Part 1 - Discuss whether any of the following items constitute income, including

appropriate reference to statutory and common law (9 marks)

a) John received rent as an investor from an investment property (2 marks)

b) Manali received gambling winnings as a regular punter (3 marks)

c) Meenuka received a tip as a waitress (2 marks)

d) Carlo was paid a payment made by a television station as a professional footballer

for being named the best and fairest in the Australian Football League (2 marks).

Part 2 In the following corporate dividend scenarios, identify the taxation issue,

quantify it, and state whether corrective actions must be taken, referring to

appropriate tax legislation. (6 marks)

a) On 1 July 2019, the directors of a small company, Jumbo Pty Ltd paid their

shareholders a dividend of $300,000 fully franked dividends. Unfortunately, it was not

a good year and on 1 June 2020, the directors only gave a dividend to shareholders of

$150,000 and unfortunately, could only give a 50% franked dividend. (2 marks)

b) On 30 June 2020, directors review the franking account balance of Juicy Ltd which

was $200,000. But it had been a very good financial year and given they had not paid

a dividend since October 2019, the directors declared a fully franked dividend of

$700,000.

(2 marks)

c) The directors of Jimminy Ltd are a little unsure what they should do in regard to

their final dividend. They declared a dividend in November for shares that were

partially franked to 50% and were hoping to do the same for shareholders again. They

want to give a dividend of $1million, but are unsure if the franking account balance

with a franking credit of $350,000 can sustain the fully franked dividend and whether

this would breach the benchmark rule?

(2 marks)

(9 + 6 = 15 Marks)

In your responses, ensure you state the appropriate legislation, tax rulings or common

law cases to support your answer and your calculations.