Semester 2 2019
Unit Code and Title	LAW2410 Income Tax Framework II	PRACTICE EXAM PAPER
The total mark for this Exam is 60. It accounts for 60% of the total marks for this Unit.

He carries on a business, as a sole trader, in Perth. As part of his business he replaces the worn-out tyres of his customers’ cars. He replaces all 5 tyres (including the spare tyre) of the cars of each customer.

For the year ended 30 June 2019, he has provided you with the following information regarding his business:

(ii) premiums paid for public liability insurance for his business - $10,000.

3. To protect the safety of himself and his employee, when replacing the tyres, he uses “Car Positioning Kits” which securely position the cars whilst work is being done on them.

2. From 31 August 2016 to 30 June 2017 : 304 days;

3. From 1 July 2017 to 30 June 2018: 365 days;

The operating expenses associated with running the car for the year were $12,300 in total (including depreciation). The car cost him $40,000 when he purchased it on 4 June 2017. All substantiation requirements are met.

Sam is single and has no dependents. He has sufficient private hospital cover with Medibank.

Tom has come to you to prepare his income tax return for the year ended 30 June 2019. Tom provides you with the following information:

(1) On 20 June 2010, he acquired a townhouse in North Perth for $220,000. On the same day, he was offered a high paying job in Sydney. He never moved into the townhouse which was rented out from 20 June 2010 until 8 January 2015.

3. From 9 January 2015 to 26 November 2018: 1,418 days]

(2) He bought a vacant block of land in Morley for $35,000 on 28 September 2011. Stamp duty on purchase was $682.

(4) He acquired the following shares at the following times and prices:

(i) shares in A Ltd on 1 December 2018 for $5,000;

(ii) shares in B Ltd for $7,000; and

(iii) shares in C Ltd for $4,000.

(8) He has a total of $8,500 in capital losses carried forward from the previous tax year of which:

(i) $5,500 is attributable to a loss on the sale of shares in BHP Ltd.;

Net capital gain – 48,803.50

Question 2

(1) Sales of electrical and electronic goods - $400,000.

On 1 January 2019, the partners discovered that an employee had stolen $3,000 cash in respect of money received from sales to customers.

(5) Paid salary to John - $10,000

(6) Paid salary to Lenny - $15,000

(9) Paid legal fees for the renewal of lease of the

office building (business premises) in which they

lease of the business premises - $700

(12) Paid debt collection expenses to a solicitor - $500

(16) Paid rent on a retail shop - $20,000

(17) Made provision for doubtful debts - $30,000

Stock at the end of the year - (i) Cost - $16,000

(ii) Market selling value - $18,000

Both are single and have sufficient private hospital cover with Medibank.

Based on the above information, you have been instructed by the partners to calculate their respective amount of tax payable for the year ended 30 June 2019.

1. his wife, Maya (aged 58 years old in 2019);

2. his daughter, Bee (aged 15 years old and a full-time student in 2019);

For the year ended 30 June 2019, the Trustee received the following amounts for the Trust:

$

(i) Maya $23,224

(ii) Bee $23,224

(i) Maya received no other income.

(ii) Bee received $25,000, as salary, working as a casual employee for David Jones. An amount of $750 was deducted from her salary by David Jones for the purposes of PAYG withholding.

Answers

(1) Net income of Trust – 110,000

(5) Tom – (i) Trustee (s.98) – tax payable - nil

(ii) Personal – Refund – 3,931.91

Part (a)

Joe is a commercial traveller employed by Opal Ltd., a retailer selling camera equipment.

Answer. FBT payable - $3,616.25

OR

(1) Sales (books and magazines) 245,000

(2) Interests (from BankWest) on investments 15,000

(3) Gardening costs (contractor is not registered) 3,000

(4) Investment advice fees

End of examination papeR

These suggested answers to the Practice Exam Paper are compiled for the Income Tax Framework II (LAW2410) unit. The material herein is of a selective nature and is strictly for academic purposes only.