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HA3042 Final supplementary exam

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HA3042 Taxation Law Supplementary Exam

Question 1                                                                                                                                                                                                                                                                                                                                                                                                                    (7 marks)

Kuldeep Singh just bought an Indian restaurant (goodwill) from Manpreet for the amount of $750,000 and on top of that Kuldeep also paid Manpreet $100,000 for Manpreet to agree not to open another Indian restaurant for the next three (3) years. Kuldeep also pays $30,000 for Manpreet to advertise Kuldeep’s restaurant on Manpreet’s car.

Required:

How much “Ordinary Income” can Manpreet earn from the above scenario?  

ANSWER:  ** Answer box will enlarge as you type

Question 2                                                                                                                                                                                                                                                                                                                                                                                                                    (7 marks)

Chanda is employed in a local accounting company (ABC accounting) that specialises in providing tax return to individuals. On 1st April, 2020 ABC provided a car for Chanda to use both for business and private purposes.

ABC Purchased the car on 1st January, 2020 for the amount of $28,000. During the year, repairs and maintenance costs amounted to $2,000. Chanda contributes $1,000 towards the cost.

Required:

Please calculate the fringe benefits taxable (FBT) amount for the car using the statutory method in this case for the FBT year 2020-2021.

ANSWER: 

Question 3                                                                                                                                                                                                                                                                                                                                                                                                                    (7 marks)

Green Garden Services Pty Ltd was incorporated in July, 2015 in Brisbane to provide lawn care services. The business turnover is approximately $150,000. On Saturday afternoon Green Garden provided gardening services to one of their clients for the amount $1,100.

Required:

What are the GST consequences for Green Garden?

ANSWER: 

Question 4                                                                                                                                                                                                                                                                                                                                                                                                                    (7 marks)

Required:

Explain the purpose of the Pay As You Go (PAYG) system. What is the difference between PAYG Withholding and Instalments? How does PAYG impact income tax payable?

ANSWER: 

Question 5                                                                                                                                                                                                                                                                                                                                                                                                                 (11 marks)

Harmeg Pty Ltd acquired a new machine (depreciating asset) at a cost of $6,600,000 (inc.

GST) on 1st October, 2019 which has an effective useful life of five (5) years. Harmeg decided to use the diminishing value method (DVM) for this particular machine and Harmeg is not a small business entity.

Required:

Please calculate the decline in value for the year ended 30 June, 2020. Please take into account the fact that 2020 is a leap year.

ANSWER: 

Question 6                                                                                                                                 (11 marks)

Sea Lion Ltd supplies a wide range of scuba diving equipment. Sea Lion Ltd derives Australian sourced income for the current tax year comprising net income from trading of $80,000, franked distribution from public companies amounting to $14,000, (carrying an imputation credit of $6,000), unfranked distributions from resident private companies amounting to $16,000 and rental income of $46,000. Sea Lion also has total deductions of $25,000 for the period.

Required:

Calculate the net tax payable by Sea Lion Ltd for the year ended 30 June, 2020. (Assume the company tax rate is 30%)

ANSWER: 

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