Principles Of Taxation Law 2024 1st Edition Jared Clements - Solutions

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The state revenue office has issued payroll tax assessments against myTaxi, a ride- sourcing service, in relation to the payments made to its drivers. Based on the following facts, what would be the basis for arguing that the payments are “wages” and on what grounds might myTaxi object against
Midcity Electrical Services Pty Ltd has the contract to deliver and install NBN equipment to customers of ATG Telecom, an Australian telecommunications company and internet service provider. Midcity hires contractors to deliver the equipment and undertake any necessary installation services. Once a
Simon is a consultant with Amcare, a global organisation that sells products through its online store. Simon is paid by Amcare on a commission basis (so a percentage of the value of goods sold to Amcare customers) and works the days and times that suit him. He is responsible for all personal costs
Retail Therapy Pty Limited is in the business of running discount gift shops. Its business model is to hold each shop in a separate subsidiary and the shop assistants are employed by the subsidiary rather than Retail Therapy. The average total wages paid by one of these shops over the course of a
Glen is a citizen of Country M but has many Australian customers for his company’s products. As most of these customers are located in Melbourne, Glen buys an apartment for $600,000 there that he stays in when on business. Assuming that Glen stays in the apartment for 190 days in the current land
Sarah is the owner of a private residential dwelling located in Tasmania(Property A). The taxable value of Property A is $300,000. Sarah resides in Property A as her PPR for one year (in 2020) and then buys another residential dwelling in Tasmania (Property B), which she subsequently uses and
Calculate the land tax payable (if any), in respect of the following landholdings and outline whether any relevant exemptions from land tax could apply:(a) Alison owns two farms located in rural New South Wales, being for the predominant use of growing crops for commercial sale. The taxable value
Following on from question 26.2, Joseph is the brother of Barry.Joseph’s step- father owned three units in a private unit trust. The total number of units on issue in the unit trust is four. The other unit was held by Joseph’s uncle. It was discovered, when Joseph’s step- father passed away,
Barry is a registered builder and decides to purchase shares in a private company registered in Victoria (X Pty Ltd). X Pty Ltd holds land in both Queensland and South Australia. The value of the land in those states is as follows: Queensland: $10,300,000 and South Australia: $500,000.The total
Calculate the transfer duty payable in respect of the following transactions that occurred:(a) Jack acquires a factory in New South Wales for $1,300,000, together with plant and equipment having a value of $750,000.(b) Mary acquires a beauty salon business in Victoria for $2,200,000, comprising the
Naiyong is an engineer. She recently purchased a new guitar from a retailer in Singapore as the guitar was not sold in Australia. The guitar is for her personal use. It cost A$3,000 and was shipped directly to Naiyong’s home. Naiyong also purchased a rug from Amazon US for A$150. The rug was not
Windows R Us is a large window manufacturing company in Australia.The company accounts for GST on an accruals basis and submits its BASs monthly. The company supplies windows for office buildings across Australia. On 15 March, the company sold windows valued at$44,000 (including GST) to be used in
Following on from Question 25.5, New Developments sold one of the apartments in the newly converted warehouse for $550,000. It also sold one of the apartments in the established apartment building for$500,000.Advise New Developments of its GST obligations arising from the sale of the apartments.
