Taxation Law

Question 1 (5 marks)

The taxation formula

Calculate the Medicare levy payable (if any) on the following amounts for a single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset:

15,000;

$23,000; and

$40,000.

Question 2 (5 marks)

Residence and source

Ajay is a student from India who comes to Australia to study for a four-year bachelor degree in business. Ajay lives in rental accommodation near the university with fellow students and works

part-time at the university social club as a barman. After six months, he has to withdraw from his studies and return to India because his father is ill.

Is Ajay considered a resident of Australia?

Question 3 (5 marks)

Income from personal services and employment

Consider the following situations and discuss whether or not they are income in ordinary concepts:

a. A cash prize for being the best student in income tax law received by a student who also receives a Youth Allowance from the government.

b. A gratuity (not being superannuation) received by a widow from her husband’s former employer in recognition of her husband’s services.

c. An honorarium received by a student for acting as honorary secretary of a small country town football club.

d. A bonus received by an employee for a suggestion adopted by the management.

Question 4 (5 marks)

Income from Business

In 1983 Bruce purchases 10 hectares of land for $1 million in an area that was ripe for subdivision. At the time of purchase he intended to get planning permission from the local council to

develop the land by subdivision and then resell it at a profit, but instead he leased it for grazing horses. Three years ago Bruce attempted to get planning permission to subdivide his 10

hectares, but it proved very difficult, and finally in March of the current tax year the local council refused permission to subdivide. Bruce reluctantly sold the land in May for $3 million.

What are the tax consequences of Bruce’s sale?

1. Answers must be in the form of ISSUE/LAW(RULES)/APPLICATION/CONCLUSION (4part of the essay)

2. Answers must be typed with a font size no smaller than 11 points and use line spacing of 1.5. The word limit is 300 words.

3. Answers must be referenced using the Australian Guide to Legal Citation (AGLC). A link to the AGLC is available in the ‘Assessments’ section of Moodle.

4. Need to apply law rules( case, sections)

5. The question see the “BTB3221 2017 Assignment 2 Question”

Rosemary Wells is a financial accountant and is married to Michael Wells, a lecturer at a university who specializes in architecture and design. In July 2015, Michael resigned from his job and started an architectural design business. He borrowed $300,000 from a bank at an interest rate of 8% per annum, which was repayable over 8 years. He used $200,000 of the borrowed money to pay a rental bond for business premises, purchase of equipment and initial staff salary costs. Michael loaned the remaining $100,000 to Rosemary at an interest rate of 1% per annum. Rosemary used $50,000 to renovate their home and the balance to undertake postgraduate studies in accounting. Rosemary studied two elective subjects (out of eight subjects in total) on professional writing. She plans to use the information she gains from the professional writing subjects to write a textbook on management accounting, which she hopes will be published and prescribed as a textbook at various universities. In the meantime, Michael’s architectural design business was unsuccessful. He decided to sell the business in January 2016 at a loss. The sale proceeds amounted to $150,000 and he continues to pay interest on the remaining borrowings.

Required:
Advise Rosemary and Michael of what deductions they may be entitled to claim

6. all reference needed uploaded, see all of them