HI6028 Taxation Theory, Practice & Law - Questions Task

Instructions:

• All questions must be answered by using the answer boxes provided in this paper.
• Completed answers must be submitted to Blackboard by the published due date and time.
  

Please ensure you follow the submission instructions at the end of this paper.

Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.

Question 1                                                                                                           (11 marks)

John, an executive of a British corporation specialising in engineering consultancy, comes to Australia to set up a branch of his company. Although the length of his stay is not certain, he leases a residence in Melbourne for 12 months. His wife accompanies him on the trip, but his teenage sons, having just commenced college, stay in London. John rents out the family home. Apart from the absence of his children, John’s daily behaviour is relatively similar to his behaviour before entering Australia. As well as the rent on the UK property, John earns interest from investments he has in France. Because of ill health, John returns to the UK 11 months after arriving in Australia.

Required:

Discuss residency tests and source issues.

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Question 2                                                                                                             (7 marks)

Why is it important to identify whether ordinary income or statutory income is exempt income or non-assessable non-exempt income? Provide at least one example each- exempt income and non-assessable non-exempt income.

Question 3                                                                                                           (11 marks)

Jos is a Sales Manager. He uses his own car to travel to various locations. He acquired the car on 1 October 2021 for $60,000. The acquisition cost was funded entirely by a loan at an interest rate of 15%. He has determined that the depreciation deduction on the car would be $2,300 for the year. In addition, Jos incurred the following expenses during the year:

• Registration and insurance = $2,000;
• Repairs and maintenance = $1,000; and
• Oil and fuel costs = $1,500.

For the period 1 October 2021 to 30 June 2022, Jos estimates that the car travelled 15,000 kilometres, 12,000 of which were for business purposes. You may assume that Jos has maintained all necessary records and a logbook.

Required:

Calculate Jos's deduction for car expenses under the two methods (cent per kilometre rate 0.72 and logbook) in Div 28 of Income Tax Assessment Act 1997. Assume that depreciation has been adjusted for part-year use and the impact of the car limit.

Question 4                                                                                                             (7 marks)

What Capital Gain Tax (CGT) events apply to the following transactions?

(a)    You sell shares in QAN for $10,000.

(b)   You receive $800,000 in return for signing a three-year contract to play AFL with the Western Bulldogs.

(c)    You pay Jean $40,000 for the option to purchase her photography business in three years’ time.

You must refer to relevant legislation in your answer.

Question 5                                                                                                             (7 marks)

Robin and Nissan are the owners of a gift shop. They are partners in a partnership of the shop. They share profits and losses equally under the partnership agreement. In addition, Robin receives salaries of $60,000 every year from the partnership for taking on the daily management role in the shop. In this income year, the partnership makes a loss of $90,000 after deducting the salaries paid to Gary.

Required:

Explain the tax implications of Robin and Nissan in this income year.

Question 6                                                                                                             (7 marks)

What are the processes to file an objection against a decision of the Commissioner? Discuss the key features of the objection and appeal process.

END OF FINAL ASSESSMENT

Submission instructions:

Before you submit your assessment, please check all of the following:

• You have named your file with your Student Number and Unit Codeg. EMG1234 HI6028
  It is critical you follow this file name instruction to ensure the file belongs to you.
• You have saved your file in MICROSOFT WORD format only. No other format is accepted.
• You have checked you are submitting the correct document as special consideration is not granted if you make a mistake.