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Taxation Law Assignment

TRIMESTER 1 2021 FINAL EXAMINATION STUDENT IDSTUDENT NAME SUBJECT NAME: Taxation Law SUBJECT CODE: MAC008 TIME ALLOWED: 2 Hours PERMITTED MATERIALS: This is an Open Book exam. INSTRUCTIONS FOR STUDENTS: You do not require a separate answer booklet. Please type your responses in the space provided.Type your full name and ID at the top of this page.Answer all questions. QUESTION 1 45 Marks Felix, a resident of Australia, has been paid a salary of $120,000 as a Vice Chancellor of Sandstone University in Sydney. In addition, the University generously paid a superannuation contribution of $20,000 to a properly registered superannuation fund called UniteSuper on his behalf. Sandstone University also deducted PAYG from his pay amounting to $40,000 which they remitted on his account to the ATO.

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Felix had allowable deductions in relation to his employment income of $15,000. All payments and transaction were made during the financial year ending 30th June 2020 Earlier in his life, on 1st January 2000, Felix had bought a rental apartment in Sydney for $350,000 and had given a mortgage over the property to his bank in return for $300,000 which was all used in the purchase. Since that date, he received rent every year. In the current financial year ending 30th June 2020, he collected $20,000 in rent but paid rates and taxes totalling $10,000, and interest on the mortgage of $5,000. On the 30thJune 2020, Felix sold the apartment for $600,000. His incidental costs in buying and selling the apartment amount to $40,000. Part a (15 marks) What is Felix’s ordinary income for the year ended 30 June 2020? You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings, and the relevant case law. Where relevant, you must show your calculations. You must apply the law to the facts and provide YOUR OWN analysis of the issues and write a comprehensive answer to the question. [Answer and show workings here] Part b (15 marks) What is Felix’s statutory income (that is the net Capital Gain) for the year ended 30 June 2020? You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings, and the relevant case law. Where relevant, you must show your calculations. You must apply the law to the facts and provide YOUR OWN analysis of the issues and write a comprehensive answer to the question [Answer and show workings here] Part c (15 marks) What is Felix’s total taxable income for the year ended 30 June 2020? You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings, and the relevant case law. Where relevant, you must show your calculations. You must apply the law to the facts and provide YOUR OWN analysis of the issues and write a comprehensive answer to the question [Answer and show workings here] QUESTION 2 15 MARKS On the 1st July 2019, a wealthy retiree, King Tut died. He was a resident of Australia aged 80 at the time of death. He left a will, and the Executor/Trustee was required to manage his assets to produce an income stream for his beneficiaries. Under the prudent control of the Executor/Trustee, the estate derived net income of $200,000 during the tax year ending 30 June 2020. The Will of the deceased provided that income was to be distributed as follows: Genevieve (his wife) 30% of any income Jessie (his daughter) 20% of any income Ellie (his 2nd daughter) 10% of any income. None of the beneficiaries are under a legal disability. In addition, the Will provides that the balance may be either retained or distributed to a beneficiary at the discretion of the trustee. During the financial year, an amount of $7,000 was also paid towards Ellie’s college fees. The ATO is interested in this income. Required Advise who is assessed for the net income of the trust and explain which sections of the Act apply in making these amounts assessable? [Answer and show workings here] END OF EXAM PAPER [Extra writing/working space if required]

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