Reference no: EM132397598

FNSACC512 Prepare tax documentation for individuals, Monarch Institute Australia

Q1.1.5. (Application of Medicare Levy using family thresholds)

Required: For each taxpayer, calculate their liability for Medicare Levy.

The following persons are resident taxpayers who are not liable for the Medicare Levy Surcharge. The information given relates to the2016/17tax year:

a. Glenn derived taxable income of $22,000 and his wife Rowena derived taxable income of $6,000. They do not have any children.

b. Kath derived taxable income of $41,000 and her husband Fred derived taxable income of $18,000. They have three dependent children.

c. Beck derived taxable income of $29,000 and her de facto partner Roy derived taxable income $40,000. They have four dependent children.

d. Will derived taxable income of $36,000 and his wife Tina derived taxable income of $22,000. They have twodependent children.

Q2.1.19.  (Tax calculation for family)

Fred, a resident taxpayer aged 47, has taxable income of $145,345 and reportable fringe benefits of $17,170. During the year Fred has paid PAYG tax instalments totalling $13,480. His wife, Jani, has taxable income of $27,000.

They have seven children and no private health insurance.

Required: Calculate Fred’s net tax payable for the 2017/18 tax year.

Q3.2.3 (Income from personal exertion)

Ned Markson is a resident taxpayer employed by Acme Holdings Ltd. The following transactions were all as a consequence of Ned’s employment:

• Net weekly wages totalled $78,000 for the year.

• Total PAYG tax withheld from Ned’s weekly wages from Acme and forwarded to the ATO amounted to $19,000.

• Additional wages paid to Ned as a Christmas bonus of $6,000 net (net of $4,200 PAYG tax withheld).

• Reimbursement of out-of-pocket travel costs of $1,200 that Ned incurred during his employment.

• A taxable travel allowance totalling $2,800. No PAYG was withheld from this amount.

• Acme paid health insurance premiums for Ned and his wife to the value of $2,750, as an employment fringe benefit.

• Superannuation contributed $10,000 to Acme Holdings Superannuation Fund on behalf of Ned.

Required:

For each of these transactions indicate which amounts are to be included in Ned’s assessable income and provide Ned’s total assessable income.

Q4.2.13 (Calculation of tax payable from dividend income)

Jim Dough, a single resident taxpayer, received the following amounts from investments during the 2017/18 tax year:

Fully Franked Dividends – Dynamic Ltd (franking credit $9,000)   $ 21,000

Partly Franked Dividends – Static Ltd (franking credit $2,400)    15,000

Unfranked Dividends – Lost Ground Ltd                                  20,000

Jim had no other income or deductions during the year.

Required:

a. Calculate Dough’s taxable income for the 2017/18 tax year.

b. Calculate Dough’s net tax payable or refundable for the 2017/18tax year.

Q5.3.5 (Taxable income from Australian and foreign sources)

Yvette Jankic, a resident single taxpayer aged 31, worked in New Zealand from 1 July 2017 until 15 November 2017and has provided the following information for the 2017/18 tax year:

Receipts	$
Interest (net of TFN tax withheld$490)	510
Interest from United Kingdom (net of withholding tax$300)	2,700
Dividend from the U.S. state of Georgia (net of withholding tax$2,100)	3,900
Gross salary - Australian employment (PAYG tax $5,285withheld)	21,000
Reportable fringe benefit as per PAYGSummary	6,252
Net salary - New Zealand employment (tax withheld$2,540)	12,650
Bonus from Australian Employer for exceptionalperformance	2,000

 

Payments	$
Interest and Dividend deductions relating to United KingdomandGeorgiainvestments	250
Work-related deductions relating to Australian employment	300

Required:

a. Calculate Yvette’s taxable income for the 2017/18taxyear.

b. Calculate Yvette’s net tax payable or refundable for the2017/18taxyear.

Q6.4.3 (Disposal of twoassets)

On 10 April 1988, Penny Pleb, an Australian resident, purchased a block of land for $74,000 as an investment. On 19 February 2018, she sold the land for$125,000.

Penny also sold shares in Prosperous Ltd for $32,000 on 1 August 2017. The shares had cost Penny $8,000 on 17 July 2009. Penny did not dispose of any other assets during the year, nor did she have any capital losses from previousyears.

Required:

Calculate the minimum net capital gain for the 2017/18 tax year. Use a combination of the indexed and discount methods, where allowed.(Show your workings).

