Reference no: EM133258395
1. Individuals are subject to a progressive tax rate structure, whereby the taxpayer's tax burden increases as their taxable income increases.
a. True
b. False
2. A well-known soccer player was paid a lump sum of $400,000 to encourage her to join a sport TV talk show. He accepted the offer and received an annual salary of $100k in addition to the lump sum payment. Which of the following statements is true:
i. ii. iii.
a. b. c. d.
The lump sum payment of $400,000 is assessable income.
The lump sum payment and annual salary are assessable income.
The annual salary is assessable income and the lump sum payment is not assessable income.
(iii) iscorrect
(ii) is correct (i)iscorrect
(i) and (ii) are correct
3. A receipt is not ordinary income if it is not a product of employment or a reward for services.
a. True
b. False
4. Can the States pass laws concerned with taxation?
a. Only the Commonwealth can passl aws concerns with taxat ion.
b. States can pass laws concerning taxation so long as it is consistent with the provisions of the Constitution.
5. On 1 December, Jane, 18-year old American student arrives in Sydney on 1 January to study a Bachelor of Accounting degree at IMC. She works part-time in a local restaurant to help pay her way. Her earnings to 30 June are $10,000. Unfortunately she does not spend enough time studying and fails all her subjects. This leads to her return home on 1 December. Did Jane become an Australian resident for tax purposes?
a. Yes,JanebecameanAustralianresidentfortaxpurposes
b. No, Jane did not become an Australian resident for tax purposes
6. Under which provisions of the Constitution can the Commonwealth pass laws with respect to taxation?
a. Section52(iii) b. Section 51(i) c. Section51(ii) d. Section 52(ii)
7. Which of the following statements is correct?
a. Incometaxispayablebyeachindividualandcompany,andbysomeother 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. Incometaxmustbecalculatedbyreferencetothe'taxableincome' 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. Alloftheabove.
8. 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
9. Jodie is a resident nurse who derives Australian source employment income during the period 1 July to 31 December of $30,000. She also derives employment income from Canada of AUD$40,000 during the period 1 January to 30 June, with appropriate tax being deducted from the salary in Canada. Jodie has private patient hospital cover. What is Jodie's net tax payable, including Medicare levy, if applicable?
a. $6,567.28 b. $6,577.28 c. $6,577.82 d. $6,557.28
10. Some of the main factors the courts look for in determining the Australian tax residence of a person include:
a. theextenttowhichtheyarephysicallypresentinAustraliaintheyearof income
b. the frequency, regularity, and duration of their visits
c. whethertheymaintainapermanentplaceofabodeinAustraliaoroverseas
d. where they maintain their family and business ties
e. alloftheabovearecorrect.
11. Legal expenses incurred by a company to provide general legal advice is an allowable deduction under s8-1 of ITAA97.
a. True
b. False
12. 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
13. 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. Theholidayisassessableincome.
b. The holiday is not assessable income.
14.The High Court in the case of Scott v FC of T determined that:
a. amountsthataremeregifts,suchasthegiftofalargesumofmoneyMr Scott received from his friend who was a widow and the wife of a former client, are not considered to be ordinary income
b. amounts that are gifts must always be treated as 'ordinary income'
c. amountsthataremeregifts,suchasthegiftofalargesumofmoneyMr Scott received from his friend who was a widow and the wife of a former client, are fully tax deductible to the person making the gift
d. None of the above.
15. Which of the following statements is correct?
a. Gainsthatareordinaryincomewillbeassessableincomeunders6-5of ITAA 1997.
b. Gains will be ordinary income if they are the type of gains that courts of law consider to be of an income character.
c. Againthatcomesinregularly/periodicallyismorelikelytobeordinary income than a lump-sum gain.
d. Whether or not a gain arises from an illegal activity does not affect whether it is ordinary income.
e. Alloftheab