(a) Private Health Pty Ltd derives $400,000 net trading income from Australian sources during the current tax year. The company also earns the following: ? $56,000 - Franked dividend from public companies with an imputation credit of $24,000. ? $50,000 - Unfranked dividend from resident private companies. ? $20,000 - Interest income. Assume Private Health Pty Ltd is a small business entity. Calculate the net tax payable of Private Health Pty Ltd Ltd for the year ending 30 June 2017. (10 marks) (b) Discuss the circumstances under which a tax benefit will arise under Part IVA Income Tax Assessment Act 1936 (Cth).

1. (a) Jinping is an employee of Private Health Pty Ltd, a national health specialist. On 1 April 2016, Jingping takes out a housing loan with his employer for $400,000 at an interest rate of 1.75% pa. This was a very good rate as he had made enquiries and the rate available at his bank was 4.25%. The statutory rate for the 2016-17 FBT year is 5.65%. Calculate the FBT payable by Private Health Pty Ltd in relation to the loan fringe benefit. (10 marks) (b) Discuss who is required to pay the GST and who is entitled to input tax credits.
2. Calculate the net income tax payable for an Australian resident individual who does not have any private health insurance but who has taxable income for the 2016/17 income year of: (a) $8,200 (5 marks) (b) $146,320 (5 marks) (c) $288,764
3. Pranab Trust is a resident discretionary inter-vivos trust carrying on hospitality trading activities. During the 2015/2016 income year the trust made a loss of $15,000 calculated in accordance with s 95(1) ITAA 1936. Pranab Trust has performed better in 2016/2017, with income of Pranab Trust comprising: Profit from the business activities $103,000 Interest on term deposit $7,000 Fully franked dividend (with imputation credit of $6,000) $14,000 During the 2016/2017 income year, tax deductible business expenses of $23,000 were incurred. The trustee has exercised discretion to make the following payments to beneficiaries who all have a vested interest in the income of the trust: Julia, aged 76, who suffers dementia and is currently in a mental institution, unable to give discharge to a legal contract 30% of trust net income Malcolm, aged 52 25% of trust net income Tony, aged 34 20% of trust net income Kevin, aged 12 10% of trust net income which is to be accumulated indefeasibly and paid at age 21. In the event of his death Kevin's share will be paid to his estate. Any remaining income is to be retained in the trust for re-investment purposes. Required: (a) Calculate the s 95(1) trust net income for 2016/2017. (5 marks) (b) Explain how the trust net income will be assessed in the 2016/2017 income year, making reference to whether assessment will be to the trustee and/or beneficiaries.
4. Explain whether a client that fails to disclose the true amount of their income on time and keep financial records would be penalised. (10 marks) (b) Explain whether a tax agent that promotes a scheme to their client that would avoid tax would be penalised.

Examination Cover Page Examination Period: Academic Institution: Academic Group: Academic Career: Examination Type: AFFIX STUDENT ID STICKER HERE 2017 Term 1 Central Queensland University Higher Education Division Postgraduate Standard I have read and understood the penalties involved if I do not abide by the rules outlined on the back of this examination paper. Student Signature: Student ID Number Unit: Subject Area: Catalog Number: Paper Number: Component: Taxation Law of Australia LAWS 20060 1 ALL Components Duration: Perusal Time: First Contact: Second Contact: 180 minutes 15 minutes Dominic Lococo - lococod David Beddoe Restrictions: Open Book Contact Number: Contact Number: 0410419109 02 9324 5744 Office Use: Release examination paper via the CQ University Past Exams website two weeks after the DE/SE examination period? Yes Instructor Authorised/Allowed Materials Dictionary - non-electronic, concise, direct translation only (dictionary must not contain any notes or comments). Law dictionaries, Business and Law dictionaries (discipline specific dictionaries) are authorised. Calculator - all non-communicable calculators, including scientific, programmable and graphics calculators are authorised. Student Calculator - Make:____________________ / Model: ____________________ Special Instructions to Students: Please see instruction sheet on first page of the examination paper. Examination Office Supplied Materials 1 x Rough Paper 1 x Exam Answer Booklet QUESTIONS ANSWERED MARKS QUESTIONS ANSWERED MARKS Number of examination answer booklets used: Number of separate sheets attached (Do not include rough paper): This examination paper is not to be released to the student at the conclusion of the examination. Central Queensland University considers improper conduct in examinations to be a serious offence. Penalties for cheating are exclusion from the University and cancellation with academic penalty from the unit concerned. Term 1 Standard Examination 2017 Taxation Law of Australia LAWS20060 Instructions Sheet 1. Write all answers in the Examination Answer Booklet provided. 