SUBJECT-TAXATION LAW

Requirement: Advise Robert as to whether he will be able to use the main residence exemption. Question 7 (10 marks) Rachel and Bill carry on a partnership together with gross receipts for the current income year of $ 80,000. During the year the following payments were made:- Purchase of trading stock Wages to employees Advances to Rachel Lease payments on two cars $ 18,000 10,000 35,000 4,000 Rachel and Bill share the profits in the ration of 3:1. Stock on hand at the beginning of the year was $ 3,000 and at the end of the year was $ 3,400. Both cars were used for business purposes, but Bill uses his 40% for private purpose as well. Bill also works part-time as a trainer and generated a gross income of 12,000. He subscribes magazines that update his knowledge on the industry and trainings to be provided to his own clients and it costs him $ 800 in annual subscription fees. He also received fully franked dividends from ABC Company of $1,125 in the current income year. Requirements: a) Calculate the net income of the partnership and the assessable income of the partners. b) Calculate the final tax liability of Bill. Question 8 (10 marks) Errol provides his employee with the use of a car for 183 days during the FBT year. During this period the travelled 16000 km. Errol purchased the car last year for $50,000. The employee contributed $1000 towards the cost of running the car and has provided Errol with relevant documentation. Requirement: Calculate the taxable value of the car fringe benefit using the statutory formula Requirement: Advise Robert as to whether he will be able to use the main residence exemption. Question 7 (10 marks) Rachel and Bill carry on a partnership together with gross receipts for the current income year of $ 80,000. During the year the following payments were made:- Purchase of trading stock Wages to employees Advances to Rachel Lease payments on two cars $ 18,000 10,000 35,000 4,000 Rachel and Bill share the profits in the ration of 3:1. Stock on hand at the beginning of the year was $ 3,000 and at the end of the year was $ 3,400. Both cars were used for business purposes, but Bill uses his 40% for private purpose as well. Bill also works part-time as a trainer and generated a gross income of 12,000. He subscribes magazines that update his knowledge on the industry and trainings to be provided to his own clients and it costs him $ 800 in annual subscription fees. He also received fully franked dividends from ABC Company of $1,125 in the current income year. Requirements: a) Calculate the net income of the partnership and the assessable income of the partners. b) Calculate the final tax liability of Bill. Question 8 (10 marks) Errol provides his employee with the use of a car for 183 days during the FBT year. During this period the travelled 16000 km. Errol purchased the car last year for $50,000. The employee contributed $1000 towards the cost of running the car and has provided Errol with relevant documentation. Requirement: Calculate the taxable value of the car fringe benefit using the statutory formula