1) Proper analysis of the scenario by identifying the correct legal issues. Articulation of arguments and application of law to facts.
2) Evidence of analytical thinking shown in logical reasoning, calculations and recommendations.
Scenario 1: Assessable Income
Jim Cox, a software designer, and resident of Australia earned the following income for the year ended 30 June 2014:
a) $55000 from sources in Australia
b) The equivalent of Aus$30,000 as salary while working overseas for three months (foreign income tax amounting to Aus$5000 had been deducted from his income)
c) Fully franked dividend of $10000, and
d) Dividend income of $850 from WYS Ltd, a London based company (15% withholding tax has been paid).
Required:
1) Analyze Jim's situation with relevant Tax Law and calculate the assessable income for the year ended 30 June 2014. Show proper reasoning to support your decision.
2) Assuming Jim does not have any deductions, what is the tax payable on the income? Show the calculations in detail.
Scenario 2: Income from personal services and employment
Jane and Sally are employed school teachers who have a very wide general knowledge. Both decide to enter a television quiz program called "Lease of the Decade". Under the rules, contestants receive $100 for each appearance, but if questions are answered correctly, they receive substantial cash prizes and other prizes, such as household items and holiday packages. The holiday packages cannot be transferred or redeemed, but the organizers of the program allow them to be converted into alternative venues and accommodation.
Jane and Sally go on the show but Jane is eliminated in the first contest and receives her $100. Sally, however, makes 10 appearances. She wins cash prizes of $50,000, household appliances worth $20,000 and a trip to Europe with her family valued at $30,000.
Required:
Analyze the scenario given above for Jane and sally by identifying and applying the relevant law. Discuss and recommend on the assessability of these prizes. Present a conclusion.
Scenario 3: Fringe Benefit Tax
Evaluate and show proper reasoning whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of fringe benefit. Support your answer with relevant sections of law:
(a) Payment to employee for the estimated cost of the employee's home phone bill as the employee sometimes has to use the home phone for work purposes.
(b) Provision of accommodation at the family home to a child who is over 21 and works in the family business.
(c) Payment of employee's superannuation contribution by the employer to a complying superannuation fund.
(d) Loan by Company X to one of its directors, Ron, who is also a shareholder in the company. The company's rules do not permit loans to directors.
(e) Payment of taxi fare by employer for employee to travel home after working late.
(f) Flowers sent to a sick employee who is hospitalized. The flowers cost $75.
(g) Provision of a car for an employee's private use, including payment of all fuel costs by the employer.
(h) Provision of sandwiches at a lunchtime seminar held at the employer's premises.
(i) Provision of an all-expenses-paid holiday to an employee who has had to work every weekend for the last six months.
(j) Provision of two laptop computers to an employee who regularly attends clients' premises.
Scenario 4: Capital Gain Tax
Nadin is a client of your tax firm. To fund her career as an artist Nadin sold some of her art collection by other artists. It consisted of:
(a) An antique ceramic bowl purchased in February 1985 for $4,000. She sold the bowl on 1
December of the current tax year for $12,000.
(b) A sculpture purchased in December 1993 for $5,500. She sold the sculpture on 1 January of the current tax year for $6,000.
(c) A bronze ?gure purchased in October 1987 for $13,000. She sold the bronze ?gure on 20 March of the current tax year for $13,000.
(d) A painting purchased in March 1987 for $480. She sold the painting on 1 July of the current tax year for $5,000.
Required
Consider the CGT consequences of the above transactions by determining whether the assets are CGT assets, collectables or personal use assets. Identify the relevant laws and apply them with appropriate details required to support your recommendation.