It is based on Australian Tax Law

Deena Maguire is a tax lawyer who regularly travelled overseas for work. After having a baby in late 2015 she took unpaid leave from work to travel around the world. Traveling with an infant required much preparation and a reasonable amount of equipment. Deena enjoyed researching and testing travel gear, and as a consequence she developed a reasonable knowledge about traveling with young kids. In April 2017 Deena had an idea to start a travel blog to share her experiences with other parents and keep memories of her trips. She registered her blogs domain www.babymaguire.com with a paid host server at a cost of $20 per year and frequently posted tips about airlines, kid-friendly hotels and product reviews of the travel gear she used. She also regularly shared her blog photos and the links to her posts on her Instagram account and Facebook page, which generated thousands of likes and substantially increased the number of visitors to her website. In July 2017 a baby pram manufacturer invited Deena to test and write a review on their latest ultra-lightweight travel pram. She would not receive any money for the review however she could keep the pram, which was retailed for $600. In January 2018 a resort in Fiji offered her 1-week free accommodation (valued at $2,000) in exchange for a blog post about her stay.

Offers of that kind became frequent, and in the current income year (2019/20) she estimates having received a total of $42,000 in benefits, $38,000 in advertising fees, and her travel expenses amounted to $14,000. Moreover, to ensure that her Instagrm skill is getting better, she enrolled in online course of photography and bought herself fancy camera, which cost her $3,000 and $2,000, respectively. Due to her many views in her videos, she received a lump sump payment of $10,000 from Youtubeee by the end of financial year.

Required: Advise Deena Maguire on the tax consequences of the above for the income year ending 30 June 2020, applying legislation, case law and tax rulings to support your answer.

3|Page

PART B this case has no connection with part A In July 2019 Deena Maguire was hired by La Leche as a brand manager, a manufacturer of baby

formula. As part of the renumeration negotiation, Deena has 3 options:

1. $150,000 Salary + $30,000 tuition fee for her children at Ivanhoe Grammar School + $2,000 mobile phone bill + $100,000 loan benefit1

2. $100,000 Salary + $50,000 Mazda CX-32+ Rental free in company property for the duration of her employment contract at Preston3

3. $180,000 Salary

Required:

1. Advise Deena Maguire on assessable income of every options for the income year ending 30 June 2020, applying legislation, case law and tax rulings to support your answer. Which one of all the options that produce the lowest assessable income for Deena?

2. Calculate Fringe Benefit Tax for FY 2019/20 Deena Employer for every option.

3. During 2019/20 financial year, Deena decide to sell:

   1. Her old car for $20,000 (originally, she purchased it for $30,000 in 2015),

   2. Her collectible painting for $50,000 (Originally purchased for $550 in 1990)

   3. 1000 Telstra shares and 2000 NAB shares for $20,000 and $30,000, respectively. She

      originally purchased them in 2016 for $30,000 and $40,000, respectively.

   Advise Deena Maguire on assessable income based on transactions in part 3 and she decided to go with option C ($180,000 Salary) for the income year ending 30 June 2020, applying legislation, case law and tax rulings to support your answer.

1 The company charged her 2.5% per year as interest, which Deena use it to buy shares of Telstra for investment. 2 40 percent are used for business usage, in this instance she needs to pay her own petrol cost ($2,000 per year, insurance ($3,000 per year) and Service cost ($1,000 per year) 3 Market value for rental of that equivalent property in that area is $2,000 per month