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(solution) Question 1 Abyan had a taxable income of $38,300. Calculate her


Question 1

Abyan had a taxable income of $38,300. Calculate her net tax payable including Medicare levy.

Question 2

Clive  Clumsy was injured during his employment, and for the first 10 weeks after the injury he received $400nper week compensation. A Supreme Court judgment awarded him $71,000 for the injury. This was made up as follows:

  • $26,000 being loss of pay of $1,000 per week for 26 weeks to date less the $400 per week for the first 10 weeks already paid
  • $5,000 being payment for hospital and medical expenses incurred
  • $30,000 for reduced working capacity in future
  • $10,000 for pain and suffering

Clive has other income of $12,582. Calculate his taxable income and net tax payable including Medicare levy.

Question 3

Maggi had the following income and deductions

                                                                                                $

Salary                                                                                      25,000

Re-imbursement of work related km travelled                       1,900

Interest                                                                                    1,000

Army Reserve Income                                                            2,500

Expenses which are fully deductible for tax purposes           2,800

Calculate her taxable income and net tax payable  for the current year including Medicare levy

Question 4

Tina bought a block of land in October 1984 with the intention of eventually building a holiday house. After being transferred to another state she sold the block in the current year and made a gain of $64,000. Is the gain of $64,000 assessable income.

Question 5

Luke sold the following assets during the current year.

Asset               Cost Base       Reduced CB              Capital Proceeds

Asset1             10,000             10,000                         15,000

Asset 2                        10,000             9,000                           8,000

Asset 3                        10,000             9,000                           9,700

Work out his CG or CL.

Question 6

Darren consulted his accountant Mr. Gough regarding the purchase of a holiday home. The cost of his advice was $500 in September 1991. In addition he paid stamp duty of $3,150. This was paid in October 1991.

Darren used a loan to acquire the property and paid $250nstamp duty on the loan in January 1992. The property was sold in September CY for $280,000. Costs associated with the sale include commission of $6,750 paid to the real estate salesman who sold the property and advertising of $600. Both these expenses were paid in September CY.

Incidental costs                                   $

Accountant?s advice                           500

Stamp duty on property                      3,150

Stamp duty on loan                             250

Commission on sale                            6.750

Advertising cost                                  600

He further incurred the following expenses into his property

                                                                                    $

Interest on loan                                                           25,000

Insurance cost over the period of ownership  3,500

Repair to stairs                                                            1.800

Rates and land tax paid                                              6,900

Interest of $3,000 was paid since October 1996 when Darren obtained a personal loan to refurbish the kitchen and bathrooms at cost of $25,000

In December 1994, Darren?s next door neighbor, Mark Taylor, disputed the placement of fence and considered that some of the land on Darren?s side of the fence was I n fact his land. It cost Darren $2,000 in various fees and cost to prove that the fence was correctly placed. Mark did not pay any of Darren?s costs

Calculate Darren  CGT.

What if the holiday home was sold for $180,000 ?

Question 7

The Jack and June partnership provides accounting services to the general public. The gross fees of the partnership were $210,000 in the year ended 30 June 2014. The partnership employs three people and paid them $30,000 each in salary for the year and in addition paid superannuation contributions of $2,250 for each of the employees into a complying superannuation fund. The partnership also paid $5,000 for each of the partners into a complying superannuation fund. Jack was paid a salary of $30,000 from the partnership while June was paid a salary of $35,000. Jack had drawings of $15,000 from the partnership during the year while June had $8,000. Jack had loaned $60,000 to the partnership for three years for use as working capital at 8% interest per annum and the partnership paid him $4,800 in interest during the year. The prevailing commercial rate for business loan is 8%. The partnership had a net loss of $34,000 in the year ended 30 June 2013. Based on the above information, what is the net income of the partnership for the year ended 30 June 2014?

The net income of the partnership is calculated as if the partnership was a resident taxpayer including the normal assessable amounts and deductions but not including contributions for superannuation for the partners or carried forward losses. The calculation is as follows:

Assessable income                          $210,000

Less:

Employee salaries paid                        90,000

Super for employees                             6,750

Interest on loan                                     4,800

Net income ? s 90 ITAA36                  $108,450

Partners? salaries are not a deduction to the partnership and drawings have no impact on the net income of the partnership. The loan by Jack to the partnership appears to be on commercial terms and therefore the interest on this loan is deductible to the partnership.

Question 8

Bill and Mary carry on a retail business in partnership. The financial statements of the partnership for the year ended 30 June 2014 indicate an operating profit of $35,000 after paying a partnership salary of $60,000 to Bill. Bill and Mary have an equal entitlement to the income of the partnership after the payment of salaries. The following additional information relates to determining the net income of the partnership:

Superannuation contributions by the partnership of $4,000 on behalf of Bill have been claimed as an expense in determining the operating profit of the partnership.

An amount of $560 in speeding fines paid for Bill has been claimed as an expense in determining the operating profit of the partnership.

