HA3042 TAXATION LAW
TRIMESTER 3, 2012
INDIVIDUAL ASSIGNMENT
Assessment Value: 20%
Instructions:
1. This assignment is to be submitted in accordance with
assessment policy stated in the Subject Outline and Student
Handbook.
2. It is the responsibility of the student who is submitting the work, to
ensure that the work is in fact her/his own work. Incorporating
another’s work or ideas into one’s own work without appropriate
acknowledgement is an academic offence. Students should
submit all assignments for plagiarism checking on Blackboard
before final submission in the subject. For further details, please
refer to the Subject Outline and Student Handbook.
3. Answer all questions.
4. Maximum word length: 2,000 words.
5. Maximum marks available: 20 marks.
6. Due date of submission: Week 9.
Question 1 (10 marks)
Caroline is a 55-year-old Australian resident. She is the chief
marketing officer based in Sydney for XYZ Limited (XYZ), a public
company listed on the Australian Securities Exchange (ASX). During
the financial year ended 30 June 2012, she had the following
transactions:
1. On 1 March 2012, Caroline received a $100,000 lump sum
compensation payment for an injury she suffered to her neck
in a car accident at the end of 2011.
2. Caroline put the entire $100,000 into a 90-day term deposit
maturing on 30 June 2012, with an interest of $1,258 payable
on maturity. At maturity, Caroline instructed the bank to
reinvest both the interest and the principal into a term deposit
with the same terms.
3. On 31 December 2011, she received a $30,000 dividend,
franked to 50%.
4. She received $300,000 salary from XYZ.
5. She took out a loan of $25,000 and used the entire amount to
make a contribution into her complying self-managed
superannuation fund. On 30 June 2012, she pre-paid interest
of $3,000 (for 10 months) on the loan.
6. On 30 June 2012, Caroline received $800,000 for the sale of a
property which she inherited from her deceased mother. The
property was her mother’s main residence up until her
mother’s death on 14 July 2010. The market value of the
property at the time of her mother’s death was $750,000. The
property was originally purchased for $320,000 in January
1991 and has not been used to produce assessable income.
7. Prior to her role at XYZ, Caroline was made redundant on 1
July 2011 from her position at Technology Limited, where she
had been employed since 4 April 2007. On 30 July 2011 she
was paid a genuine redundancy sum of $20,000. The payment
is considered reasonable and she did not have any unused
long service leave or annual leave.
REQUIRED:
Calculate Caroline’s taxable income for the year ended 30 June
2012. Show workings where relevant and briefly explain all
inclusions and exclusions. Cite the relevant section reference(s). Set
out your answer using the following table format:
Transaction Workings /
Brief
Explanation
Section
References
Taxable
income
Calculations
1. Compensation
2. Etc
Question 2 (10 marks)
Necktie Pty Ltd (Necktie), an Australian resident company, had the
following transactions in the year ended 30 June 2012:
Transaction Amount (A$)
1. Derived dividend income from an 8%-owned
company registered in the USA
4,000
2. Derived dividend income from an 89%-
owned company registered in Hong Kong
7,000
3. Incurred interest expense in relation to
Hong Kong dividend
(5,000)
4. Derived trading income from a New Zealand
branch dealing with New Zealand customers
840,000
5. Incurred interest in relation to New Zealand
trading income
(14,000)
6. Acquired some in-house software on 1 July
2011, to run its Australian business
(100,000)
7. Spent $2,000 on a Christmas party for 10
Australian staff. This was the only
entertainment incurred during the year.
Necktie uses the actual method for working
out its fringe benefits tax liability each year
(2,000)
REQUIRED:
Calculate the assessable / deductible amount (if any) in relation to
each of the above transactions. Cite the relevant section
reference(s). Ignore withholding tax. Set out your answer using the
following table format:
Transaction Assessable
income $
Allowable
deduction $
Relevant
section
reference(s)
1. Derived
dividend from
an 8%-owned
company in
the USA
2. Etc
Attachments:
taxation-law-….pdf