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What are the possible consequences for Randy if he agrees to do either of these things?

Al Basic, an Australian resident aged 30, received a gross salary of $50,000 and had no other income or deductions. Al does not use the services of a Registered Tax Agent.

Brianna Minor, an Australian resident aged 15, received interest on an investment given to her by her parents amounting to $750. She had no other income or deductions and does not use the services of a Registered Tax Agent.

Drew Toomuch, an Australian resident aged 39, derived net business losses of $15,000. He has no other income or deductions and uses the services of a Registered Tax Agent.

Fritz Watson, an Australian resident aged 19, received gross wages of $11,100 ($500 PAYG tax withheld).  Fritz did not have any other income or deductions and does not use the services of a Registered Tax agent.

a.Which of the above amounts is the Commissioner obliged to refund to Stefan?

b.Are there any other amounts that may be paid to Stefan as a result of the AAT decision?

Assessable Income and Taxation Obligations of Randy

Ron Veldhuis is aged 16 and is currently studying full-time at high school whilstlivingwith his parents.

During the 2016/17 tax year, Ron received the followingamounts:

$

Gross Wages from part-time job (PAYG tax withheld$800)

4,700

Gross Interest received on fund given by his parents (TFNwithheld $4,900)

10,000

Income Distribution from Estate of LateAunt

7,500

Income Distribution from Family Trust (tax paid by Trustee$1,500)

6,000

Unfranked Dividend from shares in QQQ Ltd (these were bought with funds from previous Family Trust distributions)

1,200

(a) For the purposes of Div 6AA, how much excepted assessable income has Ron derived?

Gross wages from part time- 4700

Income distribution from Estate of late aunt- 7500

Income distribution from Family trust- 6000

Unfranked dividend from family trust- 1200

Total                                                            $19400

(b) For the purposes of Div 6AA, how much eligible assessable income has Ronderived?

Eligible assessable income

Income from Family trust- 6000

Unfranked dividend from shares in QQQLtd- 1200

Total                                                                   $7200

(c) Calculate net tax payable by Ron for the 2016/17 taxyear.

Tax on Excepted income

($19400-$18200(tax free threshold))*19%

= $228

Tax on other income

$7200*45%

=$3240

The following questions are based on the material in Chapter 2:

(Comprehensive, inter vivostrust)

The Alberts Family Trust, an inter vivos trust, had the followingbeneficiaries:

Candy

(aged 45; entitled to 40% of trustincome)

Dandy

(aged 30; bankrupt; entitled to 35% of trustincome)

Landy

(aged 17; entitled to 20% of trustincome)

The remainder of each year's income was to be retained or distributed at the Trustee'sdiscretion.

During the 2016/17 tax year trust income was $195,000.

A discretionary amountof$7,000 was paid to Landy (this amount was in addition to Landy’s entitlement under the TrustDeed).

The trust also had losses of $15,000 in the 2015/16 tax year. These were to be met out of the trustincome. Landy also received interest of $38,000 during the 2016/17 tax year from investments given to him by hisparents.

Landy is single and is not covered by private healthinsurance.

  • Name of theBENEFICIARY
  • Whether or not the beneficiary is PRESENTLYENTITLED
  • Whether or not the beneficiary is under a LEGALDISABILITY
  • WHO IS ASSESSED on eachamount
  • Which sections of the Act apply to make the incomeassessable
  • The amount retained ordistributed.

Beneficiary

Presently entitled? (Yes/No)

Legal disability? (Yes/No)

Who is assessed?

