Assessment
Question 1. Define assessable income as per Income Tax Assessment Act 1997
Question 2. Give two examples of ordinary income and statutory income
Question 3. ATO can carry out audits if they find any discrepancies in tax return. Mention the names of three such audits conducted by ATO with brief description for each
Question 4. What are the four key differences between residents and non-residents for tax purpose
Question 5. Section 6(1) of the ITAA 1936 provides 4 exhaustive tests of residence for individuals. Mention them in brief
Question 6. Part 3 of Tax Agent Services Act 2009 includes ‘The Code of Professional Conduct'. This code includes 14 core principles that apply to all registered tax agents and BAS agents. Go to Tax Practitioners Board website to research these core principles and mention principle number five below:
Question 7. Give two examples of "adequate and effective conflict management arrangements" that you as a "tax practitioner" can apply in your workplace
Question 8. John, a tax practitioner is requested by his client, Daniel to include some fictitious expenses in his tax return to reduce the tax liability. John knows that the expenses were not incurred by Daniel and if he includes them in the tax return, then Principle no. 1 (honesty and integrity) of ‘The Code of Professional Conduct' will be violated. But at the same time John does not want to lose Daniel as client. How John can communicate his professional obligations to Daniel?
Question 9. For how long the taxpayers need to keep evidence/record for income tax purpose? Mention the relevant legal provision (name of act and section) for this rule.
Question 10. Mention the correct lodgment date for the following scenarios
Scenario
Income tax return for all individuals and trusts where one or more prior year income tax returns were outstanding as at 30 June.
Taxpayers who lodge their own return using e-tax or TaxPack
Income tax return for individuals and trusts which were tax level 6 (tax payable of $20,000 or more on last tax assessment) as per latest year lodged
Business Activity Statement for first quarter
Business Activity Statement for second quarter
Business Activity Statement for third quarter
Business Activity Statement for fourth quarter
Question 11. Mention the name of five records/documents that can be kept by taxpayers as evidence.
Question 12. What information must be included in a Tax Invoice for taxable supplies of more than $1000?
Question 13. As per tax law, mention five types of taxpayers who must lodge their tax return.
Question 14. How much assessable income was derived by each of the following taxpayers?
Scenario
Kelly's net wages were $1 350. Her employer had deducted $380 tax.
Alan received net wages of $50 300 and bank interest of $400 over the year. His employer deducted $19 700 tax.
Karl received a net salary of $41 800 over the year plus $120 bank interest. He also was paid a gross salary of $2 000 for a part-time job he had during the year. The tax deducted from his full-time job was $13 600 and $600 was deducted from his part time wages.
Fiona runs a small business that had $36 000 in sales during the year. Her net profit was calculated by deducting $22 000 of expenses.
Question 15. Advise whether the following are assessable income, statutory income, exempt income or non-assessable income.
Scenario
A lotto win
Wages
A capital gain
A gift received from a friend
A car allowance from an employer
A tax refund cheque
Bank interest received
A family tax benefit
Question 16 Identify each of the following business outgoings as either an expense or Capital
Description
Wages
Stationery
Forklift truck
Telephone bill
Fuel
Land
Photocopier
Question 17. Matthew incurred the following expenses during the year
Interest on home loan $16 200
Interest on credit card $276
Interest on investment property $14 360
Interest on personal loan $1 320
Insurance on home $630
Insurance on car $540
Insurance on investment property $570
Matthew occasionally takes work home on weekends. The personal loan was taken out two years earlier, half of it to finance a share portfolio and the other half to landscape the front yard of his home
How much of these amounts are tax deductible to Matthew? Quote the relevant legislation (sections of ITAA) to justify your answer.
Question 18. Medicare Levy and Medicare Levy Surcharge:
Calculate the amount of Medicare levy and Medicare levy surcharge for the following resident taxpayers:
|
Name
|
Taxable income of taxpayer
|
Taxable income of spouse
|
Hospital Insurance
|
Medicare Levy
|
Medicare Levy Surcharge
|
|
Bill
|
44 500
|
No spouse
|
No
|
|
|
|
Sally
|
35 000
|
60 000
|
No
|
|
|
|
John
|
76 600
|
72 400
|
Yes
|
|
|
|
Fred
|
69 300
|
110 000
|
No
|
|
|
|
Allie
|
78 844
|
No spouse
|
Yes
|
|
|
Question 19. Offset:
Calculate Low Income Tax Offset (LITO) for the following taxpayers:
|
Name
|
Taxable income
|
LITO
|
|
Bill
|
14 500
|
|
|
Sally
|
35 000
|
|
|
John
|
56 600
|
|
|
Fred
|
69 300
|
|
|
Allie
|
78 844
|
|
Question 20 Calculate Tax:
Using the table of income tax rates, calculate the primary tax for the following taxpayers:
|
Name
|
Taxableincome
|
Residencestatus
|
Tax
|
|
Steven
|
34000
|
Resident
|
|
|
Martin
|
65400
|
Non-resident
|
|
|
Gary
|
65400
|
Resident
|
|
|
Russell
|
17500
|
Resident
|
|
|
June
|
17200
|
Non-resident
|
|
|
Harry
|
19750
|
Resident
|
|
|
Sharon
|
110930
|
Resident
|
|
|
Hanna
|
90320
|
Non-resident
|
|
|
Courtney
|
224864
|
Resident
|
|
Question 21 Motor Vehicle expense:
From the following information calculate the motor vehicle expense for Mr. John Schofield with all available alternatives and select the most appropriate option for tax purpose:
He bought a Honda Accord for $28,000 on 25th July 2013. It has an engine capacity of 2.6 litres. In the current financial year he has travelled 22,000 km in total. He has kept a log book that shows 18,000 km is for work purpose. He has incurred the following expenditures for the motor vehicle:
• Petrol: $1600
• Depreciation: $2812
• Registration: $350
• Insurance: $600
• Tyres and Battery: $1075
• Servicing: $525
He has all the records for expenses
Question 22 Depreciation expense:
Prepare a depreciation asset schedule for the following (use the worksheet provided):
|
Asset
|
Original cost
|
Opening adjustable value
|
Depreciation rate
|
|
Electric guitar
|
$3600
|
$1289
|
20% DV
|
|
Drum set
|
$3000
|
$550
|
10% PC
|
|
Electric keyboard
|
$4000
|
$961
|
30% DV
|
Question 23 Prepaid expense:
Tasty Delicatessen is a small business entity. On 1 June 2013, it made a payment of $24,000 to cover the lease of its business premises for a 12-month period commencing on 1 July 2013 and ending on 30 June 2014. How much the business can claim as a deduction for the lease payment in 2012 -13 income year? Briefly explain with relevant rule.