Q7.4.15 (Losses with indexedgains)

Brad Emerson, a resident taxpayer, sold the following CGT assets during the 2017/18tax year:

ASSET	COST BASE	ACQUISITION DATE	DISPOSAL DATE	SALE PRICE
Shares -AAA	$48,000	19 Jan87	20 Feb18	$71,000
Shares -BBB	$62,000	30 May06	17 Apr18	$77,000
Shares -CCC	$49,000	8 Jun10	24 Mar18	$35,000

Required:

Calculate the minimum net capital gain for the 2017/18 tax year. Use a combination of the indexed and discount methods, where allowed. (Show your workings).

Q8.4.37 (Partial main residenceexemption)

Benita Ford, a resident taxpayer purchased a house on 30 June 2008 which she used as her main residence for 2 years until 30 June 2010. She then leased the property to tenants for 8 years until the property was sold on 30 June 2018. Benita will apply the main residence exemption for 6 years of thisperiod.

• The house was originally purchased for$420,000.

• The market value of the property on 30 June 2009 was $475,000.

• The house was sold for$705,000.

Benita did not dispose of any other assets during the 2017/18 taxyear.

Required:

Calculate Benita’s Net Capital Gain in respect of the 2017/18tax year (after allowing for the partial main residence exemption).

Q9.5.29 (ForeignPension)

Elizabeth Windsor is 59 years old. She is a resident taxpayer with private health insurance. She also received a government pension from the United Kingdom that is taxable in Australia but not in the United Kingdom. Elizabeth is subject to tax as an Australian residenttaxpayer but exempt from tax in the United Kingdom.

During the 2017/18 tax year, Elizabeth derived interest and unfranked dividends of$39,000 and also received $25,000 of pension.

Required:

a. Calculate Elizabeth’s taxable income for the 2017/18 taxyear.

b. Calculate Elizabeth’s tax payable or refundable for the 2017/18 taxyear.

Q10.5.3 (Superannuation lump sum, low capamount)

Stan Eckhardt, aged 57, received a superannuation lump sum of $310,000 from his superannuation fund upon retirement on 15 April 2018. PAYG tax of $28,170 was withheld from the lump sum. The lump sum comprised entirely of an element taxed in the fund.

Stan also received gross wages of $85,000 up to the date of his retirement.  PAYG tax of $22,110 was withheld from Stan’s wages. Stan has adequate private health insurance.

Required:

a. Calculate Stan’s taxable income for the 2017/18taxyear.

b. Calculate Stan’s net tax payable or refundable for the 2017/18taxyear.

Q11.5.5 (Superannuation lump sum and income stream)

On 14 August 2017, Tammy Gochi, aged 53, retired from her job as chief executive officer of Megacorp Limited to commence service as a volunteer for Whalepeace International. She received a superannuation lump sum of $160,000 which entirely comprised an element taxed in the fund. PAYG tax of $34,500 was withheld from the lumpsum.

During the remainder of the 2017/18tax year, Tammy also received a superannuation income stream benefit of $40,000 from the fund. PAYG taxof$9,780 was withheld from this amount. The entire amount was taxed in thefund.

Tammy’s only other income during the 2017/18 tax year was gross salary of $36,290 for the period up to the date of her retirement. PAYG tax of $9,035 was withheld by her employer. Tammy has private hospitalinsurance.

Required:

a. Calculate Tammy’s taxable income for the 2017/18 taxyear.

b. Calculate Tammy’s net tax payable or refundable for the 2017/18taxyear.

Q12.6.5 (Small business asset pool,additions)

Gwyneth is a resident, individual small business taxpayer. As at 30 June 2017, she had a General small business pool balance of $41,800.
During the year Gwyneth purchased an asset for $34,800 with an effective life of 5 years and another asset for $40,400 with an effective life of 30 years.

There were no disposals during theyear.

Required:

a. Calculate any amounts that are deductible for the 2017/18 tax year.

b. Calculate the closing balance of the asset pool.

Q13.7.1 (Identification of tradingstock)

Required: Identify which of the following would be classed as trading stock under Section70-10:

(a) Pairs of shoes held by a retailer for resale.

(b) Shares held by aninvestor.

(c) Blocks of land held by a propertydeveloper.

(d) Clothing held by a retail clothes shop, currently under lay by.