(Beneficiary or Trustee)

Section(s) Applicable

Amount $

Candy

No

No

Trustee

Section 97

72000

Dandy

No

Yes

Beneficiary

Section 97

63000

Landy

No

Yes

Beneficiary

Section 97

43000

Balance

Total

$178000

  1. Calculate tax payable by the trustee on behalf of Dandy, Landy and the balance of trust net income.

Tax payable by Trustee on behalf of Dandy:

Assessable income*45%

72000*45%= $32400

Tax payable by Trustee on behalf of Landy:

Assessable income

Income from trust- 43000

Total assessable income- $43000

Assessable income*45%

= $43000*45%

= $19350

Tax payable by Trustee on balance of trust net income:

Assessable income

Balance of trust income- 2000

Assessable income*45%

= $2000*45%

= $900

  1. Calculate tax payable byLandy (only).

Assessable income

Income from trust- 43000

Income from investments- 38000

Total assessable income- $81000

Assessable income*45%

= $81000*45%

= $36450

The following questions are based on the material in Chapter 3:

(Allocation of Partnership Net Income)

Sue, Prue, Lou and Emmet operate a transport company in the ratio 4:3:2:1.  

Their assessable income for the 2016/17 tax year amounted to $780,000 while they had $300,000 of deductions.  

Their partnership agreement states that all profits and losses are to be shared in the ratio 4:3:2:1 after adjusting for partner’s salaries, travel allowances and interest on capital.

The following data was extracted from their financial records:

Interest on Capital

Sue $ 12,000

Prue 15,000

Lou 5,000

Emmet 3,000

Partner’s Salaries

Sue 65,000

Prue 50,000

Emmet 20,000

Travel Allowances

Sue 4,000

Emmet 6,000

Based on the above information, complete the table calculating each partner’s share of partnership net income under the terms of the partnership agreement.

Sue

Prue

Lou

Emmet

Total $

Interest on capital

12000

15000

5000

3000

35000

Partners’ salaries

65000

50000

20000

135000

Travel allowances

4000

6000

10000

Share of Adjusted Net Income

109091

81819

54545

27273

300000

Total $

190091

146819

104545

83273

480000

The following questions are based on the material in Chapter 4:

Q4.4.21

(Reconciliation of taxableincome)

Trash Converters Limited, a small business entity, has prepared an income statement for2016/17:

$

$

GROSSPROFIT

1,624,000

Add: OTHERINCOME

UnfrankedDividend

2,300

Fully Franked Dividends (company tax rate 30%)

7,700

Net Dividends from Spain - note1

32,000

Gain on Sale of Shares - note2

2,000

44,000

TOTAL OPERATING INCOME

1,668,000

EXPENSES

Depreciation - note 3

34,000

Fringe BenefitsTax

48,000

Payroll Tax

46,900

Superannuation - note4

75,000

PAYG Instalments Paid - note5

92,000

Other DeductibleExpenditure

965,000

1,260,900

NETPROFIT

407,100

Note 1

The dividends from Spain have had $8,000 of tax withheld.

Note 2

Shares sold during the year were acquired in 1984 as an investment.

Note 3

Decline in value deduction is calculated as $28,000.

Note 4

Superannuation includes an amount of $30,000 paid to a director's spouse. This $30,000 amount is deemed to be excessive.

Note 5

All of the PAYG tax instalments relate to the current year.

Required:

  1. Complete the table reconciling net profit with taxable income for the 2016/17 taxyear.
  1. Calculate net tax payable by the company for the 2016/17 taxyear. (For the purpose of this exercise, assume a 27.5% small business entity company income tax rate, as per chapter 4.3 of your textbook).

$

$

Net Profit per income statement

$407100

Add:

Franking Credits

$3300

Foreign Tax – Spain

$8000

Accounting Depreciation

$34000

Superannuation

$45000

PAYG instalments

$92000

$182300

$224800

Less:

Decline in Value

$28000

Accounting Gain on Shares

$2000

$30000

Taxable Income

$194800

Tax on Taxable Income

53570

$53570

Less:

Franking Tax Offset

$2310

PAYG Instalments

$17000

Foreign Income Tax Offset – tax paid

$8000

$27310

Tax Payable

26260

$26260

Rudimentary Pty Ltd, a corporate tax entity, has the following transactions for the 2016/17 taxyear:

Date

Transaction

$

30/06/16

Balance

Nil

15/10/16

PAYG InstalmentPaid

14,000

15/12/16

2015/16 Tax RefundReceived

9,500

12/03/17

Fully Franked DividendReceived

3,500

08/05/17

Fully Franked DividendPaid

7,000

Note – the benchmark franking percentage is100%.

