1. In May CY, Nick was injured by a large lobster. He received compensation totalling $45,000. This amount represented $22,000 for loss of earnings, $5,000 for hospital and medical expense and the remaining amount for pain and suffering.

Based on the above facts and relevant tax laws, what amount does Nick need to declare as assessable income?

	A	$45,000 for the full amount of compensation received will be assessable
	B	$23,000 for his hospital stay, medical expenses and pain and suffering is assessable
	C	$22,000 for the loss of earnings is assessable
	D	$27,000 for the loss of earnings and hospital/medical expenses is assessable

2. Nick entered a 6 year loan on 1 March CY for the purchase of equipment that was required for income producing purposes. The borrowing costs associated with the loan were $750.

Based on the above facts and relevant tax laws, what is the deductible amount of borrowing expenses for the year?

	A	$41
	B	$750
	C	$50
	D	$150

3. During the year, Nick received the following in relation to some of his investments:

Item	($)
Lease premium	17,000
Rental income	86,000

Based on the above facts and relevant tax laws, what amount does Nick have to declare as a capital gain in his tax return?

	A	$86,000 - the rent is capital in nature as it is derived from an investment property while the lease premium is income according to ordinary concepts
	B	$103,000 - both the lease premium and rent are capital in nature
	C	$17,000 - the lease premium is capital in nature while rent is income according to ordinary concepts under s6-1 of ITAA 1997
	D	$0 - both the lease premium and rent are income according to ordinary concepts under s6-1 of ITAA 1997

4. n addition to the information provided in Q8, Nick has the following capital gain transactions that need to be considered:

1. Nick received proceeds of $295,000 on the sale of vacant land located in Fuddville on 30 March CY. The land was purchased on 2 April 2003 for $325,000.
2. Nick sold all his shares in Bugs Bunny Ltd on 1 January CY receiving proceeds of $4,300. The shares had cost Nick $5,600 on 15 May PY. Brokerage had cost 5% at both sale and purchase.
3. Nick received proceeds of $790,000 on 28 August 2020 for the sale of a vacant land in Daffytown. The property had been purchased on 18 September 1983 and subdivided in to separate parcels of land. The land had initially cost Nick $550,000.

Based on the additional facts and relevant tax laws, what is the net capital gain or loss that would be disclosed in Nicks income tax return?

	A	$14,795 capital loss
	B	$328,205
	C	$88,205
	D	$225,205 capital gain

5. Assuming Nick makes an overall net capital loss for the current income year, is that an allowable deduction?

	A	Yes - a net capital loss is an allowable deduction and can be applied against assessable income to reduce the taxable income
	B	No - a net capital loss is NOT an allowable deduction and must be carried forward to future years to offset future capital gains only