taxation law222
(A) Kevin is employed as a seafood process worker at a local fish market. He has a medical condition that causes intense pain in his feet when he is forced to stand for extended periods of time on cold surfaces. To relieve his pain while working in the cool room of the fish market, his doctor has prescribed he wears special electronically heated protective socks. Kevin must purchase new protective socks each month and has spent $2,400 during the 2021 year. Kevin only wears the special socks at work and claims that without them, he would be unable to do his job. Required With reference to case law and the Income Tax Assessment Acts, advise Kevin as to what amount, if any, he could claim as a tax deduction with respect to the purchase of the stockings. (4 marks) (B) Blue Sky Pty Ltd is a large manufacturing entity with an average annual turnover of $80 million. During the year ended 30 June 2021, they incurred the following expenditure (all exclusive of GST): 1/10/2020 $69,000 for a new motor vehicle for the exclusive use of the managing director. Effective life 6 years. 1/12/2020 $11,000 to pay HELP/HECS in respect of employment related university courses undertaken by current employees. 1/02/2021 $125,000 fine paid to the Environment Protection Authority for pollution caused by a toxic spill. 1/03/2021 $3,500 replacing a damaged motor in the forklift. The damaged motor was acquired in 2018 and was replaced with one of the same capacity. The new motor will have an effective life of 5 years. Required Calculate the maximum income tax deductions for the year ended 30 June 2021 available to Blue Sky in respect of each of the above transactions. (6 Marks) (A) Kevin is employed as a seafood process worker at a local fish market. He has a medical condition that causes intense pain in his feet when he is forced to stand for extended periods of time on cold surfaces. To relieve his pain while working in the cool room of the fish market, his doctor has prescribed he wears special electronically heated protective socks. Kevin must purchase new protective socks each month and has spent $2,400 during the 2021 year. Kevin only wears the special socks at work and claims that without them, he would be unable to do his job. Required With reference to case law and the Income Tax Assessment Acts, advise Kevin as to what amount, if any, he could claim as a tax deduction with respect to the purchase of the stockings. (4 marks) (B) Blue Sky Pty Ltd is a large manufacturing entity with an average annual turnover of $80 million. During the year ended 30 June 2021, they incurred the following expenditure (all exclusive of GST): 1/10/2020 $69,000 for a new motor vehicle for the exclusive use of the managing director. Effective life 6 years. 1/12/2020 $11,000 to pay HELP/HECS in respect of employment related university courses undertaken by current employees. 1/02/2021 $125,000 fine paid to the Environment Protection Authority for pollution caused by a toxic spill. 1/03/2021 $3,500 replacing a damaged motor in the forklift. The damaged motor was acquired in 2018 and was replaced with one of the same capacity. The new motor will have an effective life of 5 years. Required Calculate the maximum income tax deductions for the year ended 30 June 2021 available to Blue Sky in respect of each of the above transactions. (6 Marks)