2. Students must answer four of the five questions. These are of equal value - fifteen marks each. If more than four questions are answered, only the first four will be marked. 3. Write your answer clearly, use numbered headings or subheadings to show which part of your answer refers to which question. Example: Part A - Question 2 (a). Page 1 of 4 Term 1 Standard Examination 2017 Taxation Law of Australia LAWS20060 Answer four of the following five questions. Each question is worth 15 marks (4 x 15 = 60 marks). Question 1 (a) 15 Marks Private Health Pty Ltd derives $400,000 net trading income from Australian sources during the current tax year. The company also earns the following: $56,000 - Franked dividend from public companies with an imputation credit of $24,000. $50,000 - Unfranked dividend from resident private companies. $20,000 - Interest income. Assume Private Health Pty Ltd is a small business entity. Calculate the net tax payable of Private Health Pty Ltd Ltd for the year ending 30 June 2017. (10 marks) (b) Discuss the circumstances under which a tax benefit will arise under Part IVA Income Tax Assessment Act 1936 (Cth). (5 marks) Question 2 (a) 15 Marks Jinping is an employee of Private Health Pty Ltd, a national health specialist. On 1 April 2016, Jingping takes out a housing loan with his employer for $400,000 at an interest rate of 1.75% pa. This was a very good rate as he had made enquiries and the rate available at his bank was 4.25%. The statutory rate for the 2016-17 FBT year is 5.65%. Calculate the FBT payable by Private Health Pty Ltd in relation to the loan fringe benefit. (10 marks) (b) Discuss who is required to pay the GST and who is entitled to input tax credits. (5 marks) Page 2 of 4 Term 1 Standard Examination 2017 Taxation Law of Australia LAWS20060 Question 3 15 Marks Calculate the net income tax payable for an Australian resident individual who does not have any private health insurance but who has taxable income for the 2016/17 income year of: (a) $8,200 (5 marks) (b) $146,320 (5 marks) (c) $288,764 (5 marks) Question 4 15 Marks Pranab Trust is a resident discretionary inter-vivos trust carrying on hospitality trading activities. During the 2015/2016 income year the trust made a loss of $15,000 calculated in accordance with s 95(1) ITAA 1936. Pranab Trust has performed better in 2016/2017, with income of Pranab Trust comprising: Profit from the business activities $103,000 Interest on term deposit $7,000 Fully franked dividend (with imputation credit of $6,000) $14,000 During the 2016/2017 income year, tax deductible business expenses of $23,000 were incurred. The trustee has exercised discretion to make the following payments to beneficiaries who all have a vested interest in the income of the trust: Julia, aged 76, who suffers dementia and is currently in a mental institution, unable to give discharge to a legal contract Malcolm, aged 52 Tony, aged 34 Kevin, aged 12 30% of trust net income 25% of trust net income 20% of trust net income 10% of trust net income which is to be accumulated indefeasibly and paid at age 21. In the event of his death Kevin's share will be paid to his estate. Any remaining income is to be retained in the trust for re-investment purposes. Question 4 continued over next page. Page 3 of 4 Term 1 Standard Examination 2017 Taxation Law of Australia LAWS20060 Question 4 continued. (a) Calculate the s 95(1) trust net income for 2016/2017. (b) Explain how the trust net income will be assessed in the 2016/2017 income year, making reference to whether assessment will be to the trustee and/or beneficiaries. (10 marks) Question 5 (5 marks) 15 Marks (a) Explain whether a client that fails to disclose the true amount of their income on time and keep financial records would be penalised. (10 marks) (b) Explain whether a tax agent that promotes a scheme to their client that would avoid tax would be penalised. (5 marks) - End of paper - Page 4 of 4