Income

11. A receipt can be seen as income in one of two ways. What are they?

12. What is ordinary income?

What is statutory income?

What is the relationship between assessable income, ordinary income and statutory income?

What is the role of Div. 10?

What is the effect of s 15-2?

What is the effect of s 15-15?

What is meant by income must be derived?

When is income derived?

Define a windfall gain.

Briefly explain what mutual payments are and how they are taxed.

A sporting club receives income from membership subscriptions, hire of its facilities and bar takings in its clubhouse. To what extent are these receipts taxable?

Briefly explain when gambling winnings will be taxable.

Briefly explain when gifts will be taxable.

A plays club football in the North Queensland League. Last year he was named as the Leagues Best and Fairest player and received a $5,000 prize donated by a local television station. Explain whether he is taxable on his prize.

In what circumstances will a compensation payment be regarded as taxable income?

B received $1,000,000 for heroin he had illegally imported into Australia. The heroin had cost him $200,000. To what extent, if at all, is he liable for tax on his profit?

If B is taxable on that profit can he claim the bribes he paid various overseas customs officials as deductions?

As part of her salary package, C receives the use of a company car. She estimates that the value to her of the company car is $5,000 per year. To what extent, if at all, is she assessable on that value?

To what extent, if at all, is her employer assessable to tax because it provides her with the car?

How are loan premiums and discounts treated for income tax purposes?

How are premiums that tenants pay their landlords assessed in the landlords hands under the income provisions of the Income Tax Assessment Acts?

A farmer subdivides his farm into housing blocks and sells them at a substantial profit. To what extent, if at all, are the proceeds of those sales assessable income in his hands? Why?

Trading Stock

How are purchases and sales of trading stock treated for taxation purposes?

What impact does a change in trading stock levels between the start and end of an income year have on your taxable income?

What are your options in valuing closing stock for taxation purposes?

Can you change your valuation mechanism for closing stock from year to year?

What is the relationship between opening stock in tax year 1 and opening stock in tax year 2?

What is the relationship between closing stock in tax year 1 and opening stock in tax year 2?

General Deductibility

The ITAA 97 contains two principal provisions governing deductibility. What are they?

What are the two (2) positive limbs of s.8-1?

What is the difference between the situations in which the first positive limb applies and the situations in which the second positive limb applies?

What are the four (4) negative limbs of s.8-1?

Explain when each of the four negative limbs will operate to deny deductibility?

If you are looking for a provision denying deductibility to an outgoing (under the 4^th negative limb) where would you look for it?

In general terms it can be said that there are three (3) classes of provision in the ITAA that deal with the question of deductibility. What are they?

What is the role of Div 12?

Briefly explain the essential character test for classification of outgoings.

What other tests are used to classify losses and outgoings as either deductible or not deductible? How do those tests operate?

A competition body builder is placed on a high protein and carbohydrate diet by his coach. To what extent, if at all, are the costs of his dietary requirements deductible against his income as a professional bodybuilder?

Deductibility of Specific Expenses

To what extent, if at all, are the following expenses deductible against assessable income:

(a) travel expenses between home and work;

(b) travel expenses between two places of employment;

(c) the costs of leaving ones children in child care while one is at work;

(d) self education expenses;

(e) home office expenses;

(f) work related clothing;

(g) fines and penalties;

(h) prepaid expenses.

To what extent, if at all, is HECS deductible?

What is the practical effect of s 82A of the ITAA 1936?

G spends $200 entertaining potential clients at dinner. To what extent, if at all, is this amount deductible?