Required: Prepare the franking account for the 2016/17 taxyear.

Date

Transaction

Debit

Credit

Balance

(state if DR or CR)

1/7/16

Opening Balance

0

15/10/16

PAYG Instalment paid

14000

14000

15/12/16

2015/16 Tax refund

9500

4500

12/03/17

Full franked dividend received

3500

8000

08/05/17

Fully Franked dividend paid

7000

1000

The following questions are based on the material in Chapter 5:

(AverageIncome)

Ernie Wombat is a primary producer who commenced business in 2011/12. The following data relates to Ernie’s first 6 years oftrading:

Excepted Assessable Income and Eligible Assessable Income of Ron

Year

AssessableIncome

Deductions

2011/12

$32,000

$15,000

2012/13

35,000

20,000

2013/14

31,000

39,000

2014/15

42,000

21,000

2015/16

45,000

22,000

2016/17

51,000

25,000

  • All assessable income and deductions are from primaryproduction.
  • The deductions do not include any amounts that may be deductible for losses of previousyears.

Required:

  1. Calculate Ernie’s taxable income for each taxyear.
  2. Calculate Ernie’s average income for each taxyear.

Year

Taxable Income

Average Income

Notes (if any)

2011/12

17000

8500

2012/13

15000

16000

2013/14

-8000

3500

2014/15

21000

10500

2015/16

23000

22000

2016/17

26000

24500

(Tax calculation under averaging)

Rikki Teabridge had the following income during the 2016/17 taxyear:

Net Business Income from Primary Production $ 35,000

Gross Wages from part-time job at local supermarket $20,000

  • Rikki’s average income was$20,000.
  • Rikki had no other assessable income ordeductions.
  • PAYG tax of $2,000 was withheld from Rikki’swages.
  • Rikki is covered by adequate private healthinsurance.

Required:

Complete the following statement showing Rikki’s tax payable for the 2016/17 taxyearincluding any averagingadjustment.

Notes/Workings (if any)

Tax on Average Income

Tax on $

20000*19%

$3800

Comparison of Tax Rate

30%

Gross Averaging Amount

Tax on $             @ ordinary rates

55000*32.5%

$17875

Tax on $             @ comparison rates

55000*30%

$16500

$17187.5

Averaging Component

$17187.5

Averaging Adjustment Tax Offset

$2000

Tax Payable Calculation

Tax on $

$21675

Less Averaging Tax Offset

$28

Less Low Income Tax Offset

$1375

Add Medicare Levy

$358

Less PAYG Withheld

$2000

= Tax Payable

$17914

(Trading account, average cost)

Clyde Wishbone breeds and sells sheep. During the 2016/17 year records disclosed the following:

Quantity

Value ($)

Sheep on Hand – 30 June2016

8,200

47,900

Purchases

500

9,200

NaturalIncrease

2,900

Sales

4,300

92,400

Rations

100

Deaths

300

Clyde chooses to use the prescribed value for natural increase and average cost for rations and closingstock.

Required:

Prepare the average cost calculations and the trading account for the 2016/17 taxyear.

Average Cost Calculations

 

Qty. of Sheep

$

Opening Stock

8200

$47900

Purchases

500

$9200

Natural Increase @ prescribed value

2900

$2895

Total

11600

$59995

Average Cost of one sheep

$5.17

Average Costof Rations

Qty Sheep for rations 100

$5.17

Average Cost of Closing Stock

Qty Sheep at Closing Stock

$21.48

Sheep Trading Account

Qty.

$

Qty.

