In your own words, write reasonably argued positions to support your tax treatment of all the tax issues raised herein.Your answers to the following questions should be concise in keeping with the marks allocated.Small business entity concessions must be ignored.

(a) The following transactions relate to Ajax Pty Ltd, a resident private company. This company does not utilise any of the small business entity concessions:

21/7/16Payment of PAYG tax instalment of $15,000

31/7/16 Received a dividend of 10,500 from a resident private company franked to 30%.

31/8/16Interim dividend of $21,000 paid to shareholders to which a franking credit of $4,500 had been allocated.

28/10/16Payment of PAYG tax instalment of $7,000.

28/2/17Payment of PAYG tax instalment of $7,000.

31/3/17Final dividend of $28,000 paid to shareholders to which a franking credit of $7,200 had been allocated.

28/4/17Payment of PAYG tax instalment of $7,000.

5/6/17Income tax paid on final assessment of $2,000.

Draw up the companys franking account for the year ended 30 June 2017, taking into account any implications arising from it. The opening balance at 1 July 2016 was $2,000.

(b) Amusements Pty Ltd incurred legal expenses in opposing an application by a competitor to relocate its poker machine licence. The competitor was applying to relocate its licence to a location close to an existing poker machine venue owned by Amusements Pty Ltd.

Advise the company whether these legal expenses would be deductible.

(c) Eve has sole custody of her 3 year old son and must place him in a child care centre each day so that she can attend to her employment.

Can Eve claim an income tax deduction for these childcare costs?

(d) Steven works as a marketing manager for a large chain of discount warehouses. During his spare time he enjoyed skydiving and mountain climbing. One Saturday whilst skydiving, Steven broke both of his legs and was unable to work for 2 months following the accident. Steven only had 10 days of sick leave available, but he had taken out an income protection insurance policy that ensured that he got paid 90% of his usual fortnightly salary until he was able to return to work.

Must Steven include the receipts from the insurance company in his assessable income?

(e) Explain the income taxation consequences of annual subscriptions received by the Australian Manufacturers Workers Union (a trade union) from its members.

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