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MLC301 Principles Of Income Tax Law

tag 0 Download 6 Pages / 1,370 Words tag 16-07-2021

Question:

Discuss whether the following receipts would be included as assessable income for the taxpayer:
i. Michael the taxpayer recently finished his job to take a sailing trip around the world. To ensure he had money while away, he payed a finance institution $100,000 last year, on agreement that he will receive $2,500 a 
month for the next 4 years. 
ii. Nicholas the taxpayer recently wrote a best-selling cookbook. He received royalties of $1,000 a month from the sales. Nicholas needed a deposit for a new house and he sold the right to receive the royalties to his sister for a 
lump sum of $30,000 while retaining ownership of the copyright. 

Briefly explain whether the following receipts are ordinary income for the taxpayer:
i. The taxpayer purchased a very large factory to manufacture shoes. When he purchased the factory he intended to use it to manufacture shoes but he also considered selling the rear grass area of the factory to a local animal shelter that needed more space. After purchasing the property the taxpayer used the rear grass area to grow vegetables for his family. Two years later he then decided to sell that space to the animal shelter. He received $150,000 from the sale. 
ii. The taxpayer carried on a dairy business on land he had acquired as a gift from his grandmother. He decided to move to the city with his family and so that he could afford a house in Melbourne, he decided to subdivide and sell the dairy farm. In total, 15 subdivisions were undertaken. He ceased his farming business to focus on the development. He arranged for the necessary utilities to be connected. The taxpayer also liaised with the council and prepared advertising material and marketed the lots for sale.  

He sold the 15 individual blocks this year for $200,000 each. The development expenses totalled $500,000.  
Discuss whether the following receipts would be included as assessable income for the taxpayer:
i. The taxpayer Susan is an art dealer who enjoys visiting Crown Casino in her spare time to play poker. She likes to enter novice poker tournaments a couple of times a year, so she visits the Casino two or three times a week to 
practice. Susan has kept records of every poker game she has entered, and she researches and investigates her opponents in preparation for each game. Susan doesn’t often win a lot of money but this year she was lucky and won a novice poker tournament and received $4,000 

ii. The taxpayer has a full-time job as a music teacher. She loves singing and enters into regular karaoke competitions (usually once a fortnight). She keeps a calendar of upcoming competitions and practices regularly. Her uniform is provided by the local music store that sponsors her. This financial year she received $5,000 in cash prizes from competing. 
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[Accessed 03 February 2023].

My Assignment Help. 'MLC301 Principles Of Income Tax Law' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/mlc301-principles-of-income-tax-law/financial-year.html> accessed 03 February 2023.

My Assignment Help. MLC301 Principles Of Income Tax Law [Internet]. My Assignment Help. 2021 [cited 03 February 2023]. Available from: https://myassignmenthelp.com/free-samples/mlc301-principles-of-income-tax-law/financial-year.html.


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