FNS50215 Diploma of Accounting Module 4.2 Assignment

This assignment focuses on taxation for legal entities, plans and obligations. It contains multiple assessment activities. The assignment covers units FNSACC601 & FNSACC603.

FNS50215 Diploma of Accounting
Module 4.2 Assignment
Instructions:
 This assignment contains multiple Assessment Activities
 Please complete the Declaration of Authenticity at the bottom of this page
 Save this assignment (e.g. on your desktop)
 To complete the assignment, read the instructions for each question carefully.
 You may be required to refer to your learning materials or other sources to complete
this assessment.
 You are required to type all your responses in the spaces provided
 Once you have completed all parts of the assignment and saved it, login to the
Monarch Institute LMS to submit your assignment for grading
 To submit your assignment click on the file ”Submit Diploma of Accounting Module 4.2
Assignment” in the Module 4.2 section of your course and upload your assignment file.
 Please be sure to click “Continue” after clicking “submit”. This ensures your assessor receives
notification of your submission – very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other person’s work has been used without due
acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purpose
of detecting plagiarism.
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the
above student declaration.
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 1 of 34

Units Covered: FNSACC601 & FNSACC603
Important assessment information
Aims of this assessment
This assessment focuses on taxation for legal entities, plans and obligations.
Marking and feedback
This assignment contains multiple Assessment Activities each containing specific instructions.
You are required to attempt all questions.
This particular assessment forms part of your overall assessment for the following unit(s) of
competency:
 FNSACC601 Prepare and administer tax documentation for legal entities
 FNSACC603 Implement tax plans and evaluate tax obligations
Grading for this assessment will be deemed “competent” or “not-yet-competent” in line with
specified educational standards under the Australian Qualifications Framework.
What does “competent” mean?
These answers contain relevant and accurate information in response to the question/s with
limited serious errors in fact or application. If incorrect information is contained in an answer, it
must be fundamentally outweighed by the accurate information provided. This will be assessed
against a marking guide provided to assessors for their determination.
What does “not-yet-competent” mean?
This occurs when an assessment does not meet the marking guide standards provided to
assessors. These answers either do not address the question specifically, or are wrong from a
legislative perspective, or are incorrectly applied. Answers that omit to provide a response to any
significant issue (where multiple issues must be addressed in a question) may also be deemed
not-yet-competent. Answers that have faulty reasoning, a poor standard of expression or include
plagiarism may also be deemed not-yet-competent. Please note, additional information regarding
Monarch’s plagiarism policy is contained in the Student Information Guide which can be found
here: http://www.monarch.edu.au/student-info/
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 2 of 34

Units Covered: FNSACC601 & FNSACC603
What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be
given one more opportunity to re-submit the assessment after consultation with your Trainer/
Assessor. You will know your assessment is deemed ‘not-yet-competent’ if your grade book in the
Monarch LMS says “NYC” after you have received an email from your assessor advising your
assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas
deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting
competency after resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our
Complaints & Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions:
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter
areas raised in the question in full as part of the response.
Performance based questions:
A performance based question requires you to clearly demonstrate your ability to complete
certain tasks, that is, to perform these tasks.
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to
assist you 
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 3 of 34