$

Opening Stock

8200

47900

Sales

4300

92400

Purchases

500

9200

Rations

100

517

Natural Increase

2900

2895

Deaths

300

1551

Gross Profit

182685

Closing Stock

6900

148212

Total

Total

242680

The following questions are based on the material in Chapter 6:

(Assessablecontributions)

The Spotless Superannuation Fund is a complying superannuation fund. The fund received the following contributions:

July 2016

Contributions from contributing employer relatingto2015/16

$27,800

Sep2016

Superannuation Guarantee Shortfall received from ATO

11,400

Oct2016

Contributions from employer relating to Sept 2016 quarter

34,500

Jan2017

Contributions from employer relating to Dec 2016 quarter

36,100

Apr 2017

Contributions from employer relating to March 2017 quarter

27,450

July 2017

Contributions from employer relating to June 2017 quarter

19,320

All of the above amounts related to members who have supplied their TFN.

There was a further $8,340 of superannuation accrued and payable by the contributing employer in relation to 2016/17 but not yet received by the fund.

Calculate the fund’s assessable income from contributions for the2016/17 taxyear.

Contributions from contributing employer relatingto2015/16- 27800

Superannuation Guarantee Shortfall received from ATO- 11400

Contributions from employer relating to Sept 2016 quarter-34500

Contributions from employer relating to Dec 2016 quarter-36100

Contributions from employer relating to March 2017 quarter-27450

Contributions from employer relating to June 2017 quarter-19320

Total                                                                                                156570

Less: accrued                                                         8340

= 148230

(Assessable income, ordinaryincome)

The Blowhard Superannuation Fund, a complying fund, received the following amounts during the 2016/17 tax year:

Unfranked Dividends from listed companies

$12,450

Franked Dividends from listed companies (Fullyfranked. Company Tax rate 30%)

20,300

Interest from cash managementaccount

8,250

Proceeds from redemption of term deposits (includes principalof$50,000)

59,400

Interest from at-call deposit (net of $4,900 TFN taxwithheld)

5,100

Interest from investments segregated to meet the payment of  current income stream benefits

35,000

Required:

Calculate the fund’s assessable income from investments for the2016/17 taxyear.

Unfranked Dividends from listed companies-12450

Franked Dividends from listed companies-20300

Interest from cash managementaccount-8250

Proceeds from redemption of term deposits-59400

Interest from at-call deposit-5100

Interest from investments-35000

Total= 140500

The following questions are based on the material in Chapter 7:

Q11.7.3

(Calculation of income attributable to members)

Dockside Rowers Club disclosed the following data for the 2016/17 financialyear:

DaysOpen

361

Financialmembers

900

Average % of members in attendancedaily

15%

Total visitors for the year

4,200

Visitors accompanied bymembers

1,950

Net Trading Surplus for theyear

$200,000

Required:

Calculate the proportion of the receipts that would be deemed to be from non-members.

Net trading surplus- 200,000*(15%*900)*1950/4200*365

= 45755357144

The following questions are based on the material in Chapter 8:

Q12.8.1

(Professional and other income of an artist)

Sam Journeyman derives income as a professional beach dodge ball player.

During the 2016/17 tax year, Sam received the followingamounts:

Tournament Prizemoney from dodgeball

$85,000

Appearance fees from dodge balltournaments

12,000

Cash sponsorship from Aussieboom

60,000

Jetski provided by Aussieboom as abenefit

8,000

Interest from bank account comprising savings from Prizemoney

3,700

Directors fees from DodgeballAustralia

14,500

Car provided by Dodgeball Australia as abenefit

7,200

Required:

  1. Calculate Sam’s taxable professional income for the 2016/17 taxyear.

Taxable Professional Income

$

Tournament Prize money from dodgeball

85000

Appearance fees from dodge balltournaments

12000

Cash sponsorship from Aussieboom

60000

Jetski provided by Aussieboom as a benefit

8000

Total

165000

  1. Calculate Sam’s other taxable income for the 2016/17 taxyear.

Other Taxable Income

$

Interest from bank account comprising savings from Prizemoney

3700

Directors fees from DodgeballAustralia

14500

Car provided by Dodgeball Australia as abenefit

7200

Total

25400

The following questions are based on the material in Chapter 9:

