Question 41

1. Lyn Wang, aged 24, has recently finished university and commenced employment with a local accounting firm on 1 March 2020. As yet, she does not have a Tax File Number (TFN). Advise Lyn as to her employer's obligations concerning her TFN.

a.

Lyn's employer must withhold tax from her salary at her respective marginal rate of tax if Lynfails to provide her TFN.

b.

Lyn must provide her TFN to her employer.

c.

Lyn's employer must withhold tax from her salary at the top marginal rate of tax if Lyn fails toprovide her TFN.

d.

Lyn need not provide her TFN to her superannuation fund.

1 points

Question 42

1. Where a partnership records a loss for an income year for tax purposes: (Choose the most correct option)

a.

It is transferred to the individual partner's tax calculation as an allowable deduction and if the individual partner does not have assessable income sufficient to absorb the loss the individual partner can carry forward the loss or part of the loss to future years.

b.

It will be of no significance for tax purposes because it cannot be used by the partnership under tax legislation.

c.

It will be carried forward and allowed as a deduction from future income of the partnership.

d.

It is only transferred to the individual partner's tax calculation as an allowable deduction for that partner's share if the individual partner has assessable income.

1 points

Question 43

1. Karen Koles is a resident of New Zealand who receives royalty payments, as a result of licensing a design in Australia, from Design Co Ltd which, for tax purposes, is a resident company of Australia. Where are the royalty payments sourced?

a.

The royalty payments are not part of Karen's assessable income.

b.

New Zealand

c.

Australia

d.

Both A and B

1 points

Question 44

1. In relation to the source and assessability of dividend income, which of the following statements is most correct?

a.

Dividends are always sourced in the country where the company is a tax resident.

b.

There is a statutory source rule for dividends contained in s 44, ITAA 36.

c.

Dividends are assessable income to non-residents regardless of where those profits are sourced.

d.

Dividends are always sourced in the country where the company was first incorporated.

1 points

Question 45

1. Which of the following statements is most correct?

a.

In FCT v Applegate 79 ATC 4307 it was held that the taxpayer had not established a permanent place of abode outside Australia because the taxpayer ultimately intended to return to Australia.

b.

Jing is a student from China who comes to Australia at the beginning of the tax year, to study for a 3 year Business degree and ultimately take up employment in Australia. Jing will be likely to be an Australian tax resident while studying in Australia due to the 183 day rule.

c.

In FCT v Applegate 79 ATC 4307 it was held that the use of the word 'permanent' in section 6 ITAA 36's definition of 'resident' meant everlasting.

d.

In FCT v Jenkins 82 ATC 4098 it was held that the taxpayer did not have a permanent place of abode outside Australia because the taxpayer ultimately intended to return to Australia after3 years.

1 points

Question 46

1. Which of the following expenses cannot be claimed as a deduction against assessable income?

a.

An expense prevented from being deducted by a specific provision, such as those in Div 26.

b.

An expense that is incurred in gaining tax-exempt income.

c.

Any expense that is of a capital, private or domestic nature.

d.

All of the above.

1 points

Question 47

1. Jamie has a collectable loss of $2,000 carried forward from a prior year and $12,000 in ordinary capital losses carried forward from a prior income year. During the current income year he sold a rental property for $450,000 that he purchased in September 2005 for $280,000. He also sold a collectible painting for $10,000 that he acquired three years ago for $6,000. Assuming Jamie had no other transactions during the year, calculate his net capital gain or capital loss for the current year ended 30 June. (Minimise gains where possible.)

a.

$80,000

b.

$74,000

c.

$81,000

d.

$160,000

1 points

Question 48

1. Andrew is an employee tax accountant at a Big 4 accounting firm. He purchased an iPhone on 1 March 2020 for $1,000. He used the phone 30% for work purposes. However, he was promoted to manager in April and as a result, received a new phone from his employer. He sold the iPhone for $500 on 1 June 2020 to a reputable second-hand dealer. Assume that the iPhone has an effective life of 2 years and Andrew uses the prime cost method for calculating depreciation deductions. What is the balancing adjustment amount in relation to sale of the iPhone to the second-hand dealer?

a.

He has a deduction of $126.

b.

He has a deduction of $112.

c.

He has a deduction of $374.

d.

He has an assessable income amount of $500.

1 points

Question 49

1. Fastforward Ltd is a resident company that is not a small business entity. It acquired a depreciating asset for $260,000 on 1 October 2019 and first used the asset on the same day solely for a taxable purpose. The estimated effective life of the asset is eight years and the company elects to use the prime cost method.

What is the decline in value for the year ended 30 June 2020 (ignoring the impact of any leap years)?

a.

$260,000

b.

$32,500

c.

$48,750

d.

$24,374

1 points

Question 50

1. Big Accounting Pty Ltd is a large accounting firm with 5 partners and 35 employees. When would it be entitled to deduct its cleaning expenses?

a.

None of the above.

b.

When Big Accounting receives an invoice for the services.

c.

When Big Accounting pays for the services.

d.

When the contract for the services is entered into.

1 points