New Developments Pty Ltd (New Developments) is a property investment and development company. Recently, New Developments purchased an old warehouse which it is converting into apartments for sale. New Developments also owns an established apartment building, which it rents out to tenants. In the
Big Bank Ltd operates nationally with more than 50 branches, a 10-storey head office and numerous call centres. It is registered for GST purposes. Big Bank has for many years provided loans and deposit facilities to customers in Australia. Last year it launched a new product, Big Bank home and
BP Pty Ltd is a large company incorporated in Australia. BP is registered for GST purposes. The company sells tractors for $55,000 each (including GST). It purchases the tractors from China for$45,000 each, and the tractors are shipped to BP at an additional cost of $2,000 each. BP also sells
Mackenzie is a talented photographer. She specialises in taking photos of dogs in Australia. Her photos sell for between $300 and $1,000 and she usually earns at least $2,000 per month from the sale of her photos.One reason her photos are so popular is because of the quality of her prints. She only
Advise whether the following would be considered “taxable supplies”,“GST- free supplies” or “input tax supplies” (you may assume that the supplies are made by an entity located in Australia and registered for GST purposes and that the supplies are made for consideration in the
Sam works on a full- time basis for WonderWorks, which pays him a salary on a monthly basis. Sam also derives significant investment income from shares he inherited from his grandmother. Sam has just received a notice of a PAYG instalment rate from the ATO. Explain how the PAYG system will apply in
Over the last income tax year, Kate sold her investment property and made a capital gain of $50,000. When preparing her income tax return, Kate inadvertently omitted the gain. A Notice of Assessment was issued and one year later, Kate received a letter in the mail from the Commissioner of Taxation
Mary Jones is an accountant and registered tax agent who specialises in small business clients, especially those running restaurants and cafes.As part of joint investigations of the ATO and the AFP, Mary has been identified as a potential facilitator of tax evasion. In particular, evidence suggests
ABC Lumber Pty Ltd mills Australian grown timber and sells it wholesale to other businesses as well as on a retail basis to individual customers.Bill is in the business of making custom designed timber furniture and has taken delivery of some recycled timber from ABC, with payment due in 90 days.
Elizabeth Wilson prepared and lodged her income tax return on 1 October. On 10 October, she received notice that she was entitled to a$120,000 distribution from a family discretionary trust in relation to the prior year. She assumed the trustee paid the tax on her behalf, but in case this was wrong
Robert Jones consults a local registered tax agent, Pam, in relation to his tax affairs. He has invested in an olive- growing scheme which did not have a PR. Robert gave details of his tax affairs, including expenditure in the scheme, to the Pam in August. Pam did not lodge Robert’s return until
Ten officers from the ATO arrive unannounced at the premises of BDE Ltd, a firm of chartered accountants which specialises in promoting agricultural tax investments. The ATO copies the entirety of the hard disk of the chief accountant and, as a result, copies and removes advice prepared by BDE on
Phil is an Australian resident taxpayer who is intending to live and work in Dubai for three years. Phil wants to know whether he will continue to be treated as an Australian resident for tax purposes when he is overseas.He does a few internet searches and finds a couple of documents in the
Nicole has just received an amended assessment that shows a significant increase in her taxable income and tax payable. She thinks the ATO is being very heavy handed in their approach to her and is treating her unfairly. What options does Nicole have to challenge this amended assessment – she
Jessica is a financial accountant working in the finance department of an engineering consulting firm. The firm recently reviewed their internal operations and decided that the finance department should be outsourced to independent third- party contractors, with existing staff being made redundant.
Sara Lee entered into a contract in April 2014 to sell part of its business to a Swiss company Roche Holdings Ltd for $60 million. The sale is to be effected in November 2014.In August 2014, the board of directors was advised by Sara Lee’s lawyers that the company has made a CGT loss of $6
George is an accountant with an income of $300,000 per year and he is looking for a tax- effective investment in agriculture. He decides to invest in Hardwood Forests Pty Ltd, the promoter of a scheme for growing trees in northern New South Wales. Forty- nine other investors have already signed for
Since 1960, X Co Ltd has owned and operated a factory which manufactures ammonia for supply to the fertiliser industry. The factory was built at a cost to the taxpayer of $3 million. Of that $3 million, $2 million was attributable to the cost of the building and $1 million for the cost of plant.
P, a company incorporated in the United States, is in the business of providing online cloud services. It has a subsidiary in Australia, A, which promotes and liaises with customers in the Australia. It also negotiates the terms of the contracts with customers in Australia. The finalised contracts
You are the tax adviser for a large multinational entity with its parent company in Australia. The CFO has asked for advice on whether they need to file country- by- country reports. Provide advice to the CFO as to when they will need to report and what reports will need to be provided to the ATO.
