Is the holiday assessable income

Assignment Help Taxation

Reference no: EM133261383

Assignment:

1. Which of the following statements is correct?

a. Income tax is payable by each individual and company, and by some other entities (s4-1 ITAA97).

b. Income tax must be paid for each 'financial year' defined by s.995-1 ITAA97 as the year commencing 1 July and ending 30 June (s.4-10 ITAA97).

c. Income tax must be calculated by reference to the 'taxable income' derived by a taxpayer during the 'income year' (s.4-10(2) ITAA97).

d. The amount of income tax payable is calculated by multiplying the taxpayer's taxable income by the applicable tax rate and then subtracting tax offsets (s.4-10(3) ITAA97).

e. All of the above.

2. Steven writes a book and owns the copyright to it. A publisher who wishes to publish and sell Steven's book offers to give him $20 per sale in consideration for Steven selling the copyright to the publisher. The amount received by Steven will constitute a royalty and therefore assessable.

a. True

b. False

3. Establishing that there is a nexus between the amount received and the work performed is not an essential element for determining whether the receipt is ordinary income under 6-5 of the ITAA97.

a. True b. False

4. David and Shane sell insurance. As an incentive, the insurance company gives them a free holiday in the amount of $5,000 when they achieve a certain amount of insurance policies in a financial year. The holidays are non-transferrable and therefore cannot be sold. Is the holiday assessable income?

a. The holiday is assessable income.

b. The holiday is not assessable income.

Reference no: EM133261383

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