Question 1

Philip is a student studying accounting at UNSW.

The following information relates to the financial year ending 30 June 2022.

From 1 July 2021 to 31 January 2022, Philip works as a waiter at a local restaurant

and is paid $23.00 per hour. He works 3 x 5 hour shifts each week. You can assume

the total amount received in wages during this period is $9,600. In addition, he often

receives tips from diners. The amount he receives varies, but is generally between

$30 - $50 each shift. You can assume that the total amount of tips receivedduring this

period was $3,200.

In September 2021, Philips employer gives him an employee of the month award.

This award is given to an employee each month based on positive feedback received

from customers. The award is a $500 bonus.

In November 2021, Philip received a prize for receiving the highest mark in the subject

Advanced Taxation. The prize was a non-transferrable $200 gift voucher tothe

UNSW Bookshop.

In the period from 1 July 2021 to 15 November 2021 when Philip was still at

university, he received Youth Allowance from the Australian Government, with the

total amount received being $2,400.

In February 2022, Philip starts a graduate position with an accounting firm in the

Sydney CBD. His annual salary is $80,000 plus $7,600 compulsory superannuation.

You can assume the salary received by 30 June 2022 was $33,000.

Advise Philip as to whether any of the amounts or benefits he receives under the

above transactions are ordinary income to him (i.e. do not consider statutory income

provisions, FBT or CGT). Assuming Philip does not receive any other

benefits/amounts apart from those listed above, calculate his assessable income for

the year ended 30 June 2022.

Question 3

Homes Pty Ltd is incorporated in Australian and owns and operates two nursing homes

in Kensington, Sydney. Each home has around 90 residents. In addition to receiving

weekly occupancy fees from residents, Homes also receives an operating subsidy from

the Commonwealth Government. The operating subsidy is paid to Homes but the

amount of the subsidy is based on the income level of each resident of Homes (i.e.

higher government subsidies are paid for lower-income residents). The operating

subsidy is designed to help meet the cost of caring for each resident. Homes received

$470,000 in operating subsidies during the current income year.

Homes also received $10,500 from a former tenant of another commercial property

owned by the company some six months after the lease had expired. The payment

made was pursuant to a clause in the lease requiring the former tenant to make repairs

to the property, which it had failed to do. In fact, the former tenant only made the

payment after Homes had arranged for its solicitor to send a letter of demand to the

former tenant. The former tenant operated an accounting practice from the property.

Advise Homes on the assessability of the above receipts. Principles of income tax law

must be referred to in your advice. (Ignore capital gains tax implications).