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HI6028 Taxation Theory, Practice & Law - Holmes Institute

Assessment - Case Studies of Specific Deductions and Tax Liability

Learning outcome 1: Demonstrate an understanding of the Australian income tax system, the concept of FBT, Ordinary Income, general anti-avoidance provisions and income tax administration.
Learning outcome 2: Identify and critically analyse taxation issues.
Learning outcome 3: Interpret the relevant taxation legislations and case law.
Learning outcome 4: Apply taxation principles to real life problems.

Question 1

Part A. Andrew is employed as a salesperson of a solar company. His employer requires him to travel extensively during the year for work-related purposes. With reference to relevant legislation, discuss the ways (methods) Andrew might be able to claim deductions for his car expenses

Part B. John, the owner of the solar company, purchased a Mercedes car and will be used 100% for business purposes on 1 November 2021 at a cost of $118,000 (inc GST) estimated to have a useful life of ten years.

Required: With reference to relevant legislation, discuss and calculate what amount is allowed as a deduction for the decline in value of the machinery and the car discussed above, using both prime cost and diminishing value methods

QUESTION 2

A new client, Mery, is your first client. She requires to lodge her income tax for 2020/21. Furthermore, she has done some charitable works this year. So, she wants to know about the legal provisions and asks what types of entities are exempt from income tax? Answer the question.

Furthermore, she gave her annual income and deduction below. Calculate her Total Assessable Income, Taxable Income, Total tax Liability, including Medicare Levy and Medicare Levy Surcharge, if applicable, for the taxpayer (Mery ) with the information below:
- Mery is a resident single mom with one dependent child (7 years old) taxpayer of Australia for the tax year 2020-2021
- Her Taxable Salary earned is $102,000 (Including tax withheld) having no private health insurance.
- She had a $7,000 deduction.
- Mery has a student loan outstanding for his previous studies at Queensland University technology of $42,000.
- Mery's employer pays superannuation guarantee charge of 10% on top of her salary to her nominated fund.
- Mery earned a passive income of $6,000 from the investments in shares in the same tax year.

Hint: The following website can be used to cross check your answers, but you need to provide the detailed calculations, rates and explanations with the screenshots of rates from ATO website.

Attachment:- Case Studies of Specific Deductions and Tax Liability.rar