The Multilateral Instrument (MLI) entered into force for Australia on 1 January 2019. What are the consequences for Australia? How does the MLI modify the operation of Australia’s tax treaties? Provide examples of modifications.
Kangaroo Wines Pty Ltd is a business which produces wines in Australia. Each bottle is produced at a cost of $5 which it sells unrelated foreign distributors at $10 each. It also sells nearly identical wine to Koala Wines Co, a controlled foreign subsidiary, which resells the wine to unrelated
Consider the Australian- Canadian DTA. Discuss the tax consequences of the following income amounts under that treaty:(a) business profits derived by a resident of one country from a“permanent establishment” in the other country;(b) dividends, interest and royalty income;(c) income from real
What do you see as the rationale for the use of the arm’s length price?Consider the acceptable methods for determining the arm’s length price. Do you believe they represent a “reasonable” transfer price between related parties?
The following are the current year details of Angelo’s income, expenses and the foreign tax he paid. All of Angelo’s foreign income amounts have been converted to Australian dollars.Gross income $Employment income from Australia 44,000 Employment income from the United States 12,000 Employment
Gary, an Australian resident, is the sole shareholder of MC Pty Ltd, a company incorporated in Australia. In this income year, MC Pty Ltd made an interest- free loan of $80,000 to Gary. By the income year end, the company waived 30% of the loan. The balance of the loan remains outstanding by the
P is a non- resident company and owns all the shares in three Australian resident companies, A, B and C. B owns all the shares in D, another resident company. A owns 90% of the shares in E, a resident company.The other 10% is held directly by P. How many different consolidated groups may be formed
P, a company incorporated in Australia, is the head company of a tax consolidated group with a wholly owned subsidiary S1.P acquired all the shares in S2, a company incorporated in Australia, on 1 July this income year. S2 had $20 million unused tax losses which were transferred to P upon
P has three wholly owned subsidiaries S1, S2 and S3. All the four companies are incorporated in Australia. P holds directly all the shares in S1 and S2. Shares in S3 are held through S4, another wholly owned subsidiary of P incorporated in Bermuda. In this income year, P has a taxable income of $2
A resident company, owned by two resident individuals, has an opening credit balance of $7,000 in its franking account in this income year. It has the following transactions in the year:• on 18 July, it paid a PAYG instalment of $30,000;• on 29 August, it paid a $35,000 cash dividend franked to
A resident company pays a dividend of $1,400 (franked to 60%) to a nonresident shareholder. Advise the Australian income tax implications of the shareholder if it is:(a) an individual living in the United States;(b) a US company holding 20% shares in the resident company; and(c) a US company
A resident company pays a fully franked dividend of $700 to a resident shareholder. Advise the income tax implications of the shareholder if it is:(a) an individual subject to the top marginal tax rate;(b) an individual with marginal tax rate of 19%;(c) a company with other assessable income of
Green Planet Pty Ltd was incorporated to research and develop a new technology to produce biodegradable plastic from seaweed. After making losses for several years, a venture capital company purchased 60% of the shares in the company. The company then discovered that the “seaweed to plastic”
Yumyum Thai Pty Ltd is in the business of running a Thai restaurant, serving traditional Thai food. It has two shareholders, Gary and Matt.Gary held 75% of the shares in company while Matt held 25%. After a decade of profitable operation, the company incurred tax losses of$200,000 in each of the
A unit trust with 400 units has two unit holders, John and Mary, both are residents of Australia. John acquired all the 400 units in 1983 for$300,000. Mary acquired 100 units from John in 1990 for $400,000. In the current income year, the unit trust derived $800,000 capital gain from disposing of
Clark Gable is trustee of the Gable Discretionary Trust. The beneficiaries of this trust are Jane and Ingrid, neither of whom is under a legal disability. The Gable Trust has a number of share investments, and also generates substantial rental income from properties it owns. In April 2024, the
