Reference no: EM132983214 , Length: word count:1500

HI6028 Taxation Theory, Practice & Law

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

An owner of a Cinema Hall, on ascertaining that a portion of the ceiling of the hall was in need of repairs, decided to replace the whole of the ceiling with different but better materials. The new ceiling, in addition to enhancing the appearance of the hall, improved the acoustics. The total cost of the material and of erecting the new ceiling was $320,000. It was estimated that the cost of repairing the ceiling would have been $220,000.

With reference to Income Tax Assessment Act 1997 and relevant case law, discuss the amount, if any, allowable as a deduction for income tax purposes.

Kindly use the four sections of:

1. Facts of the scenario
2. Relevant laws and cases
3. Application of laws and cases
4. Conclusion

(Maximum 800 words)

QUESTION 2

A new client, Mary, is your first client. She needs to lodge his income tax for 2021/22. Further, she wants to know about some tax-related provisions and practices. She asks some questions - what are the differences between taxable income, ordinary income, and statutory income? What types of ordinary and statutory income do not constitute assessable income? (Maximum 700 words)

Furthermore- She gave her annual income and deduction below. Calculate her Total Assessable Income, Taxable Income, Tax Liability, Medicare Levy and Medicare Levy Surcharge, if applicable, for the taxpayer (Mary) with the information below:

- Mary is a resident single mom with one dependent child (4 years old) taxpayer of Australia for the tax year 2021-2022
- Her Taxable Salary earned is $110,000 (Including tax withheld) having no private health insurance.
- She had a $12,000 deduction.
- Mary has a student loan outstanding for his previous studies at Queensland University of $32,000.
- Mary's employer pays superannuation guarantee charge of 9.5% on top of her salary to her nominated fund.
- Mary earned a passive income of $5,000 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 detailed calculations, rates and explanations of rates from ATO website.

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