Q13.9.7

(False and misleadingstatements)

Randy Michaels has a client, Shonky Pty Ltd. The directors of Shonky have asked Randy to lodge their company's 2016/17 income tax return with the correct taxable income, but with a false address and contact details. They have also requested that Randy does not disclose the fact that the company has made payments to associated persons during theyear.

Required:

What are the possible consequences for Randy if he agrees to do either of thesethings?

Penalty will be imposed on randy for showing misleading information.

The following questions are based on the material in Chapter 10:

Q14.10.1

(Returns required forlodgement)

The following information relates to transactions during the 2016/17 taxyear:

  • Al Basic, an Australian resident aged 30, received a gross salary of $50,000 and had no other income or deductions. Al does not use the services of a Registered Tax Agent.
  • Brianna Minor, an Australian resident aged 15, received interest on an investment given to her by her parents amounting to $750. She had no other income or deductions and does not use the services of a Registered TaxAgent.
  • DrewToomuch,anAustralianresidentaged39,derivednetbusinesslossesof$15,000. He has no other income or deductions and uses the services of a Registered TaxAgent.
  • Fritz Watson, an Australian resident aged 19, received gross wages of $11,100 ($500 PAYG tax withheld).  Fritz did not have any other income or deductions and does not use the services of a Registered Taxagent.

Required:

For each taxpayer state whether or not they are required to lodge an incometaxreturnforthe2016/17taxyearandifso,whenthereturnmust belodged.

Name

Required to lodge? (Y/N)

(include brief comment/notes to support your view)

If Yes,

due by date is

Al Basic

Yes

21 July

Brianna Minor

No, Minor is not required to pay tax

Drew Too much

Tax is lodged for claiming the previous loss

Fritz Watson

No

Trust Income and Taxation Obligations of Ron

Q15.10.5

(Rulings and determinations)

The following tax rulings were issued in relation to the application of tax legislation:

  1. A ruling is issued by the tax office relating to investment in a publicly available trust which aims to breed and sell Three-Legged Northern MongolianParrots.

The prospectus claims that investors will be able to claim the cost of any units subscribed as an immediate tax deduction. In the ruling, the Commissioner has indicated that not only will there be no immediate deduction, but investors will be ineligible to claim any interest expenses in acquiring the units until the trust has commenced derivingsales.

  1. Joanne Royal has applied for and received a ruling relating to her ability to claim a net medical expenses tax offset for massage oils.  The ruling stated that Joanne cannot include the oils in determining her taxoffset.
  2. The Commissioner released a ruling that ‘frequent flyer’ bonuses received by employees as a result of employer expenditure are not subject toFBT.
  3. Frank phoned the ATO regarding a meal allowance received from his employer. In the course of the phone conversation, he provided full identification and was advised by a tax officer that the allowance is assessableincome.

Required:

For each of these examples, indicate the type of ruling or decision that has beenmadebytheCommissionerandtheextenttowhichitisbindingonthe taxpayersinvolved.

Taxpayer

Type of Ruling

[Oral, Public, Private, Product, Class, Tax Determination]

Extent to which it is binding

(provide your explanation/reasons)

a.

Tax Determination

Onwer of the investment is required to abide by all the rules

b.

Product rulings

It will bind the product owner to get the tax offset

c.

Public Ruling

It is applicable for all the employer

d.

Oral

Franked Phoned ATO about the business matters to include mel allowances in the assessable income is valid.

