This assignment is to be submitted in Word document only.
The method of referencing to be used in this assignment is the American Psychological Association (APA) referencing method. Additional information regarding this method is available through the library and the Academic Learning Centre.
Part A:
Your friend has got a job as a cadet journalist. He is writing a newspaper article on taxation matters and he has asked you to help him research some of the information he requires. He has given you a list of questions that he has to address in his article and he needs you to provide him with short answers to these questions and provide references so that he can check the answer if required.
1. Who is the chairman of the Board of Taxation?
2. What activities has the Board of Taxation been tasked with?
3. Where could information be found on the internet regarding the Australian Taxation Office and what they do?
4. Does the Taxpayer’s Charter allow the Australian Taxation Office to disclose your information to other parties? Under what circumstances would this be allowed to occur?
5. Which section of the Income Tax Assessment Act 1997 includes the value of allowances in assessable income? What is the title of this section?
6. What topic does Taxation Ruling TR 2015/2 discuss?
7. Who has the statutory responsibility for administering the Commonwealth tax system?
8. From where does the Commonwealth Government derive its power to make laws with respect to taxation?
9. What does ITAA36 stand for?
10. Is a definition of the term ‘income’ found anywhere in the tax legislation?
Part B:
Alex McLeod carries on business as a sole trader in Wollongong as a rural mechanic and farm machinery spare parts retailer. He is married and has one dependent child, a daughter aged 12 years, who attends a local school.
Details provided by the taxpayer for the 2015/16 year of income are as follows:
RECEIPTS:
$
* Sales of spare parts 100,000
* Charges for mechanical repair work 45,000
* Interest on joint savings account 2,800
* Interest on deposit with a United Kingdom
Bank (net of 10% United Kingdom withholding tax) 270
The joint savings account is in the names of the taxpayer and his wife. Interest amounting to $2800 has been earned on this account.
PAYMENTS:
1) Business
$
* Gross wages (casual employees) 8000
* Light and power 900
* Telephone and postage 1500
* Advertising 2300
* Purchase of farm machinery spare parts 44000
* Purchase of new custom-made toolbox roller cabinet 18 000
* Accountancy fees 7200
* Local Government rates on business property 2700
* Insurance on business premises and contents 2100
* Trade journals 300
* Sundry business expenses (all tax deductible) 11500
2) Personal
$
* School expenses for daughter 1200
* Donation to Australian Red Cross Society 100
* Membership subscription - Wollongong Apex Club 100
* Medical Expenses (net of Health Fund refunds)
Taxpayer $500
Wife 800
Daughter 650 1950
(McLeod has family cover in a private health fund, with hospital and ancillary cover. Premiums amounted to $2400 for the year)
STOCK ON HAND (farm machinery spare parts)
- at 30/6/2015 $16,000
- at 30/6/2016 $14,000
PLANT ON HAND AT 30/6/2015
Original Cost Opening adjustable value
1/7/15
$ $
Holden utility 24,000 12,400
Toyota land cruiser 26,000 18,000
Ford 2 tonne truck 34,000 16,000
Motor vehicle hoist (heavy vehicles) 70,000 21,000
Diesel engine emission tester 30,000 25,000
On 1st October 2015, the Holden Utility motor vehicle was traded in for $10,000 on a new Holden Commodore sedan motor vehicle costing $32,000. The new Commodore sedan has been used 40% for private purposes.
The taxpayer uses the diminishing value method of depreciation and uses the effective life determinations as specified by the Commissioner. All assets were purchased after 10 May 2006. The business has not elected to utilise the small business entity provisions.
Required:
(a) Determine the taxpayer's taxable income for 2015/16; and
(b) Calculate the income tax payable by the taxpayer for 2015/16 year of income.
In providing an answer to these questions you MUST also provide a discussion justifying the inclusion or exclusion of all items. Therefore, your answer will consist of both calculations and a discussion.