Tax law casestudy questions and answers

Question 1 (10marks)

During the income year ended 30 June 2019/20 Nicholas, a resident, received salary and wages income of $35,000, interest income of $3,000, an exempt compensation payment of $23,000, commission income of $4,000, a Living Away from Home Allowance (LAFHA) of $20,000, an Overtime Allowance $2,000 and a rental loss of $9,000. Assuming that he has PAYG (W) of $6,000. Ignore tax offsets.

Required: what is Nicholas tax payable / refund (Please show all workings)?

Question 2(10 marks)
The Disco Biscuit Company is a resident company that owns and operates a car dealership. During the year, the company has provided the use of a car to a number of people. The details are shown below. For each of the below transactions, explain by referencing to legislation and case laws applicable whether the provision of the vehicle represents a fringe benefit.

a. Mary, the wife of Damon who is a salesperson of the company, received a car to use.

b. Gabby operates the business of providing an advertising consulting services to clients. The Disco Biscuit Company gives Gabby the use of a Mercedes for her services provided to it instead of paying a fee for her service upon their mutual agreement.

c. Nigel, a salesperson, receives the use of a Lexus, a luxury car.

d. Tristan, the managing director, is given the use of a Jaguar (car) instead of receiving a director’s fee.

Question 3 (10 marks)
During the 2019/20 income year, Maxwell Johnson, sold various assets that realized capital gains and losses as follows:
Items Amount ($)
Loss on sale of motor vehicle 5,600
Gain on sale of yacht (cost base not indexed) 21,900
Gain on sale of antique crockery (indexed cost base) 13,900
Loss on sale of jewelry 1,300
Gain on sale of land held as an investment (cost base not indexed) 24,000
Gain on sale of family home (cost base not indexed) 38,000
Loss on sale of shares 19,300
Gain on sale of rental property (indexed cost base) 21,000
Gain on sale of rare comic book collection (cost base not indexed) 7,500
Capital loss from a previous year from the sale of shares 6,400
In each case above, the asset has been held by Maxwell for more than 12 months and the relevant minimum cost thresholds have been exceeded.
Required: calculate the minimum net capital gain that Maxwell is required to include as assessable income for the 2019/20 income year.

Type of service-Academic paper writing
Type of assignment-Case study
Pages / words-4 / 1100
Number of sources-4
Academic level-Senior (College 4th year)
Paper format-Harvard
Line spacing-Double
Language style-AU English

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