 The following questions are based on the material in Chapter 11:

Q16.11.1

(Due dates forpayment)

The following taxpayers are required to lodge income tax returns and each has a tax liability in respect of the 2016/17 taxyear:

  1. Sophie Wilson, an individual resident, has lodged her 2016/17 income tax return on 15 September2017. Based on the return, she will have tax payable of $2,000 She is not on the lodgement list of a registered taxagent.
  2. Payable Pty Ltd, a resident corporate entity, has lodged their 2016/17 income tax return on 10 August They were not on the lodgement list of a registered tax agent. Based on the return, Payable Pty Ltd will have $1,200 of taxpayable.
  3. On 20 August 2017, Dianne Porterhouse received her 2016/17 assessment indicating that she had $4,000 payable on 22 November 2017. Dianne lodged an objection and on 15 November 2017 received an amended assessment showing that $2,900 was nowpayable.

Required:

For each of these taxpayers, specify the date due for payment ofamounts owed to the taxoffice.

Taxpayer

Due Date for payment to ATO

a.

Sophie Wilson

21 October

b.

Payable Pty. Ltd.

21 September

c.

Dianne Porterhouse

21 December

The following questions are based on the material in Chapter 12:

Q17.12.5

(Previousoffences)

Cheryl, a single resident taxpayer, is employed as an elite full-time soccer referee and claims that she plays video games for ‘practice in making decisions’. In her 2016/17 income tax return, Cheryl disclosed taxable income of $153,000 after claiming video game expenses of$1,500.

Cheryl is also subject to the Medicare Levy Surcharge (Tier 3). Cheryl has been penalised previously following an audit of her 2013/14 income taxreturn.

Required:

Calculate the likely penalties that would be imposed on Cheryl iftheresulting shortfall were uncovered during ATO auditactivity.

Cheryl

Disclosed

Taxable Income

Amended

Taxable Income

Taxable Income

$153000

$151500

Tax on income

$68850

$68175

Medicare Levy 2%

$1377

$1364

Medicare Levy Surcharge 1.5%

$1033

$1023

Total

$ 224260

$222062

Total shortfall of tax payable(= Amended Total less Disclosed Total)

$ 2198

Penalties

Calculation details

Amount $

Base penalty amount

$2198

Increase for previous offences

$100

Total Penalty

$2298

The following questions are based on the material in Chapter 13:

Q18.13.7

(Successfulappeal)

Stefan Hawkins has been successful with an appeal to the AAT against his 2016/17 income tax assessment. The basis for the challenge was $20,000 of deductions that were disallowed by theCommissioner.

The AAT indicated that the entire amount should have been properly allowed as a deduction. The Commissioner has advised that he will not seek to have the AAT decisionoverturned.

The amount that was challenged by Stefan comprised $8,000 of income tax, $2,000 of additional penalties, and $1,500 of general interest charge. Stefan had paid these amounts infull.

Required:

  1. Which of the above amounts is the Commissioner obliged to refund to Stefan?

11500 will refund by the commissioner

  1. Are there any other amounts that may be paid to Stefan as a result ofthe AATdecision?

Rest of 8500 will be paid by AAT to qualify the total challenged amount of 20000

The following questions are based on the material in Chapter 14:

Q19.14.9

(Tax planning, Superannuation co-contributions)

Jim’s taxable total income is $37,000. In addition to this he received reportable fringe benefits of$3,500.

Required:

Calculate the maximum Superannuation co-contribution he can receivefor the 2016/17 year.

(Show your workings)

Maximum super annuation

Taxable income- Reportable FBT

= 37000-3500

= 33500

= 33500*10%

= 3350

 The following questions are based on the material in Chapter 15:

Q20.15.1

(Personal serviceincome)

Required:

For each of the following, state whether the income described would be classed as Personal ServicesIncome (include a brief explanation/reason for your decision):

  • Sally, a marketing consultant, provides consulting services to a soft drink company.
  • Greg owns a block of holiday apartments that he leases for holidayletting.
  • Rochelle is a music producer.  She does not use her own studio, but employs a team of five engineers and producers who contract to produce complete projects for various artists.
  • Howard receives monthly payments from a produce co-operative for the right to use software that he has developed. The software records all classification, inventory and financial transactions.
  • Mal receives contract receipts to act as general manager of a lighting company. His contract is for eighteen months only. Mal is provided with an office, furniture and a computer for the duration of thecontract.

