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Question 1 ? Assessable Income (10 marks) Outline...




Question 1 ? Assessable Income (10 marks) Outline the issues to consider when deciding whether a receipt is income according to ordinary concepts. You should discuss relevant cases. Discuss, with reference to legislation or case law, whether the following are ordinary income in the hands of the recipient: ? a tip received by a waiter ? a gift received from a close friend who is also a former employer ? proceeds from the sale of trading stock (e.g. electrical appliance sold by a retailer) ? gambling winnings of a regular punter ? amounts received by a building equipment hiring company from its customers for damaged and non-returned scaffolding ? a free overseas holiday received by a pharmacist from a drug manufacturer Question 2 ? Fringe Benefits Tax (6 marks) Sienna is required to live away from home for work purposes for 30 days during the FBT year. For this period, she is paid a living-away-from-home allowance of $8,500. The allowance includes $110 per day which the employer can show is reasonably necessary to compensate her for the cost of accommodation and $60 per day for her food costs. Calculate the taxable value of this living-away-from-home allowance fringe benefit for the year ended 31 March 2012. Question 3 ? Deductions (8 marks) Ben is a self-employed builder who specialises in renovating residential properties. Each week, he travels from home to various building sites where he works. Sometimes he may work on more than one site during a particular day. He always carries his tools and some building materials in the back of his truck. On weekends, he often goes to the homes of potential clients to quote on renovation jobs. As he charges a high fee for his services, only a small portion of his quotes are accepted by clients. In the future, Ben wants to become an architect so is enrolled in a course at university. He has to pay fees for this course and also must purchase textbooks and drawing materials. Advise Ben whether his travel and self-education expenses are deductible. Question 4 ? Capital Gains (6 marks) Stan is about to sell his plumbing business that he has owned for 14 years, and has come to you for advice to minimise his tax in relation to the sale. He estimates he will make a gain on sale of $250,000. Discuss what options are available to minimise the amount of capital gains tax he might have to pay. Question 5 ? Tax Offsets and Obligations (10 marks) Gemma has a taxable income of $62,000 for the current tax year. She is 56 years old and is a sole parent to a dependent child attending secondary school. Her child has had substantial dental work in the current tax year. Gemma has no private health insurance. Outline the tax offsets Gemma might be entitled to claim for the year, and explain any special conditions that must be met to obtain these offsets. Explain any additional levies or tax Gemma may be required to pay, based on the information provided above.


Paper#4503 | Written in 18-Jul-2015

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