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Taxable income assignment






Law that applies including Reasons and Common Law/Tax Ruling

Amount ($) Effect on taxable income

1. Salary and allowance  

The $69,000 along with the PAYG credit of $30,000 would be considered as part of the taxable income in accordance with the provisions contained in Section 6.5 of ITAA97. Furthermore, the allowances of $10,000 to cover the wardrobe needs and the $5,000 comprised of the hairdressing and make up costs respectively would also be considered as part of the taxable income. The Australian Taxation Office mentions certainly allowances that can be deductible, and they include costs related to working conditions, special duties, travel from home and work and other travel sites.


2. Gifts

The $1,000 gift voucher would not include any taxation liability and therefore would not be considered within the taxable income. The tax liability would befall on the employer in terms of an FBT or Fringe Benefits Tax.

Furthermore, the $200 China vase gifted by the staff members would not be subject to any sort of tax liability since it was below the FBT threshold of $300 and was given in benefaction.


3. Investment earnings

The $1,000 received as interest for the deposit with the bank along with the partially franked (40%) of $7,250 would be considered when calculating the taxable income. This is in accordance to the provisions of Section 202.5 of ITAA97. Tax offsets are covered under Sections 205 and 207 of ITAA97.


4.         Casino Winnings and TAB Account

Gambling that is considered social are not considered under the taxable income within Australia, and the $20,000 earned would not be subject to any tax liabilities. The case of Murphy v NCAA highlighted the non inclusion of gambling proceeds into the taxable income. The $50,000 and the $25,000 trifecta would also not be subject to tax liabilities since it would come under the purview of the agencies hosting the pony races within the different states of Australia.


5. Sale of my residence  

The sale of the residence would be subject to Capital Gains Tax as the event would be a CGT event in terms of a disposal of an asset. The purchase price was $200,000 along with $25,000 for acquisition expenses. The sale price was $700,000 excluding $15,000 as expenses for the sale. This is in accordance to the provisions contained in Section 102.20 of ITAA97. A 50% deduction would also be applicable since the asset was held for a period exceeding12 months.

$450,000/2 = $225,00

6. Company Car  

Company cars are subject to Fringe Benefits Tax within Australia. However, the expenses for the fuel would only be deductible based on the business related expenses, which is travelling to and from the work. The expenses for travelling to the rental property would not be considered as a deduction, and therefore entail a tax liability since the company asset was used for personal uses.


7. Rental property  

The rent of $1,500 per month would be considered as an ordinary income in accordance to provisions of Section 6.5 of ITAA97. Income from properties such as rents and dividends would therefore come under the purview of the taxable income. The rent received from September 2018 to June 2019.

The $22,000 would further not be considered in terms of an allowed capital works deduction in accordance to the provision contained in Division 43 of the ITAA97 as it would be considered as renovation expenditure since 1/3rd of the roof was required to be replaced.


8. Company Loan

The loan taken from the company amounting to $600,000 at a 4% interest rate was below the benchmark loan rates as mentioned in Division 7A of ITAA97 for the year 2018-2019. However, since the complying terms would classify the loan in accordance to the provisions of Division 7A, it would not be treated as a loan benefit for FBT purposes. Due to this, the loan would be considered as a sum given for loan benefits and would be considered when calculating the taxable income. Loans must be made to shareholders or their associates in their capacity of an association with an employee or in respect of the employment. The $600,000 was given in respect ofthe employment, and therefore the entirety would be considered for taxation purposes due to the unavailability of FBT purposes.


9. Various expenses

The donation made to Lat Trobe University amounting to $1,000 would not be considered as part of the taxable income since it was to a deductible gift recipient and no receipt of benefits were involved. This is in accordance to Sections 30.15 of ITAA97. The tax return fee of $300 would be considered as an expense when calculating the taxable income. The superannuation contribution of $10,000 would also not be considered as part of the taxable income as it was below the $100,000 limit. The telephone expenses of $100 would be deductible, and the $900 used for personal uses would be an expense and come under the calculation of taxable income. Lastly, the $290 briefcase used for business purposes would not include any tax liability and could be claimed as a business expense deduction.



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