Taxpayer

Is this Personal Services Income? (Yes/No)

(provide your explanation/reason)

a. Sally

Yes it is personal income as Sally provides their consulting services as a marketing expert to a soft drink company.

b. Greg

No, it is not a personal income as there are no efforts applied by Greg.

c. Rochelle

No it is personal income as she employs a team of members who is earning for her.

d. Howard

Yes, it is a personal income as he is getting amount for his intelligence in the form of softwares.

e. Mal

Yes it is personal income, as he is earning money on the basis of their talent.

The following questions are based on the material in Chapter 16:

Q21.16.3

(Definition of taxhavens)

 Required

What are two key factors that the OECD identifies in considering whether a jurisdiction is a taxhaven?

Tax haven is a terminology used to describe a jurisdiction under which lower rates of taxes or no taxes applicable on the income of an individual. Aim of the country is to reduce their taxes on various things to grab the attention of foreign investors by increasing the flow of foreign capital in the country.

There are two key factors considered by OECD by knowing this jurisdiction are mention as below:

· Lack of transparency

· No nominal taxes

 The following questions are based on the material in Chapter 17:

Q22.17.5

(Calculation of FBT liability, gross upvalues)

Hook, Line and Plunger Coffee Shop provide their employees with the following fringe benefits during the 2016/17 FBT year. The employer is registered for GST and able to claim input taxcredits.

Description of FringeBenefit

TaxableValue

Low interestloan

$2,450

Payment of private telephoneaccount

1,940

Use of a Volkswagen car (purchased January2000)

3,380

Use of a Holden car (purchased March2015)

9,415

Payment of private school fees (noGST)

10,825

The employer has not paid any FBT instalments during theyear.

Required:

Calculate Fringe Benefits Tax payable by Hook, Line and Plunger Coffee Shop forthe 2016/17 FBTyear.

Show separate calculations for any Type 1 and Type 2 fringe benefits.

Type 1 (only) Fringe Benefits:

Taxable Values of Fringe Benefits: (List by description)

Use of Volkswagen car

$3380

Use of Holden car

$9415

= Total Taxable Value (Type 1 only)

$12795

Gross-Up Factor (Type 1 only)

2.1463

= Total Grossed-Up Value of  Benefits (Type 1 only)

$2.1463

@ FB Tax Rate %

49%

= Total FBTax Payable (Type 1 Benefits only)

$2919.8

Type 2 (only) Fringe Benefits:

Taxable Values of FB:   (List by description)

Low interest loan

$2450

Payment of private telephone account

$1940

$

= Total Taxable Value (Type 2 only)

$4390

Gross-Up Factor (Type 2 only)

1.9608

= Total Grossed-Up Value of  Benefits (Type 2 only)

$1.9608

@ FB Tax Rate %

49%

= Total FBTax Payable (Type 2 Benefits only)

$1096.62

Total FB Tax Payable (Type 1 plus Type 2)

$4016.42

The following questions are based on the material in Chapter 18:

Q23.18.5

(Active asset reduction and retirement exemption)

On 1 July 2016, Micah Wong, a resident taxpayer aged 58, sold his mortgage broking business for $2,675,000 and retired. The proceeds are entirely for goodwill and the cost base for this asset consists solely of second element costs on disposal of $35,000.

Micah commenced business in 2007 and does not have any other current or prior year capital gains or losses. His business satisfies the requirements of Subdivision 152-C.

Required:

Yes / No?

a. Does the 50% CGT discount apply?

Yes

b. Does the Small Business Active Asset reduction apply?

Yes

c. Does the Small Business Retirement Concession apply?

