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Microsoft Word - HA3042 Individual Assignment T1.2019 Individual Assignment Specifications Purpose: This individual assignment aims to assess students on learning outcomes 1 to 3 as mentioned above. This assignment covers the following key topics: Specific Deductions, Individual Income Tax and Fringe Benefits Tax (FBT). Students need to research these three topics, as stated above, and apply their knowledge from the relevant weeks 1 – 8, before attempting these questions. HA3042 Assignments Instructions and Requirements QUESTION 1 (5 MARKS) Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premises was unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided that it was not feasible to stop operations to repair the chimney, so they gained permission to build an alternative chimney adjacent to the old chimney, thereby allowing production to continue. They found that although the new chimney was substantially the same size and make as the old one, it was cheaper to build than it would have been to repair the old one. Also, the new chimney can better ventilate the weather, which was not available in the previous one. After the new chimney was erected, the old chimney was demolished. Is any amount allowable as a deduction for the cost of the new chimney? QUESTION 2 (10 MARKS) Anushka (an Australian Tax resident) works as an employee for a child care centre, Brilliant Kids Pty Ltd, on a permanent part-time basis while she runs her business as a day carer for her own customers. Meanwhile, she invested some of her extra cash in some shares on the ASX and in an Australian private company. Listed below is the summary of her earnings for the year ended 30 June 2020. Particulars $ Net Salary Received from Brilliant Kids for the year (Tax paid by company to ATO during the year is $29,000) 81,000 Net Business Profit as a sole trader (Day Carer) 30,000 Allowable Deductions on Employment (Uniforms, Laundry, Shoes) 5,000 Fully Franked Dividend 7,000 Unfranked Dividend from a private company 1,200 Required: Calculate Anushka’s taxable income and net tax payable (Ignore Medicare Levy and Medicare Levy Surcharge if any). (Please use the following table to complete your response to this question in the spaces provided) Particulars Answer Marks Net Salary Received 0.5 mark Add Back Tax Paid 0.5 mark Net Business Profit 0.5 mark Fully Franked Dividend 0.5 mark Add Back Franking Credit 1 mark Unfranked Dividend 0.5 mark Assessable Income 1 mark (Allowable Deductions) 0.5 mark Taxable Income 1 mark Tax Payable 2 marks Less Refundable Tax Offsets PAYG Withholding 0.5 mark Franking Credits 0.5 mark Net Tax Payable 1 mark Total Marks 10 marks QUESTION 3 (10 MARKS) Discuss the Fringe Benefits Tax (FBT) implications of the following cases (a) – (e): (Note - No calculations are needed. Only answer whether the employer is liable for FBT or not and why or why not) (a) An employer provides a Christmas lunch at a local restaurant, costing $1,000, for 10 of its key employees. (2 marks) (b) A sporting club, which pays its honorary treasurer an honorarium of $5,000 per year, providing a car to him. The car is used 90% for club business. The treasurer has a full-time job at the local hospital. (2 marks) (c) An employer gives each of its 15 staff a leg ham each valued at $60 for Christmas. (2 marks) (d) An employer allows its staff to take home their laptop computers. It is estimated that only half the work done at home is business related. (2 marks) (e) A company director, not in receipt of any remuneration from the company, uses the company’s two-tonne truck while undertaking renovations to his own home. (2 marks) HA3042 Taxation Law Individual Assignment T2.2020 HA3042 Taxation Law Individual Assignment T2.2020 HA3042 Taxation Law Individual Assignment T2.2020