HI6028 Taxation Theory, Practice and Law T2 2021

HI6028 Taxation Theory, Practice and Law
T2 2021
Final Assessment
Holmes Institute

Assessment Question 1

Robert, a chief executive officer of an American Company specializing in management consultancy, comes to Australia to set up a branch of his company. Robert was recruited for this job in Australia and signed a contract with the company in Sydney. Although the length of his stay is not certain, he leases a residence in Brisbane for 12 months. His wife accompanies him on the trip, but his teenage daughter, having just commenced college, stay in New york. He and his wife have a joint account with National Australia Bank in Australia. Robert’s income from a consultancy is paid directly into this account. Robert rents out the family home. Apart from the absence of his children, Robert’s daily behaviour is relatively similar to his behaviour before entering Australia. All his family other investments, including a share portfolio that generates dividend income, remain in the USA.

Discuss whether Robert is a resident of Australia for tax purposes and how his income from salary and investment would be taxed. (Maximum 500 words)

Assessment Question 2

What is the difference between a ‘net capital gain’ and a ‘capital gain, and between a ‘net capital loss’ and a ‘capital loss’? Are net capital losses deductible? (Maximum 300 words)

Assessment Question 3

ABC Co (a resident private company) owns 20% of the shares in XYX Co (a resident public company). Both companies have a corporate tax rate of 30% and a corporate tax rate for imputation purposes of 30%. XYX Co pays ABC Co a $70,000 dividend which has $12,000 of franking credits allocated to it (i.e. the franking percentage of the dividend is 40%). What are the relevant franking account entries for ABC Co and XYX Co? Assuming this is the only receipt of ABC Co, how much tax will it be required to pay? How would your answer be different if ABC Co was a non-resident company? (Maximum 250 words)

Assessment Question 4

Referring to relevant statutory provisions and common law, discuss whether, for the current income year, the following amounts would be as an allowable deduction against assessable income.

1. Provision for the estimated amount of trade debtors’ accounts, which might not be collected.
2. An amount of $9,000 paid to a solicitor for preparing a partnership deed.
3. Newspapers purchased by an accountant who advises clients on financial and investment matters.
4. Travel cost of a business executive to attend a trade fair in London paid by the employer.
5. Speeding fines of $ 500 paid by an owner to a driver. (Maximum 300 words)

Assessment Question 5

1. Calculate the taxable value of the fringe benefit using the statutory formula in the following case context:

   Nancy provided her employee (William) with the use of a Toyota Pajero car 216 days during the Fringe Benefit Tax year. During the period, the car travelled 12,000 km. Nancy purchased the car last year for $65,000. William contributed $2,000 towards the cost of running the car and has provided Nancy with relevant documentation.(6 marks) (Maximum 250 words)

2. Rory is a staff of a furniture manufacture company. His employer allowed him to purchase an office table for $ 1,200. The table would ordinarily be sold to customers for $1,800. Calculate the taxable value of the fringe benefit. (5 Marks) (Maximum 200 words)

Assessment Question 6

What are the key features of the objection and appeal process against the Commissioner’s decision? (Maximum 350 words)