Reference no: EM13552706

Part One: Income tax rates

Martha is a resident who is 40 years old and has $170,000 of taxable income for the current income year. Calculate her basic income tax liability.

Part Two: Ordinary income

In 1979, a doctor who lived and worked in Sydney purchased a 20 acre parcel of rural land on the outskirts of the city for $100,000. Over the years, he used the property as a “hobby farm” for growing “fruit trees” and as a “weekend retreat” for relaxation. Recently, the surrounding area has become more developed and the property has increased in value substantially. The doctor has also recently run into financial difficulties as a result of a malpractice suit and he is considering selling the property.

Advise him as to whether he would be required to include any amount in his assessable income as a result of the sale.

Part Three: General deductions

Compare the decision in FC of T v Anstis (2009) with the decisions in Lunney and Hayley v FC of T (1958) and FC of T v Maddalena. Is it possible to reconcile the outcomes in these cases?

Part Four: Provisions that deny or limit deductions

Discuss some of the circumstances in which entertainment expenditure is deductible?