Part A: 5%

Discuss the current tax law for determining whether an individual is a resident of Australia for tax purposes. In respect of residency tests, compare the Australian tax law to the tax law in one other country.

Part B: 5% & Part C 5%

John Jones is a chartered accountant with his own accounting and tax practice in the form of sole proprietor. His receipts and payments (excluding GST) for the year ended 30 June 2021 are as follows:

Receipts

Professional fees: $200,000

Income from part-time teaching at a university: $20,000

Interest on bank deposits: $5,000

Rental income from an investment property: $26,000

Fully franked dividends received from an Australian resident company: $7,000

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Payments

Office rent: $26,000

Salary paid to a secretary: $50,000

Electricity: $3,000

Office sundry expenses: $10,000

Train fares for travel to and from work: $450

Entertainment: $8,000

Interest paid on loan to acquire the investment property: $25,000 Council rate and water for the investment property: $2,000

Cost of repairing roof tiles of the investment property: $3,000 Cost of extending a bathroom in the investment property: $15,000

John Jones has a carry forward past year tax loss of $10,000. He is single and does not have any private hospital insurance.

REQUIRED

Part B: Assuming John Jones is a resident of Australia for tax purposes, calculate his assessable income, allowable deductions, taxable income and tax liability for the year ended 30 June 2021.

Part C: With reference to case law and/or statutory law, explain whether the aforesaid receipts are assessable income and payments are allowable deductions under the Australian tax law in the Part B calculations.