Assessment:
Please read all instruction carefully including the general requirements for assessment in this unit.
The purpose of this assessment is to give you feedback on your progress in this unit. The written answer format to a series of questions gives you the opportunity to briefly explain how the law applies to practical problems and also to show that you understand the basic concepts dealt with in these topics. This format is also good reparation of the final examination. This test will be conducted on-line but will be marked by hand and returned within the normal 15 working days policy of the University. When marking is completed you will be able to access your result and an answer guide for each questions.
You are permitted to print the tests (a printable file will be provided) but your answers to the test can only be submitted on-line via Cloud Deakin. Written or emailed submission will not be accepted.
You can submit at any time during the period the test is open - there is no time limit on how long the test can be open for but you must submit before the closing time.
After the closing time submission will not be possible. Note: all times are expressed as AEST (Australian Eastern Summer Time).
You will be able to access the test as many times as you wish while it is open. Previous work will be saved provided the SAVE button has been pressed as each question is completed. The completed questions are noted on the left of the screen. Provided you have not pressed the Submit button you can change your answer to previously saved questions.
The test can only be submitted once. Submission is made by pressing the SUBMIT button and once this is done the submission is final and cannot be altered.
It is your responsibility to check that the submission is made correctly. Computer errors etc will not be accepted as a reason for non-submission.
You are permitted to use any resources available to answer these questions, but you are reminded that this assessment is to provide you with feedback on your current level of understanding. Plagiarising the work of others will not assist you in identifying any misunderstanding or weaknesses in your knowledge (please refer to the Unit Guide).
Maximum of 150 words per question.
Each question is marked out of 4. There are no negative marks given.
The questions for Test 2 only cover the material studied in Topics 3 and 4 including all the prescribed reading and review questions for this topic. As a result, the question may require you to consider matters that were not specifically covered in lectures but are covered in the readings for these topics.
For each question you will be required to write a brief answer and in some cases show calculations. You should always cite relevant sections and cases where appropriate.
Question 1. Which of the following are CGT assets. In your answer briefly explain why citing sections?
i) A private home that is treated as the taxpayer's main residence.
ii) The right to a fair trial for a criminal offence.
iii) Your private car that is not used for any income earning activity.
iv) Goodwill recognised on the sale of a business.
Question 2. State the CGT event and whether there is a capital gain/loss for the following transactions. All assets are post-CGT. Cite section numbers for each statement and determine whether Div 115 is applicable.
i) The sale of a diamond ring costing $600 which has been owned for 2 yrs.
ii) Creation of a restraint of trade agreement between Nicole (the payer) and Rob (the party subject to the restraint).
iii) The loss on the sale of TV costing $11,000 2 years ago.
iv) A company received compensation as a result of winning a legal battle over a breach of one of its patents.
Question 3. Brian purchased his first home in Warrnambool on 1 June 2008 for $300,000, stamp duty was $20,000. He immediately moved in and treated the house as his main residence. On 1 June 2011 Brian moved to Melbourne to take up a new job (at this time his Warrnambool home had a market value of $425,000). On 1 June 2011 Brian rented out the Warrnambool house which was valued at $450,000 at that time. Brian was able to purchase a small apartment in Melbourne for $400,000 on 1 January 2011 and moved in. In 2015 Brian decided to sell the Warrnambool house so he could pay off the Melbourne apartment. On 4 April 2016 Brian sold the Warrnambool house for $550,000. Calculate Brian's net capital gain or loss assuming he has no other CGT events (show workings). Would your answer be different if Brian did not purchase the Melbourne property but lives in rental accommodation?
Question 4. Explain (citing sections) whether or not the following can be included in the cost base for each of the following situations (all assets are post-CGT:
i) The cost of legal action to defend a dispute over the boundary of a property subject to CGT. The cost is not deductible.
ii) The cost of advertising to purchase a CGT asset.
iii) The cost of interest incurred on a vacant block of land that is sold for a loss. The interest is not deductible.
iv) A boat gifted to the taxpayer for no consideration valued at $180,000. The taxpayer also agrees take over the debt on the boat of $20,000.
Question 5. Jo died in April 2014, and his daughter Charlotte inherited his investment property which he purchased for $30,000 in June 1984. Jo's investment property had a market value of $520,000 at the time of his death. Charlotte used the house as a rental property and sold it for $650,000 in June 2016. Charlotte also inherited from her father a parcel of shares purchase by Jo on 1 September 1990 for $100,000 and at the time of his death had a market value of $80,000. Charlotte sold the shares on 1 March 2016 for $90,000.
Determine Charlotte's net capital gain showing workings.
Question 6. Discuss whether the following are specific deductions under the ITAA 97 and ITAA 36 in the current tax year. In your answer state relevant sections.
i) The taxpayer is a high income individual ($200,000 taxable income) who realises a tax loss of $25,000 on an investment property.
ii) The travel costs incurred by the taxpayer who operates a business from home and then travels to work as an employee at a separate location.
Question 7. Discuss briefly, citing sections, whether the following are deductible.
i) Political donation made by a large newspaper company to a major political party.
ii) Expenses incurred by the taxpayer in preparing the previous year's income tax return.
iii) An employer pays an employee's HECS-HELP contributions which are incurred in providing a Fringe Benefit.
iv) A taxpayer in the business of lending money, writes-off of a loan of $40,000 as bad debt.
Question 8. The taxpayer is a large insurance company which offers insurance for a wide range of business and household risks. During the current tax year, they made a lump sum payment of $13,000 to the Victorian Housing Commission to be the preferred home insurance provider for the residents of commission houses providing a discount of 10%. The Housing Commission promoted this insurance provider to the tenants but they were free to purchase insurance from other insurance providers. Consider whether the $13,000 is deductible under s 8-1.
Question 9. Joan purchased an investment property to rent out for residential purposes. Immediately after purchasing the property, she discovered that there was dry rot in the bathroom (it had been there for years) which had to be repaired at a cost of $1,200. Before the first tenants moved in Joan showed the property to her family and her young son smashed a window with his football (cost $400 to replace). Consider the deductibility of these two expenses.
Question 10. Gillian (not a small business entity) has owned and operated a clothing retail store for the past 15 years from the same premises. During the current tax year, she incurred the following expenses for her business:
| A new computer purchased on 1 Jan 2016 with and effective life of 3 years. She estimates that the computer is used 10% for private purposes. |
$2,000 |
| Business advice on whether she should expand her business and form a company to launch her own clothing label. |
$3,000 |
What is the largest possible deduction for the current tax year?
1500 word there are 10 question need to answer all of them each question take 150 word
Attachment:- Assignment 1+answer.rar