SCHEDULE OF TUTORIAL QUESTIONS

Week

Chapter

Number

Topic

Question
Barry is a barrister. In his chambers there is a large had desk which he purchased
Capital Allowance
Regime

92

(inclusive of GST). Advise Barry as to which expenses he can claim deductions for
under Div 40 ITAA97.

Capital Write-offs
and Allowances

17

for $1,000 from his neighbour at a garage sale. A computer terminal is situated on
the desk which he acquired for $4,400 (inclusive of GST). There are also several
bookshelves in his chambers which cost Barry $3,300 (inclusive of GST). Placed on
the bookshelves are several volumes of various law reports which cost him $44,000

Felicity is a solicitor who runs a legal practice in the suburbs. Three years ago, she

91

11

Capital Allowance
Regime;
Capital Works Regime

purchased land for $1.1m (inclusive of GST) near a new shopping centre. She
spent $2.2m (inclusive of GST) constructing an office building. Felicity also spent
$88,000 (inclusive of GST) to purchase new furniture, computer and printers for her
office. Advise Felicity of what deductions she may be able to claim.

Meaning of Trading
Stock

Discuss what items owned by a typical milk bar proprietor would be trading stock
and what items would not be trading stock

General Treatment of
Trading Stock

When is trading stock on hand and why is this concept important?

18

Trading Stock
Accounting and

10

Valuing Trading Stock

Asset Taxation
Rules

Cost Base and Reduced

Cost Base;
Discount Capital Gains

Net CG and Net CL;

Cost Base and
12

10

19

Reduced Cost Base;

Capital Proceeds;
Specific CGT Events

Capital Gains Tax

13

Net CG and Net CL;

CGT Events - Overview;
CGT Assets; Specific
Exemptions and Special
Rules;
Cost Base and Reduced
Cost Base;
Capital Proceeds;
Discount Capital Gains

Soft Seats Ltd (SSL) is a furniture retailer that specialises in selling chairs. In the
preceding income year, it had opening stock valued at $2m and it purchased
chairs for $11m (inclusive of GST) during the year. Its closing stock at at the end of
that year was valued at $5m and it had sales revenue for the year of $22m
(inclusive of GST). What is SSLs taxable income for the year?
In what circumstances may a taxpayer index the cost base of an asset and in what
circumstances do the discount capital gain rules apply?
Theodore is a resident who acquired shares in three companies (A Co, B Co and C
Co) for $5,000 each. In the current income year, Theodore sold his shares in A Co
and B Co for $6,000 each and he sold his shares in C Co for $4,000. Theodore had
held the A Co shares for eight months and the B Co and C Co shares for three
years. Calculate Theodores net capital gain. Would your answer be different if
Theodore was a non-resident? Also, would your answer be different if the shares
were owned by a company instead of by Theodore.
Fred is a resident who signed a contract to sell his holiday home in the Blue
Mountains in August last year. The sale was settled in February this year when Fred
received $800,000 from the purchaser. Are incurred legal fees of $1,100 (inclusive
of GST) and a real estate agents commission of $9,900 (inclusive of GST) in
relation to the sale. Fred purchased the holiday home in March 1987 for $100,000
and paid $2,000 in stamp duty on the transfer and $1,000 in the legal fees. In
January 1990, Fred engaged a builder to build a garage on the property for
$20,000. Calculate Freds net capital fain for the current year. Assume he also has a
net capital loss from last year of $10,000 arising from the sale of shares. Would
your answer be different if the loss arose from the sale of an antique vase?

17

Main Residence
Exemption

Rob purchased his home in Sydney on 1 July 2003. He lived in the home for two
years and then was posted overseas for eight years, during which time he leased
the house to tenants. On his return, he continued to live in the home until it was
sold on 30 June 2015. Is Rob entitled to the main residence exemption?

Calculating the Taxable

Values of FB

What is the object of the otherwise deductible rule? To which fringe benefit does
the rule apply?
Explain the steps involved in calculating an employers fringe benefits taxable

FB Taxable Amount

11

FB;
Car FB;
Housing FB;
Property FB

20

Terry is given a Porche by his employer. Is this car a benefit or a property benefit?
He is also provided with free accommodation for a month in a house owned by his
employer. Is this a housing benefit or a property benefit?

Fringe Benefits Tax

Brian is a bank executive. As part of his remuneration package, his employer

provided him with a three-year loan of $1m at a special interest rate of 1% pa
(payable in monthly instalments). The loan was provided on 1 April 2015. Brian
used 40% of the borrowed funds for income-producing purposes and met all his
obligations in relation too the interest payments. Calculate the taxable value of this
fringe benefit for the 2015/16 FBT year. Would your answer be different if the
interest was only payable at the end of the loan rather than in monthly instalments?

Debt Waiver FB;

Loan FB

12

amount. What is the difference between the Type 1 aggregate fringe benefits
amount and the Type 2 aggregate fringe benefits amount? Why are these
amounts multiplied by different gross-up rates?