Mary withdrew $3,000 from the partnership bank account during the year to pay for some dental surgery work for one of her children. This has been claimed as an expense in determining the operating profit of the partnership.

No depreciation has been deducted in determining the operating profit. The amount of depreciation calculated under division 40 ITAA 97 was $5,000.

Based on this information what is the net income of the partnership for the year ended 30 June 2014?

Question 9

The Tennyson Family Trust is a discretionary trust that carries on a retail business. It had sales proceeds of $400,000, expenses when operating its business of $230,000 and it received a fully franked cash dividend of $7,000 during the year. What is the net income of the trust for the current year?

Question 10

The Hayden Family Trust is a discretionary trust with three individual resident beneficiaries. The following is a summary of the financial information necessary to calculate the net income of the trust for the year ended 30 June 2014:

Rental income from renting out residential property of $230 000. Related allowable deductions were $76,000.

Sale of a rental property on 14 May 2014 for $560 000 where the property was purchased on 5 June 2000 for $410,000.

Cash dividends of $21,000 received from Australian resident companies. All dividends were fully franked.

Interest income of $12,000 received during the year

Question 11

Elizabeth purchased a truck (carrying capacity 10 tonnes) for use in her delivery business for $67,000 on 1 September 2012. She uses the truck 100% for business use at all times and is not using the Small Business Entity (SBE) method of depreciation. The effective life of the truck at the time of acquisition was seven years. Her depreciation claim (assuming diminishing value method applied and rounded to nearest $1) for the year ended 30 June 2014 will be:

Question 12

Elizabeth purchased a truck (carrying capacity 10 tonnes) for use in her delivery business for $67,000 on 1 September 2012. She uses the truck 100% for business use at all times and is not using the Small Business Entity (SBE) method of depreciation. The effective life of the truck at the time of acquisition was seven years. Her depreciation claim (assuming prime cost method applied and rounded to nearest $1) for the year ended 30 June 2014 will be:

Question 13

Bill is a self-employed electrician who primarily undertakes electrical repair work for the public and at 30 June 2014 he had the following items on hand:

Light fittings that cost $12,000 during the year ? he will separately charge for the light fittings when completing a job.

Electrical cable that cost $3,000 ? he will use the cabling to complete his work but will not separately charge an amount for the cable used in completing a job.

Nails and screws that cost $700 ? he will use these in completing his work but will not separately charge an amount for the nails and screws used in completing a job.

Tools purchased during the year that cost $4,000 ? he will use these to complete his work but does not hold them for resale.

Assuming that Bill wishes to value his trading stock at cost price on 30 June 2014, what value of closing stock should he choose?

Question 14

Noel carries on a business of forest operations and purchased land and trees for $60,000 ($20,000 of the cost was attributable to the timber). During the current year Noel fells all the timber and incurs $10,000 in felling and transportation costs. Noel had no sales during the current year. Assuming that Noel wishes to value his stock on

Question 15

Kate carries on a business of manufacturing school playground equipment. In addition, she also provides consulting services to schools about the type of playground equipment to use. On 30 June 2014 she had raw materials on hand that cost $23,000, partly finished goods on hand that cost $25,000 to get to their current condition, finished goods on hand that cost $50,000 to manufacture and she has unbilled consulting fees of $12,000. What is the value of her trading stock on hand at 30 June 2014, assuming that she wishes to value her trading stock at cost?

Question 16

A resident individual has earned salary and wages income of $18,000 and a fully franked cash dividend of $19,600 for the year ended 30 June 2014. He had tax instalments (PAYG) withheld from his salary and wages income of $3,000. He has no dependants and is entitled to no dependant tax offsets/rebates. What is his net tax to pay or his refund due (including Medicare levy but excluding low income tax offset) when his assessment issues?

Question  17

Nicholas, an Australian resident individual for taxation purposes, received a fully franked cash dividend of $1,260 from Hardware Ltd on 4 June 2014. What amount should he include in his assessable income?

Question 18

Daniel, an Australian resident individual for taxation purposes, received a partially franked cash dividend of $3,360 (franked to 50%) from Equity Ltd on 23 May 2014. What amount should he include in his assessable income?

Question 19

Kate, an Australian resident individual for taxation purposes, received an un-franked cash dividend of $7,000 from Unity Ltd on 25 June 2014. What amount should she include in her assessable income as a result of receiving the dividend?

Question 20

Nicholas is a medical doctor who purchased an air-conditioner for his medical practice. He is registered for GST and paid $1,650 (including GST) for the item. He holds the tax invoice. What amount of GST can he claim as an input tax credit?

Question 21

Nicholas works for Computer Specialists Ltd as a salesman. He is provided with a car that cost the company $45,000 on 1 May 2011. Nicholas used the car from the time that his employer acquired the car. During the FBT year ended 31 March 2014 Nicholas travelled 35,000 km in the car. The car?s log book indicates that the business percentage is 80%. Nicholas paid $2,000 of the operating costs for the year ended 31 March 2014. What is the taxable value of the car for the year ended 31 March 2014 using the statutory formula method?

 


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