HA3042 Introduction of Taxation Law
Task:
Purpose:
This assignment is designed to assess your level of knowledge of the key topics covered in this unit
Unit Learning Outcomes Assessed:
• Gain a broad understanding of tax law
• Demonstrate ability to analyse and synthesise complex tax law issues
• Demonstrate ability to apply principles of tax law to complex legal problems
Question 1
All depreciable assets are 100% for business use and Ace uses a low-value pool for all eligible assets. The closing value of the low-value pool at 30 June 2019 was $8,000. Ace purchased a camera on 20 Jan 2020 for $840.
Advise Ace of the Income Tax consequences arising out of the above information for the 2019 - 2020 Income year assuming Ace is not a small business entity.
Question 2
Your client is a medium-sized manufacturing company and has provided you with its accounting records for the financial year ending 30 June 2020.
The following amounts listed below from (a) – (f) are included in the accounting records. How would you treat them for tax purposes?(Note – The exact amounts are to be calculated and discussed in your response)
(a) The provision for long service leave for the employees is $35,000. The actual amount paid during the year was $20,000 for the year ended 30 June 2020.
(b) The Insurance premium on the plant and equipment is $30,000, which was paid on 1 March 2020 for the next 12 months.
(c) As at 30 June 2020, there was an outstanding electricity account for $2,000 and a telephone account for $5,000 which are both still to be paid.
(d) A maintenance contract on the factory equipment for 12 months is $12,000. The payment was made on 1 October 2019.
(e) The sum of $200,000 was paid on 1 August 2019 to the Managing Director as compensation for the early termination of her employment contract. The employment contract had one year to go. It would have ended on 30 July 2020.
(f) There is interest expense of $70,000 on a loan which has three years to run that was originally used to purchase a computer repair business. The business ceased to operate on 30 June 2020.
Question 3
(Note this question is from the Week 9 Tutorial)
Determine whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, state the relevant category of fringe benefit. Provide reasons for your answers and calculate the exact fringe benefit amount(s), where appropriate, for the following cases listed below (a) – (g):
(a) A monthly payment of $120 is made to Jack. Jack is an employee, who sometimes uses his home phone for work purposes. Jack has estimated that the business use percentage of his phone bill is 20%.
(b) A payment of $1,000 employee’s superannuation contribution by the employer to a complying superannuation fund.
(c) A loan of $20,000 from the company to one of its shareholders with no interest being charged. The company’s rules do not permit loans to employees, but it is silent about loans to shareholders.
(d) A payment of a $50 Uber fare by the employer for the employee to travel home after working late.
(e) A bunch of flowers sent to a sick employee. The flowers cost $120.
(f) Provision of a car for an employee’s private use, including payment of all fuel costs by the employer. Consider whether any fringe benefits have arisen.
(g) Provision of sandwiches at a lunchtime seminar held at the employer’s premises.
