For the purposes of Div 6AA, how much excepted assessable income has Ron derived?
- Name of the BENEFICIARY
- Whether or not the beneficiary is PRESENTLY ENTITLED
- Whether or not the beneficiary is under a LEGAL DISABILITY
- WHO IS ASSESSED on each amount
- Which sections of the Act apply to make the income assessable
- The amount retained or distributed.
Calculate the proportion of the receipts that would be deemed to be from non-members.
What are the possible consequences for Randy if he agrees to do either of these things?
Which of the above amounts is the Commissioner obliged to refund to Stefan?
Are there any other amounts that may be paid to Stefan as a result of the AAT decision?
For each of the following, state whether the income described would be classed as Personal Services Income (include a brief explanation/reason for your decision):
(a)Sally, a marketing consultant, provides consulting services to a soft drink company.
(b)Greg owns a block of holiday apartments that he leases for holiday letting.
(c)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.
(d)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.
(e)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 the contract.
Div 6AA
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 |
- 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 |
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:
Q3.3.3
(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:
- Complete the table reconciling net profit with taxable income for the 2016/17 taxyear.
- 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).
4 a. and 4 b.
$ |
$ |
|
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 |
(FrankingAccount)
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:
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:
- Calculate Ernie’s taxable income for each taxyear.
- 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 |
$17914 |
Q8.5.9
(Trading account, average cost)
Clyde Wishbone breeds and sells sheep. During the 2016/17 year records disclosed the following:
Quantity |
Value ($) |
|
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:
Q9.6.3.
(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 proportion of the receipts that would be deemed to be from non-members
Required:
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 |
Q10.6.5
(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:
(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:
- 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 |
- 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:
(Returns required forlodgement)
The follwing 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 |
(Rulings and determinations)
The following tax rulings were issued in relation to the application of tax legislation:
- 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.
- 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.
- The Commissioner released a ruling that ‘frequent flyer’ bonuses received by employees as a result of employer expenditure are not subject toFBT.
- 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.
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:
(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:
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.
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.
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
Possible consequences for Randy
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.
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:
(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.
- Which of the above amounts is the Commissioner obliged to refund to Stefan?
11500 will refund by the commissioner |
- 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:
(Personal serviceincome)
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:
(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:
(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 |
- 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 |
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. |
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