(e) Petrol held in underground tanks by a servicestation.

(f) Raw materials held in store by amanufacturer.

(g) Stationery supplies held for office use by an insurance company.

(h) Videos held for hire by a videostore.

Q14.8.13 (Business deductions for employing others)

Zac Harris operates a retail outlet selling kitchen utensils. During the 2017/18 tax year, Zac had the following transactions relating to hisemployees:

(a) Zac paid net wages to his employees totalling$215,000.

(b) As at 30 June 2018, there was one week’s worth of wages that remained unpaid amounting to $4,500. Zac made a journal entry accruing this amount as an expense.

(c) Zac deducted $74,000 of PAYG tax from his employee’s wages. Of this amount, $9,000 was paid on 5 July2018.

(d) Zac paid a retiring employee $7,000 of annual leave entitlements on termination.

(e) Zac paid an employee a redundancy payment of $15,000. The employee had given 7 years’ service toZac.

(f) Zac provided for an increase in annual and long service leave of$8,500.

(g) Zac paid travel allowances amounting to$3,400.

Required: Identify which amounts are allowed as deductions for Zac’s business forthe 2017/18taxyear.

Q15.9.1 (Tax relatedexpenditure)

Required: For each of the following resident individual taxpayers, calculate the amount that they would be entitled to claim as a deduction for the 2017/18 tax year:

(a) On 10 August 2017, Dennis paid $100 to Australia Post to lodge his income tax return via Tax PackExpress.

(b) Daniel paid three PAYG tax instalments of $6,000 each in October 2017, January2018and April2018.Solution: Amount of PAYG tax instalment of $18000 will be reduced from tax payable and can be deduction from income.

(c) On 24 August 2018, Wilson paid his tax agent a fee of $300 for preparing his 2017/18 income tax return during July 2018.

(d) On 5 October 2017, Hope paid her cousin who is studying to be anaccountant $200 to prepare her 2016/17 income taxreturn.

(e) During the year, Jacqueline paid a total of $42,000 in payroll tax.

(f) On 15 April 2018, Josh paid $13,600 in fringe benefitstax.

(g) During the year, Krystal travelled a total of 400 kilometres in her 2,800cc Ford Falcon driving to her tax agent for meetings involving tax planning and attending to her income tax and fringe benefits tax returns. She did not use her car for any other work- or business-related trips during theyear.

(h) On 15 February 2018, Raelene paid $11,800 land tax on her business premises.

(i) On 27 January 2018, Dirk paid $18,900 in NSW land tax on his family’s holiday house. He did not use this property for business or producing rentalincome.

(j) On 1 August 2017, Troy paid his solicitor $700 to prepare a submission to the Administrative Appeals Tribunal relating to his 2014 income tax assessment which Troy wasdisputing.

(k) On 15 March 2018, Leonie paid $7,000 on her 2017 income tax assessment. This amount included $6,000 of income tax, $800 of penalties and $200 from the shortfall interestcharge.

Q16.9.21 (Calculation of deductions – business taxpayer)

Ricky Falzano conducts business operating a waste removal service and has provided the following data in respect of the 2017/18taxyear:

INCOME
Gross Income	$1,638,940
EXPENDITURE
Net Wages paid toemployees	743,900
PAYG tax withheld from employees'wages	296,720
PAYG tax instalmentspaid	87,845
Fringe Benefits Taxpaid	5,155
Entertainment of employees (subject toFBT)	5,380
Entertainment of clients (not subject toFBT)	9,235
Annual leave paid	14,780
Annual leave provided	5,560
Rent paid to Ricky's brother for the businesspremises	137,000
Payroll Tax paid	19,430
Employees superannuationcontributions	98,020
Personal superannuation contributions forRicky	50,000
Superannuation Guarantee Chargepaid	11,315
Other overheadspaid	69,330

Note 1 – The market value of rent for the business premises was$65,000.

Note 2 – The deduction available to Ricky for decline in value on his equipment and office fittings was$46,780.

Required: Calculate Ricky’s taxable income for the 2017/18taxyear.

Q17.10.3 (Application of decline in valuemethods)

On 1 July 2017, Di Lifter commenced business operating a retail nursery. Di chooses to apply her own estimates of effective life to various assets purchased during her first year oftrading.

Required:

For each asset, calculate only the deduction for decline in value available to Di forthe 2017/18taxyear.