Tom runs a small retail business selling men’s clothing in the suburb of Glen Waverley, Melbourne. The business is structured as a discretionary trust – the “Jones Family Trust” – with his company, Glen Waverley Clothing Pty Ltd, as the trustee. Tom and his wife, Mary, are the two
Bruce Whelan established the “Whelan Family Trust” in 1990 with ABC Pty Ltd as the corporate trustee. Bruce and his wife May are the directors of the trustee company. The trust holds a variety of investments in property and cash. The trust was established to protect the investments as Bruce is
The Li Family Trust is a discretionary family trust with two adult resident beneficiaries, Emma and Peter. During this income year, the activities of the trust gave rise to the following:$Loss from rental property (6,000)Interest income from term deposits 4,000 Cash received from fully franked
Lawless Trust is a discretionary trust, with an Australian incorporated company as trustee. The trust derived the following income in this income year:• $600,000 profits from running a restaurant in Sydney;• $90,000 interest from an Australian bank account; and• $18,000 interest from a Hong
Peter and Paul are partners in a partnership. Their shares of the partnership profits and losses are 60% and 40% respectively. Peter is a resident and Paul is a non- resident. In this income year, the partnership derived the following income:• interest income from an Australian bank account:
Gary and Matt are partners in a partnership running a Thai restaurant.They share profits and losses equally under the partnership agreement.In addition, Gary receives a salary of $30,000 every year from the partnership for taking on the daily management role in the restaurant.In this income year,
Johnny and Leon are adult partners in a business selling sporting goods.The partnership records, excluding GST, for the current income year disclose the following:Receipts ($):400,000 Sales of sporting goods (see Note 3)10,000 Interest on bank deposits 21,000 Dividend franked to 60% received from
Alasdair is a retired solicitor. His wife Tracy is a retired school teacher.Both wish to remain active, so they invest in a gift shop that is to be managed by their daughter Carol, who is aged 35. They form a partnership of three called “Carol’s Gift Shop”.Alasdair and Tracy contributed
Peter and Jill are in a partnership as retailers of electrical goods. The partnership records, exclusive of GST, for this income year disclose:Receipts ($):300,000 Gross receipts from trading Payments ($):100,000 Purchases of trading stock 30,000 Partners’ salaries (each)2,000 Interest on cash
Renee is aged 65, works full- time and has $1 million in her superannuation accumulation account. She does not require any money at the moment as she still earns a very good income from her employment. She would like to know the advantages and disadvantages of converting her accumulation balance to
Don is 61 and still working full- time. He currently has a salary of $100,000 and receives $10,500 in mandatory superannuation contributions. Is there any way he could use the transition to retirement provisions to reduce his tax without reducing his take- home pay?
Donna is aged 59 (and has reached her preservation age) and fully retired. She has $2 million in her accumulation account. She converts$1.5 million of this to an account- based pension at the beginning of the tax year, which due to excellent earnings, grows to $1.8 million in value. She makes the
William is aged 59 (and has reached his preservation age) and is selfemployed.He is in good health, and he has asked you for advice on whether he should take his superannuation as a lump sum at the end of the current tax year or whether he should wait until he is 60. Assume that the fund is a taxed
Liam retired on 1 July of the current tax year at the age of 53 because he was made permanently disabled from a work- related accident. He received a payment on termination of $900,000 from his superannuation fund. $200,000 was a tax- free component in the fund and the remained was from the taxable
Jack retired and is 59 years of age (and has reached his preservation age), when he receives a superannuation lump sum of $580,000 which comprised a tax- free component of $100,000 and the remainder was from a taxable component of the fund. Assume that the fund is a taxed fund.What tax if any is
Jenny receives a superannuation lump sum of $500,000 at age 60. Her superannuation lump sum includes a tax- free component of $300,000 and a taxable component in the fund of $200,000. Assume that the fund is a taxed fund.What tax if any is Jenny liable for?
