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HA3042 Taxation Law T1 2018 Individual Assignment Due date: Week 11 XXXXXXXXXXMaximum marks: 20 (20%) Instructions: This assignment is to be submitted by the due date in soft-copy only (Safe assign –...

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HA3042 Taxation Law

T1 2018 Individual Assignment


Due date: Week 11
XXXXXXXXXXMaximum marks: 20 (20%)
Instructions:
This assignment is to be submitted by the due date in soft-copy only (Safe
assign – Blackboard).
The assignment is to be submitted in accordance with assessment policy
stated in the Subject Outline and Student Handbook.

It is the responsibility of the student submitting the work to ensure that
the work is in fact his/her own work. Ensure that when incorporating the
works of others into your submission that it is appropriately
acknowledged.
Question 1 (3 Marks)
Hilary is a well-known mountain climber. The Daily Te
or newspaper offers her
$10,000 for her life story, if she will write it. Without the assistance of a ghost
writer, she writes a story and assigns all her right, title and interest in the
copyright for $10,000 to the Daily Te
or. The story is published and she is paid.
She has never written a story before. She also sells the manuscript to the
Mitchell Li
ary for $5,000 and several photographs that she took while
mountain climbing for which she receives $2,000.
Requirement:
Discuss whether or not the three payments are income from personal
exertion. Would your answer differ if she wrote the story for her own
satisfaction and only decided to sell it later?
Question 2 (2 marks)
Eric provides his employee with the use of a car for 183 days during the FBT
year. During this period the car travelled 16,000 km. Eric purchased the car last
year for $50,000. The employee contributed $1,000 towards the cost of running
the car and has provided Eric with relevant documentation.
Requirement:
Calculate the taxable value of the car fringe benefit using the statutory
formula.
Question 3 (5 marks)
Your client is a parent who lent $40,000 to her son to provide a short-term
housing loan. The agreement is that the son will repay $50,000 at the end of
five years.
The loan was made to the son without any formal agreement and without any
security provided for the sum lent. In addition, the client (the mother) has
informed you that she told her son that he need not pay interest. However, the
son repaid the full amount after two years and included in his payment an
additional amount which was equal to 5% pa on the amount bo
owed. Only one
cheque was presented for the total amount.
Requirement:
Discuss the effect on the assessable income of the parent.
Question 4 (10 Marks)
Scott is an accountant who purchased a vacant block of land in Brisbane on 1
October 1980. On 1 September 1986, Scott built a house on the land. At the
time, the land was valued at $90,000 and the cost of construction was $60,000.
The property has been rented out since construction was completed. On 1 March
of the cu
ent tax year, Scott sold the property at auction for $800,000.
Requirement:
a) Based on the information above, determine Scott’s net capital gain
or net capital loss for the year ended 30 June of the cu
ent tax
year.
) How would your answer to (a) differ if Scott sold the property to
his daughter for $200,000?
c) How would your answer to (a) differ if the owner of the property
was a company instead of an individual?
Answered Same Day May 28, 2020 HA3042

Solution

Pulkit answered on Jun 01 2020
136 Votes
QUESTION 1
According to the Income Tax Assessment Act, 1997 definition of income includes any such income earned in the form of Salary, Bonus, Commission, Pension and any other such benefit, income from the head of House Property, income from the head business and profession, income from any service and income earned from the personal exertion. The Income Tax Assessment Act excludes any income earned by the way of interest provided that such interest income is not from the lending money and giving any movable or immovable thing on rent, and in respect of the definition, income from any dividend.
As per the above definition in respect of income, the amount of payment of $10000 as provided to Hilary must be refe
ed as an income earned from personal exertion. As such income is earned by Hilary in exchange of her time and services, she would be liable to pay tax as assessable income and not as any capital gain. So Hilary will be taxable as she had earned such income on the sale of rights, her title and interest in the story that got published. Also the income of $5000 which Hilary got by the sale of manuscript story, that she made to Mitchell Li
ary will also be counted as a part of income from personal exertion due the reasons as provided above. And lastly the income of $2000 that she earned by selling the photographs that she clicked during her mountain climbing will also be counted as a part of income from personal exertion as this income is received by her due to the skills of mountain climbing she have.
The income if she would have earned by writing the story on her own and then making the sales, it would also be treated as income from personal exertion as the income would be earned by way of her personal skills and efforts.
QUESTION 2
The above problem can be calculated by using any of the methods i.e., either by operating cost method or by the help of...
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