Taxation

Question 1

Isabelle has been employed as an Operational Consultant by General Motors (GM) the US parent company located in Detroit for many years. Isabelle is single and having always wanted to visit Australia she takes up an offer to oversee the manufacturing operations at General Motors Holden (GMH) in Adelaide. Isabelle leased her Detroit residence and on the 1st of August 2015 rents a house in Adelaide and begins employment at GMH.

After two months of work for GMH Isabelle aged 49, has been made redundant on 1st October 2015. She received a payment of $15,030 as part of a genuine redundancy scheme. On termination of her employment she also received $500 for unused annual leave. On

hearing that Isabelle had lost her job in Australia the Detroit Pistons (basketball team) immediately posted a $1,500 Burberry Diamante watch and greetings from the US card to her.

After a month holiday in the Caribbean Isabelle decided to buy a small business. She acquires Primary Blood Laboratories on the 22nd of December 2015; its main operation is improving clinical outcomes for people with rare blood disorders. Isabelle decides to relocate the business operations from North Adelaide to South Adelaide and signs a 2 year lease with a monthly rental of $5000. To encourage her to sign the lease the property manager of the building offered her a rent free period of two months.

During the year ended 30th June 2016 the following events took place:

Salary from GM Detroit (1/7/2015 to 31/7/2015) $10,000

Salary from GMH (1/8/2015 to 1/10/2015) $25,000

Travel Allowance (1/8/2015 to 1/10/2015 $500

Interest received on her NAB Bank Account (1/8/2015 to 30/6/2016) $500

Rental Income from her residence in Detroit (1/8/2015 to 30/6/2016) $11,450

Interest received from Detroit Term Deposit Account (1/8/2015 to 30/6/2016)

o (15% has been withheld from this interest) $425

Business Income - Primary Blood Laboratories (22/12/2015 to 30/6/2016) $27,800

Genuine Redundancy Payment (see above 1/10/2015) $15,030

Unused Annual Leave on Termination (see above 1/10/2015) $500

Tax withheld whilst an employee of GMH:

Salary PAYG withholdings $5,600

Genuine Redundancy withholdings (see above) $1,840

Required:

a) To what extent is Isabelle assessable on the above transactions?

b) Calculate her taxable income and tax payable for the 2015/2016 tax year.