QUESTION 1:
Please read Taxation Ruling TR 2009/5 and answer the following questions. Taxation Ruling TR 2009/5 can be found on the ATO website at www.ato.gov.au .
(a) Seller Pty Ltd makes a payment of $10 000 to Buyer Pty Ltd to cover the cost of in-store promotional activities relating to its products. What is the appropriate tax treatment of the payment in the hands of both Buyer Pty Ltd and Seller Pty Ltd?
(b) Seller Pty Ltd provides a volume rebate discount of 10% when Buyer Pty Ltd purchases more than $50 000 worth of product in a calendar month. Buyer Pty Ltd has qualified for this discount ten times in the past twelve months. What are the tax implications of the information given in (b) above?
QUESTION 2:
Jojo spends between 15-20 hours per week writing blogs about saving money. She has a part time job to supplement her income, teaching money management at evening classes and works Wednesdays and Thursdays at the local cafe. Jojo does not have a formal business plan but tries very hard to promote her blogs. She is widely known and recognized in her local town because some of her blogs are printed as columns in the local newspaper. She has won four prizes from writing competitions. Jojo has a Master’s degree in creative writing graduating two years ago. In the two years since graduating she has earned advertising revenue from her blog sites amounting to between $8,000 and $10,000 per year with her writing related expenses typically around $6,000 a year. Jojo works from a granny flat on her property and all her blogs are kept on sites which she actively promotes through social media. Jojo is a diligent bookkeeper and keeps record of all her writing related income and expenses. She is a member of two professional writing associations and has been reviewed on a number of other websites to which she is unrelated.
Required:
Discuss the factors that will be taken into consideration by the ATO in determining if Jojo is conducting a business or not and their likely decision.
QUESTION 3:
Brigitte arrives in Australia on 30 December 2015 from Germany. She is enrolled in the Master of Accounting program at a Brisbane university. She comes to Australia from Germany with the intention of studying for two years in Australia. She manages to get a part-time job working in a restaurant with one of her friends. Brigitte lives in a flat near the university that she shares with two of her classmates. Brigitte has an active social life and is part of a close knit community of theatre enthusiasts. Brigitte excels in her studies and is well-liked by her friends and patrons of the restaurant where she works. Unfortunately, Brigitte’s mother is struck down with a serious illness and she has to return to Germany on 30 June 2016 to care for her. This means she has to leave her university studies and friends behind and will be unable to return.
Required:
Advise Brigitte as to whether she will be a resident of Australia for income tax purposes for the 2015/16 income year.