QUESTION 1: APC Pty Ltd purchased a car on 1 April 2021 for $32,000 (including GST) and during the next 12 months it incurred the following costs:

Fuel	$3,510
Servicing/repair	$720
Insurance	$640
Registration	$600
Depreciation (using 30%)	$9,600
Interest expense (using 5.85%)	$1,872
Total	$16,942

The costs above include GST where applicable. A logbook showed that business use of the vehicle was 30%. Required: Assuming that it is not registered for GST, how much fringe benefits tax would APC Pty Ltd have to pay in respect of the FBT year ended 31 March 2022? You must show your calculation step by step and provide reasons for your treatment.

QUESTION 2: Case Study

Sean is a resident who has always lived in Australia. He is currently working full time for a large global company and earning $95,000 (in 2021-22 income year), which is expected to increase annually by 4%. His employer pays the superannuation guarantee to his nominated complying super fund. Sean incurred $4,000 expenses related to his work, and such expenses are expected to increase annually by 2%. He may be transferred by his employer to the Branch in China for one year (in 2022-23 income year), and will return to Australia to resume work here after the expiry of the contract. He purchased a property two years ago and immediately used it as his main residence until now. During his absence, Sean is planning to rent out his property. He did some research and found the average rental income from the properties in the suburb he currently lives is $345 per week. He also provide the following actual expenses related to the purchase and ownership of the property:

Property purchase price: $400,000

Strata levy: $1,970 per quarter

Council rate: $394 per quarter

Water rate: $217 per quarter

The cost of obtaining finance: $2,000

Annual interest on loan: $15,764

He will seek the real estate agent to manage the property during his absence. The additional expenses may be incurred:

Advertising fees: $985

Property management fees: $148 per month

Sean is planning to replace a fibro wall inside his rental property, which was damaged by a flood, with a brick feature wall. Based on the current price research, it may cost Sean about $7,882.

All the rental income and expenses above are expected to increase annually by 2%.

Sean bought 10,000 shares from a listed company with a cost of $0.50 per share. The current market price of the shares held by Sean is $2 per share. The trend of the share price remains stable in these weeks. He thinks it is the time to sell all these shares at the current price.

Sean is also planning to operate a business for exports of goods and services from Australia. The expected turnover is $60,000, and the net profit is estimated to be $30,000.

Sean does not have an appropriate private health fund with hospital cover

Required: Answer all the questions to respond to Sean's following issues.

QUESTION 1. Sean's employer offers him a salary sacrificed super contribution arrangement. Is this a tax-effective strategy?

QUESTION 2. Sean is planning to sacrifice $15,000 or $22,000. Which amount will you recommend? Why or why not?

QUESTION 3. During his absence, will Sean still be considered as an Australian resident for tax purposes? Why or why not?

QUESTION 4. Advise which expenses mentioned in the scenario can be deductible for Sean if he is about to rent out the property during his absence.

Rental property related expenses	Deductible or not? Why or why not? Provide your explanation and reason

QUESTION 5. How much total estimated tax will be payable (i) with and (ii) without salary sacrifice? Ignore any offsets. Complete the following tables and show all the calculations in your answers. Round up your answers to the whole number without any decimal points.

Table 1: Work out the forecasted value for rental income and all the deductible rental expenses (based on your answers to Q4). Show your working or explanation.

Items	Current Values $	Forecasted Value $

Table 2: Use the forecasted value in Table 1 and after develop a Rental Property Schedule. Show your working. Insert the lines in the table if needed.

Forecasted Rental Property Schedule
Rental income
Less: Rental expenses
Net rental property profit or loss (Please delete either "profit" or "loss" that is not applicable, and write profit $ as positive number and loss $ as negative.)

Table 3: Work out the total estimated tax will be payable (i) with and (ii) without salary sacrifice. Show your working for calculation and also write down the reasons if the item is valued at nil.

	Without Salary Sacrifice	With Salary Sacrifice
Salary
Salary sacrificed super
Assessable income
Work related deductions
Net rental property loss
Taxable income
Marginal tax rate (shown as %)
Income tax
Medicare levy
Medicare levy surcharge
Income tax, levy and surcharge
(Total of Income tax, Medicare levy and Medicare levy surcharge)
Tax on salary sacrificed super
Total tax payable

QUESTION 6. Advise if Sean is required to pay CGT in the future when the property is sold because he is about to use it to produce assessable income during his absence.

QUESTION 7. Advise how to minimise the taxable capital gain arising from the disposal of the shares. Show the relevant calculations to support your advice.

QUESTION 8. Considering the taxation effect of each type of business structure only, advise what kind of the tax entity (i.e. sole trader or company) Sean can use for his proposed business.

QUESTION 9. Provide tax planning for GST.