Antonio is a member of an employer- sponsored superannuation plan. Under the terms of the plan, Antonio is required to contribute 5% of his salary ($5,000) to the fund each year, and the employer contributes $10,000 as part of the Superannuation Guarantee Charge.However, in the current year,
Barbara is aged 53, and under the Superannuation Guarantee Charge, her employer pays $20,000 to her superannuation fund. In addition, she has entered into an effective salary sacrifice arrangement with her employer to sacrifice 20% of her salary into superannuation. This results in an additional
Antonio is a member of an employer- sponsored superannuation plan. Under the terms of the plan, Antonio is required to contribute 5% of his salary ($5,000) to the fund each year, and the employer contributes $10,000 as part of the Superannuation Guarantee Charge.However, in the current year,
Barbara is aged 53, and under the Superannuation Guarantee Charge, her employer pays $20,000 to her superannuation fund. In addition, she has entered into an effective salary sacrifice arrangement with her employer to sacrifice 20% of her salary into superannuation. This results in an additional
Kris sells jigsaw puzzles to the general public through his website. Each puzzle is sold for $25 but purchasers can buy five puzzles for $100.Advise Kris as to his income tax consequences in relation to a sale of five puzzles to a customer.
Ryan designs and makes clocks. He sells the clocks through a website.His books of account provide the following information:1 July 30 June Completed clocks ready for sale $15,000 $27,000 Partly completed clocks $10,000 Nil Material for body of clocks $24,000 $800 Clock mechanisms $1,500 $2000 Total
Jimmy has his own t- shirt- making business. He purchases t- shirts directly from manufacturers in various countries and sells the t- shirts through boutique stores in Australia. The following transactions took place during the year:(a) Jimmy purchased $30,000 worth of t- shirts on 1 June from a
Bean Bags R Us is a retail company in Australia selling bean bag chairs for children. The company purchases the bean bags from various wholesalers and sells them to the public through temporary stalls at markets. The company started operations during the last financial year and had no stock on hand
Dimitri is a share trader who owns shares as trading stock because they are held for sale in the ordinary course of his business. He decided to purchase shares in various blue- chip companies as a long- term investment to provide for his children’s education in the future. The children are
Consider whether the following are trading stock:(a) Bees kept for use in a honey production business.(b) Horses used in the city horse carriage tour business.(c) Horses owned by a horse- training business for racing in competitions.(d) Horses owned by a race horse breeder.(e) Undeveloped land
Samuel is the sole shareholder, director and employee of a company.Samuel’s company owns and hires out a digger and truck. The business rents the digger and truck out at a fixed rate per hour. The rate is for the backhoe, the truck and Samuel’s labour. The business never rents the backhoe or
Ms Lei is a sole practitioner accountant. Her practice also acts as an agent for a local energy supplier accepting payments. The income is small with five regular employees, including her son and daughter who each work 30 hours a week. The regular employees do not have professional accounting
Emily has a sickness insurance policy that will pay a weekly benefit and is renewable in advance each July. She receives the renewal notice each June and pays it in July. In what year will Emily be able to deduct the payment for the policy?
If your client owns a small business selling designer clothes and sells dresses on a “lay- by” system, when are they said to have derived their income? Is it when the final payment is made or when the first payment has been made?
If you are accounting on a cash basis in your accounting practice and a client came in to pay their account on 30 June, but you did not bank it until the next day, namely 1 July, when are you taken to have derived that income? Would it make any difference if you were accounting on an accruals basis?
Would it be tax effective if your client paid for the lease payments on their photocopier for the next two years in one lump sum just before the end of the financial year?
If your client is required to pay interest on a loan that was used in a business that was sold last year, are they still entitled to claim a deduction for the interest expense even though they are not able to match the expense to the derivation of assessable income from the business?
When are taxpayers allowed to account for their taxable income on a cash basis and when are they required to account for their taxable income on an accruals basis? Could a business with a turnover of $20 million account on a cash basis?