Units Covered: FNSACC601 & FNSACC603
Assessment Activities
Short Answer and Worked Answer Questions
FNSACC601 Prepare and administer tax documentation for legal entities
FNSACC603 Implement tax plans and evaluate tax obligations
The following questions are based on the material in the textbook “Advanced Income Tax Law” by Peter Baker,
Geoff Cliff & Sonia Deaner, 14th Edition (January 2017)
Activity instructions to candidates
 This is an open book assessment activity.
 You may use a financial calculator or computer application to help calculate values
 You are required to read this assessment and answer all questions that follow.
 Please type your answers in the spaces provided.
 Please ensure you have read “Important assessment information” at the front of this assessment
 Estimated time for completion of this assessment activity: approximately 3 hours
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 4 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 1:
Q1.1.9.
(Comprehensive calculation for a prescribed person)
Ron Veldhuis is aged 16 and is currently studying full-time at high school whilst living with his parents.
During the 2016/17 tax year, Ron received the following amounts: $
Gross Wages from part-time job (PAYG tax withheld $800) 4,700
Gross Interest received on fund given by his parents (TFN withheld $4,900) 10,000
Income Distribution from Estate of Late Aunt 7,500
Income Distribution from Family Trust (tax paid by Trustee $1,500) 6,000
Unfranked Dividend from shares in QQQ Ltd (these were bought with funds from previous
Family Trust distributions) 1,200
Required:
(a) For the purposes of Div 6AA, how much excepted assessable income has Ron derived?
Excepted Income
Particulars Amount ($) Amount ($)
Gross Wages 4700
Income Distribution from Family Trust 6000
Income Distribution from Deceased Estate 7500
Total Excepted Income 18200
(b) For the purposes of Div 6AA, how much eligible assessable income has Ron derived?
Eligible Assessable Income
Particulars Amount ($) Amount ($)
Gross Interest received on Fund 10000
Unfranked Dividend from Shares 1200
Total Eligible Income 11200
(c) Calculate net tax payable by Ron for the 2016/17 tax year.
Eligible Assessable Income
Particulars Amount ($) Amount ($)
Gross Interest received on Fund 10000
Unfranked Dividend from Shares 1200
Total Eligible Income 11200
Tax on taxable Income (45%) 5040
Less: Low Income Tax Offset 445
Total Net Tax Payable 4595
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 5 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 2:
Q2.2.15
(Comprehensive, inter vivos trust)
The Alberts Family Trust, an inter vivos trust, had the following beneficiaries:
Candy (aged 45; entitled to 40% of trust income)
Dandy (aged 30; bankrupt; entitled to 35% of trust income)
Landy (aged 17; entitled to 20% of trust income)
The remainder of each year's income was to be retained or distributed at the Trustee's discretion.
During the 2016/17 tax year trust income was $195,000.
A discretionary amount of $7,000 was paid to Landy (this amount was in addition to Landy’s entitlement
under the Trust Deed).
The trust also had losses of $15,000 in the 2015/16 tax year. These were to be met out of the trust income.
Landy also received interest of $38,000 during the 2016/17 tax year from investments given to him by his
parents.
Landy is single and is not covered by private health insurance.
Required:
a. Complete the following table (covering all beneficiaries) nominating:
 Name of the BENEFICIARY
 Whether or not the beneficiary is PRESENTLY ENTITLED
 Whether or not the beneficiary is under a LEGAL DISABILITY
 WHO IS ASSESSED on each amount
 Which sections of the Act apply to make the income assessable
 The amount retained or distributed.
Beneficiary
Presently
entitled?
(Yes/No)
Legal
disability?
(Yes/No)
Who is
assessed? Section(s)
Applicable
Amount
$(Beneficiary
or Trustee)
Candy Yes No Beneficiary
Section 101
of the
ITAA 1936
78000
Dandy Yes NO Trustee
Landy Yes No Trustee
Subsection
95A (1) of
the ITAA
1936
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 6 of 34

Units Covered: FNSACC601 & FNSACC603
Balance 117000
Total 195000
b. Calculate tax payable by the trustee on behalf of Dandy, Landy and the balance of trust net income.
Tax payable by Trustee on behalf of Dandy:
Tax Payable by Trustee on Behalf of Dandy
Particulars Amount ($)
Assessable Income 0
Tax on Taxable Income 13728.25
Add: Medicare Levy 0
Total Tax Payable 13728.25
Tax payable by Trustee on behalf of Landy:
Tax Payable by Landy
Particulars Amount ($)
Assessable Income
Distribution of Trust Profits 39000
Discretionary Amount 7000
Receipt of Interest 38000
Total Assessable Income 84000
Tax on Taxable Income 18847
Add: Medicare Levy 1680
Less: Loss 3000
Total Tax Payable 17527
Tax payable by Trustee on balance of trust net income:
Tax Payable by Trustee on Net Income
Particulars Amount ($)
Assessable Income
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 7 of 34

Units Covered: FNSACC601 & FNSACC603
Balance Amount 117000
Tax on Taxable Income 30922
Add: Medicare Levy 2340
Total Tax Payable 33262
c. Calculate tax payable by Landy (only).
Tax Payable by Landy
Particulars Amount ($)
Assessable Income
Distribution of Trust Profits 39000
Discritionary Amount 7000
Receipt of Interest 38000
Total Assessable Income 84000
Tax on Taxable Income 18847
Add: Medicare Levy 1680
Less: Loss 3000
Total Tax Payable 17527
The following questions are based on the material in Chapter 3:
Q3.3.3
(Allocation of Partnership Net Income)
Sue, Prue, Lou and Emmet operate a transport company in the ratio 4:3:2:1.
Their assessable income for the 2016/17 tax year amounted to $780,000 while they had $300,000 of
deductions.
Their partnership agreement states that all profits and losses are to be shared in the ratio 4:3:2:1 after
adjusting for partner’s salaries, travel allowances and interest on capital.
The following data was extracted from their financial records:
Interest on Capital
Sue $ 12,000
Prue 15,000
Lou 5,000
Emmet 3,000
Partner’s Salaries
Sue 65,000
Prue 50,000
Emmet 20,000
Travel Allowances
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 8 of 34

