1. Heidi had been a radio host on Mornings with Heidi for a Melbourne radio station. Heidi was becoming increasingly popular among the listeners and began to catch the attention of competing stations. In September 2017, Heidi was offered a lump sum of $150,000 to encourage her to join a particular radio station on their afternoon shift, Drive. Heidi accepted the offer. She received the $150,000 and began working for the station in January 2018 this year. As well as the $150,000, Heidi is paid a $140,000 annual salary, is provided with a car, mobile phone and an annual travel allowance of $15,000.

REQUIRED:

Discuss the tax implications of the amounts provided to Heidi. Your answer should include references to appropriate legislation, case law and tax rulings. Calculations are not required.

(10 marks)

Hints: Assessability of receipts as ordinary income v. capital; allowance v. reimbursement; fringe benefits.

2.Julian operates an art gallery in Walhalla. During the current tax year, Julian travelled to Melbourne for two days to attend his friends birthday party and meet his tax agent (Tracey) to discuss the compliance work for the business. He stays one night at a hotel. While he was meeting with Tracey, Tracey asked Julian about some expenses listed in the gallerys accounts during the year. Julian explained that the council advised him that he was required to repair faulty wiring, reposition existing electrical outlets and install new power points, mains and switchboards after a recent inspection. Tracey requested Julian provide the receipts and documentation relating to the expenditure. Tracey also queried Julian about a sum of money sitting in the suspense account. Julian explained that it related to deposits paid on three of the paintings by a customer. They have agreed to make weekly payments over eight weeks and collect the paintings at the time of the final payment.

REQUIRED:

Advise Julian of the tax implications of his situation. Your answer should include references to appropriate legislation, case law and tax rulings. Disregard GST.

(10 marks)

Hints: Deductibility of cost of travel to Melbourne; deductibility of costs of repairs, repositioning and installations; and, treatment of suspense account balance.

3. Canberra Ltd began operating a brewery in northern Victoria. The company was incorporated in Hong Kong in 2018 with three shareholders/directors, two of whom are located in Victoria and the third located in Hong Kong. Immediately after incorporation, the company employed a consultant to undertake a feasibility study on the local market, spending $15,000 in July 2018. Once the study was completed and they received the report from the consultant, they determined that there were adequate opportunities to set up the brewery in Beechworth.

REQUIRED:

Advise Canberra Ltd of the tax implications of its situation. Your answer should include references to appropriate legislation, case law and tax rulings. Disregard GST.

(10 marks)

Hints: Residency of a company (remember three tests); deductibility of feasibility study.