Q18.10.15 (Disposal of depreciatingassets)

Required: The following are all resident taxpayers. In each case, calculate the deduction available for decline in value as well as any assessable income (if any) arising from the disposals during the 2017/18taxyear.

(a) Trevor sold shop fittings from his retail store on 31 October 2017 for $3,700. The fittings had originally cost $5,600 and were depreciated using the diminishing value method using an effective life of 10 years. The opening adjustable value was $4,000 on 1 July 2017. The fittings were originally purchased in 2010/11. Decline in value on Trevor’s other assets was$15,000.

(b) Hannah sold equipment from her factory on 31 May 2018for $9,200. The equipment had originally cost $11,000 and was depreciated using the prime cost method using an effective life of 5 years. The opening adjustable value was $6,000 on 1 July 2017. Decline in value on Hannah’s other assets was$1,700.

(c) Joe sold office equipment from his law practice on 1 November 2017for $600.  The office equipment had an original cost of $1,800 but was added to the low value pool in 2015 when it became a low value asset. The low value pool had an opening balance of $3,500 and there were no additions to the pool during the year.

(d) Tommy, an employee of Kwikee Couriers, sold a phone on 15 May 2018for $50. He had purchased the phone in 2016 for $250 and had claimed the full cost of the phone as a deduction in that year.

Q19.11.15 (Various off sets-refundable and non-refundable tax off sets)

Meghan Royal, is a resident taxpayer aged 57, had the following transactions for the 2017/18 taxyear:

RECEIPTS
Income Stream Benefit from a taxed superannuationfund (no PAYG tax waswithheld)	$17,000
Gross Wages (PAYG tax withheld$1,500)	22,000
Fully FrankedDividends	4,900
PAYMENTS
Private Health Insurance (reduced premium nottaken)	3,000

Meghan did not have anydeductions.

Meghan also wholly maintained her father Phillip for the whole year. Phillip did not have any adjusted taxable income and was not eligible for any governmentpensions.

Required:

a. Calculate Meghan’s taxable income and

b. Net tax payable for the 2017/18 taxyear.

Q20.12.7 (Tax losses, partner inpartnership)

The following data relates to Stephanie Garner, a resident taxpayer. Stephanie derives income from a public relations business and is also a partner in a marketing business.

	2015/16	2016/17	2017/18
Assessable businessincome	$93,400	$126,000	$133,400
General businessdeductions	80,000	129,000	119,200
Share of Partnership NetIncome(Loss)	(21,800)	14,900	(5,600)
Superannuation andGifts	4,000	11,000	8,000
Net exemptincome	1,500	3,000	2,000

General business deductions are separate from personal superannuation, gifts, partnership losses and losses of previousyears.

Please assume that the necessary tests have been satisfied such that any partnership losses from Stephanie's share in the marketing business may be deducted from other income as appropriate.

Required: For each year, determine Stephanie’s Taxable Income and any lossesthat may be carriedforward.

Q21.13.3 (Investor, capitalgains)

Karl Kruger is a 38-year-old single Australian resident taxpayer. During the 2017/18tax year, Karl received and retained the followingrecords:

Account Summary received from XYZ Bank
Interest from Term Deposits	$17,200
Interest from Savings Account	350
Bank Charges relating to Term Deposits	40
Interest charged on line of credit (used for personal expenses)	715
4 February 2018Dividend Statement from Eccy Ltd
Franked Dividend	2,100
Franking Credits	900
Rental Summary from Hawkeye Real Estate
Gross Rent Received	15,200
Rentalexpenses:
Agent's Commission	920
Council Rates	1,490
Landlord Insurance	290

Other Information:

• Karl’s rental property was built in 1999 when total construction costs of $200,000 were incurred. Karl has owned and leased the property since 2009.

• Karl made mortgage repayments on his rental property of $20,000, of which $12,100 was principal.

• Karl also sold the following assets during the year:

Required:

a. Calculate Karl’s net capital gain/loss for the 2017/18taxyear.

b. Prepare a statement calculating Karl’s tax payable/refundable

Q22.14.1(Regulatoryframework)

Required:

Explain the function of the Tax Agent Services Act 2009 (TASA) and the Tax Agent Services Regulations 2009(TASR)?

Q23.14.9 (Tax Avoidance)

Required:

What are the three necessary criteria for the anti-avoidance provisions of part IVA ITAA36 to apply?