Yes

  1. Calculate Micah's net capital gain for the 2016/17 tax year (use grid provided to show your workings):

Calculation details (if any)

$

Sales consideration

$2675000

Cost on disposal

$35000

Net Capital Gain

$2640000

 The following questions are based on the material in Chapter 19:

Q24.19.7

(GST attribution transactions)

Jack Ramjet owns a clothing store in Melbourne. The following transactions occurred in the September 2016quarter:

All applicable transactions include GST.

Cash sales

$ 65,000

Credit sales (accounts receivable customers)

120,000

Collections of accounts receivables

90,000

Cash purchases

50,000

Credit purchases to suppliers (accounts payable customers)

55,000

Payment of accounts payables

68,000

Wages paid to employees

24,000

Interest received

200

Interest paid

1,200

Required:

Calculate the GST payable for the September quarter:

(a) On a cash basis.

(b) On an accrual basis.

( a) Cash Basis

GST Collected:

Amount $ (incl. GST)

GST $

Cash Sales

65000

6500

Collection of accounts receivables

90000

9000

Interest received

200

20

Total GST Collected

$15520

GST Paid:

Amount $ (incl. GST)

GST $

Cash Purchases

50000

5000

Wages paid

24000

2400

Payment of accounts  payable

68000

6800

Interest paid

1200

120

Total GST Paid

$14320

Net GST

(specify if Payable or Refundable)

$1200

( b ) Accrual Basis

GST Collected:

Amount $ (incl. GST)

GST $

Credit Sales

120000

12000

Total GST Collected

$12000

GST Paid:

Amount $ (incl. GST)

GST $

Credit Purchases to Suppliers

55000

5500

Total GST Paid

$5500

Net GST

(specify if Payable or Refundable)

$6500

The following question is based on the material in Chapter 20:

Q25.20.1

(What is tax crime?)

Required:

Provide five (5) methods of “criminal attack” that are most commonly used by criminals to evade taxation obligations or fraudulently use the system to obtain an improper financial benefit.

5 Most common ‘criminal attack’ methods on the tax system:

1.

Malware is severe attack method used by extruders to steal the confidentiality of the tax systems in the form of various viruses, bugs, and worms to collapse the important data. The Trojan virus affects the whole tax systems which need to protect against the hackers.

2.

A Phishing attack is another criminal method used by hackers to manipulate the taxable records of an individual to evade the assessed amount of tax for a particular year. Aim of this attack is to affect the quality of data as hackers will send email to get their personal data to evade their tax.

3.

Denial of service attacks is another cyber criminal method in which the whole server of the tax websites of HM&RC got hacked to obtain all the confidential data. Through his way, hackers will come to know about the personal details of a taxpayer.

4.

Password attack is one of the severe cyber attack in which hacker will spoil the conoodential information such as username and password of a taxpayer.

5.

Malvertising is a fraud committed by hackers in which fake tax website is created to steal the confidential information of all the taxpayers of Australia.

Cite This Work

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My Assignment Help. (2020). Possible Consequences For Taxpayers: Randy And Ron. Retrieved from https://myassignmenthelp.com/free-samples/fnsacc601-prepare-and-administer-tax-documentation-for-legal-entities.

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My Assignment Help (2020) Possible Consequences For Taxpayers: Randy And Ron [Online]. Available from: https://myassignmenthelp.com/free-samples/fnsacc601-prepare-and-administer-tax-documentation-for-legal-entities
[Accessed 16 July 2024].

My Assignment Help. 'Possible Consequences For Taxpayers: Randy And Ron' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/fnsacc601-prepare-and-administer-tax-documentation-for-legal-entities> accessed 16 July 2024.

My Assignment Help. Possible Consequences For Taxpayers: Randy And Ron [Internet]. My Assignment Help. 2020 [cited 16 July 2024]. Available from: https://myassignmenthelp.com/free-samples/fnsacc601-prepare-and-administer-tax-documentation-for-legal-entities.

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