You are the tax accountant for Computer Consultants Pty Ltd, a large company with a turnover of $24 million. You have been asked to review the 30 June accounts for the company. After you conducted your review, you notice the following items had been claimed as a tax deduction in the financial
For the year ended 30 June, BBNT Pty Ltd, a lawn mower manufacturer, reported an operating (accounting) profit of $750,000. The company does not elect to be taxed as an SBE taxpayer.In coming to this profit figure, the financial accountant had taken into account the following items:(a) $30,000 has
Your client is a medium- sized building company and has provided you with its accounting records for the current financial year. Included in the accounting figures are the following amounts. How would you treat them for tax purposes?(a) Provision for long service leave for 10 employees – $25,000.
Your client is a small IT consulting business consisting of a husband and wife as the principals and two employees. From the time the business was established, 1 July 2015, it has been accounting for tax purposes on a cash basis. For the current financial year, your client has decided to account on
Consult the ATO Australian zone list to determine whether the following places are considered remote areas. Which zone do they fall in?• Toowoomba• Groote Eylandt• Katherine• Kalgoorlie• Mt Isa
Kevin has an invalid brother, Jo, who lives with him. Jo receives a disability support pension. What is Kevin’s allowable rebate for the current tax year under the following scenarios?• Jo has no adjusted taxable income and Kevin has adjusted taxable income of $80,000;• Jo has adjusted
Leah has a salary sacrifice arrangement with her employer. Her package results in an annual salary of $65,000 and reportable employer superannuation contributions of $15,000. Leah also has an investment property from which she derived rental income of $25,000 and had deductible outgoings of
“Adjusted taxable income” determines a taxpayer’s eligibility to claim certain offsets such as the dependency offset. It also determines the extent (ie, the quantum) of a taxpayer’s claim. How does “adjusted taxable income” differ from “taxable income”? Why would certain offsets be
What do you think are the largest measured tax expenditures for the most recent tax year? (HINT: Visit the website of the Treasury to find the latest Tax Expenditures and Insights Statement.)
What is a tax expenditure? What do you consider the purpose of tax expenditures?
Jacaranda Pty Ltd is a new company operating in Perth, West Australia.The company signed a commercial lease for a period of several years with an option to further extend the lease at its discretion. The company incurred various expenses in making the leased premises suitable for its business. The
An extract of the asset register of Big Profits Pty Ltd (Big Profits) for the 2022– 2023 income year is as follows:Asset Cost Opening adjustable value Method Effective life Decline in value for this period Closing adjustable value Desktop Computer 1,350 1,350 Diminishing Value 3 years 450 900
Following on from 14.4, Alpha Pty Ltd sold the stretch limousine to an unrelated party for $150,000 on 1 December of this year. Advise Alpha Pty Ltd of its tax consequences on the disposal of the stretch limousine.
Alpha Pty Ltd acquired a stretch limousine from a related company, Beta Pty Ltd, for $200,000 on 1 March of this year. The market value of the stretch limousine at that time was $100,000. Prior to the sale, Beta Pty Ltd had owned the stretch limousine for five years and calculated its depreciation
On 1 October, Meghan acquired a standard patent from Kate (the original holder) for $85,000. Prior to the sale, Kate had held the patent for 12 years. Advise Meghan as to her depreciation deduction in relation to the standard patent. You may assume that it is not a leap year.
Jerry and Elaine own and run a diner together. The diner is run through their partnership, Tom’s Diner. Jerry and Elaine also own a residential investment property together which they purchased in equal proportions. During the current income year, they undertook the following transactions:•
On 1 June 2022, Lin Lin purchased a new computer monitor for $2,200.The computer monitor is used for work purposes in Lin Lin’s employment as an architect. The Commissioner has assessed the effective life of computer monitors as four years. Lin Lin decided to upgrade to a new computer monitor and

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Principles Of Taxation Law 2024 1st Edition Jared Clements - Solutions

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