What would happen if the bank released Brian from repaying the interest on the
loan?
Gerry is employed by a furniture retailer. Gerrys employer allowed him to
16

Property FB

purchase floor stock for $2,200. The same floor stock would ordinarily be sold to
customers for $8,800. What is the taxable value of this fringe benefit?
Identify whether the following payments and receipts of a resident company result
in any franking credit of franking debit entries in its franking account:

11

Franking Distributions

payment of income tax $300

payment of a PAYG instalment of $600
payment of GST of $100
payment of FBT of $500
receipt of a $700 dividend which has a franking percentage of 10%
receipt of a $700 dividend which has a ranking percentage of 100%
receipt of a unit trust distribution of $100 which includes a dividend of $70 which
has a franking percentage of 50%

11

22

13

Companies

Franking Distributions

A resident company wants to pay a dividend of $1,000. What is the maximum

amount of franking credits that it can allocate to the dividend?

Week

Chapter

Number

Topic

Question
A resident company pays a $7,000 fully franked dividend to each of its five
shareholders. Explain how its shareholders are taxed assuming their relevant
details are as follows:
Taxation on Dividends; Tom is a resident who has a salary income of $60,000
Gross-up and Credit
Teresa is a resident who has no other income
Mechanism
R Co is a resident private company that has a tax loss of $1,000
Super Co is a trustee of a complying superannuation fund that has no other
income
F C is a company that is resident in the United Kingdom and has no other income

14

Companies,
Partnerships
and Trusts

23

Fred (a resident) and Wilma (a non-resident) are equal partners in a computer

business. The business generates 75% of its income from Australian sources and
25% of its income from foreign sources. Assuming the partnerships net income for
the current income year is $400,000, how is this income taxed?

Determining Tax
Liability

Partnerships
4

12

Definition of a
Partnership;
Determining Tax Liability;
Partnership Creation,
Variation and Other
Dealings

Jack (an architect) and his wife Jill (a housewife) borrowed money to purchase a
rental property as joint tenants. They entered into a written agreement which
provided that Jack is entitles to 10% of the profits from the property and Jill is
entitles to 90% of the profits from the property. The agreement also provided that if
the property generates a loss, Jack is entitled to 100% for the loss.. Last year a loss
of $10,000 arose. How is this loss allocated for tax purposes? If Jack and Jill divide
to sell the property, how would they be required to account for any capital gain or
capital loss?
Minnow Pty Ltd is an Australian resident company that is trustee of a discretionary
trust. During the 2014/15 income year, the trust estate derived $100,000 of interest

24

11

25

26

Trusts

Tax Losses

Tax Evasion, Tax

Avoidance and Tax

Planning

13
27

Tax Evasion

6
12

Alienation AntiAvoidance
Provisions

28
7

13

38

39

41

General AntiAvoidance
Procisions

International
Transactions

5
9

6
49

50

Why is it necessary to have a COT and SBT for companies with tax losses?

Corporate Loss
Restrictions

Why are the key requirements of the COT and SBT?

Distinguishing Between
Tax Evasion, Tax
Avoidance and Tax
Planning

Discuss the difference between tax evasion, tax avoidance and tax planning.

What is the relevance of purpose under Pt IVA? Whose purpose is relevant and
how is such a persons purpose ascertained?

Purpose

Why are penalty rates of tac imposed on children? Do the penalty rates apply to all
of a childs taxable income?
Alienation of Income to
Minors
Andy is a 12-year-old resident and earns $40,000 in interest from a bank deposit.
How much tax is he liable to pay?
Foreign Income Tax

Taxation

Offset

company current year, Ted received a net amount of $8,500 in dividends from the
company. Explain how such dividends are taxed in Australia.
Discuss how the DTAs generally deal with the taxation of business profits, salary,

Double Tax

Distributive Articles in

Agreements

DTAs

Withholding Taxes

Dividend, Interest and

Royalty Withholding Tax

Administration

dividends and rent.

Taxation Rulings

Discuss the different kinds of tax rulings issued by the ATO. What is a binding
ruling and what is the effect of such a ruling?
What kind of audit powers does the Commissioner have under s 263 and s 264
ITAA36? Are these powers limited in any way?

Record Keeping

Penalties, Offences

Admin. Penalty Regime

and Interest
Payments

resident shareholders and non-resident depositors.

Explain how the assessment process operates in respect of and individual. How is
this different from the process applicable to companies?

Audit Powers

Administration

Res Bank is a resident company that carries on a banking business. Discuss how the
withholding tax regime would apply to dividend s an interest it pays to its non-

Assessments

Record Keeping,
Reporting & Recovery

Ted is a resident who owns shares in a foreign company. Each year, the foreign
company pays Ted dividends that are subject to 15% foreign withholding tax. In the

International

3
47

income from Australian sources and $100,000 of rental income from foreign
Meaning of Key Terms
sources. On 30 June 2015, the directors of the company resolved to distribute oneused in Div 6;
fifth of the income of the trust estate to each of: Ginger (a 90-year-old foreign
Overview of Key Terms
resident, Thurston (a 90 year-old foreign resident), Mary-Anne (a 16 year-old
used in Div 6
Australian resident), and F Co (a company resident in Fiji). No resolution was made
in respect of the balance income. Advise how the net income of the trust estate is
taxed.

What record-keeping requirements must taxpayers comply with?

Interest Payment Regime

Discuss the way in which the general administrative penalty regime applies to
breaches of the tax law.
What happens if a taxpayer is late in paying tax?