Units Covered: FNSACC601 & FNSACC603
Sue 4,000
Emmet 6,000
Required:
Based on the above information, complete the table calculating each partner’s share of partnership net
income under the terms of the partnership agreement.
Sue Prue Lou Emmet Total $
Interest on capital 12000 15000 5000 3000 35000
Partners’ salaries 65000 50000 20000 135000
Travel allowances 4000 6000 10000
Share of Adjusted Net
Income 192000 144000 96000 48000 480000
Total $ 660000
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 9 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 4:
Q4.4.21
(Reconciliation of taxable income)
Trash Converters Limited, a small business entity, has prepared an income statement for 2016/17:
$ $
GROSS PROFIT 1,624,000
Add: OTHER INCOME
Unfranked Dividend 2,300
Fully Franked Dividends (company tax rate 30%) 7,700
Net Dividends from Spain - note 1 32,000
Gain on Sale of Shares - note 2 2,000 44,000
TOTAL OPERATING INCOME 1,668,000
EXPENSES
Depreciation - note 3 34,000
Fringe Benefits Tax 48,000
Payroll Tax 46,900
Superannuation - note 4 75,000
PAYG Instalments Paid - note 5 92,000
Other Deductible Expenditure 965,000 1,260,900
NET PROFIT 407,100
Note 1 The dividends from Spain have had $8,000 of tax withheld.
Note 2 Shares sold during the year were acquired in 1984 as an investment.
Note 3 Decline in value deduction is calculated as $28,000.
Note 4 Superannuation includes an amount of $30,000 paid to a director's spouse. This
$30,000 amount is deemed to be excessive.
Note 5 All of the PAYG tax instalments relate to the current year.
Required:
a. Complete the table reconciling net profit with taxable income for the 2016/17 tax year.
b. Calculate net tax payable by the company for the 2016/17 tax year. (For the purpose of this exercise,
assume a 27.5% small business entity company income tax rate, as per chapter 4.3 of your textbook).
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 10 of 34

Units Covered: FNSACC601 & FNSACC603
4 a. and 4 b.
Amount ($) Amount ($)
Net Profit per income statement $ 4,07,100
Add:
Franking Credits $ 5,390
Foreign Tax – Spain $ 32,000
Accounting Depreciation $ 34,000
Superannuation $ 45,000
PAYG instalments $ 92,000 $ 2,08,390
$ 6,15,490
Less:
Decline in Value $ 28,000
Accounting Gain on Shares $ 2,000 $ 30,000
Taxable Income $ 5,85,490
Tax on Taxable Income $ 1,61,010
Less:
Franking Tax Offset $ 2,310
PAYG Instalments $ 92,000
Foreign Income Tax Offset – tax paid $ 8,000 $ 1,02,310
Tax Payable $ 58,700
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 11 of 34

Units Covered: FNSACC601 & FNSACC603
Q5.4.27
(Franking Account)
Rudimentary Pty Ltd, a corporate tax entity, has the following transactions for the 2016/17 tax year:
Date Transaction $
30/06/16 Balance Nil
15/10/16 PAYG Instalment Paid 14,000
15/12/16 2015/16 Tax Refund Received 9,500
12/03/17 Fully Franked Dividend Received 3,500
08/05/17 Fully Franked Dividend Paid 7,000
Note – the benchmark franking percentage is 100%.
Required: Prepare the franking account for the 2016/17 tax year.
Date Transaction Debit Credit Balance
(state if DR or CR)
01-07-2016 Opening Balance $ -
15-10-2016 PayG Instalment Paid $ 14,000.00 $ 14,000.00
15-12-2016 Tax Refund $9,500.00 $ 9,500.00
12-03-2017 Fully Franked Dividend Received $ 3,500.00 $ 3,500.00
08-05-2017 Fully Franked Dividend Paid $7,000.00 $ 7,000.00
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 12 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 5:
Q6.5.1
(Average Income)
Ernie Wombat is a primary producer who commenced business in 2011/12. The following data relates to
Ernie’s first 6 years of trading:
Year Assessable Income Deductions
2011/12 $ 32,000 $ 15,000
2012/13 35,000 20,000
2013/14 31,000 39,000
2014/15 42,000 21,000
2015/16 45,000 22,000
2016/17 51,000 25,000
 All assessable income and deductions are from primary production.
 The deductions do not include any amounts that may be deductible for losses of previous years.
Required:
a. Calculate Ernie’s taxable income for each tax year.
b. Calculate Ernie’s average income for each tax year.
Year Taxable Income Average Income Notes (if any)
2011/12 17000
39333
(Assessable Income -
Deductions = Taxable Income)
= (32000-15000)
2012/13 15000 39333 (35000-20000)
2013/14 -8000 39333 (31000-39000)
2014/15 21000 39333 (42000-21000)
2015/16 23000 39333 (45000-22000)
2016/17 26000 39333 (51000-25000)
The average income is as below:
Year Average Income
2011/12 $ 32,000
2012/13 35,000
2013/14 31,000
2014/15 42,000
2015/16 45,000
2016/17 51,000
The average income of Ernie is ($32,000 + $35,000 + $31,000 + $42,000 + $45,000 + $51,000)/6 = $39,333
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 13 of 34

Units Covered: FNSACC601 & FNSACC603
Q7.5.5.
(Tax calculation under averaging)
Rikki Teabridge had the following income during the 2016/17 tax year:
Net Business Income from Primary Production $ 35,000
Gross Wages from part-time job at local supermarket $ 20,000
 Rikki’s average income was $20,000.
 Rikki had no other assessable income or deductions.
 PAYG tax of $2,000 was withheld from Rikki’s wages.
 Rikki is covered by adequate private health insurance.
Required:
Complete the following statement showing Rikki’s tax payable for the 2016/17 tax year including any
averaging adjustment.
Notes/Workings (if any)
Tax on Average Income
Tax on $ $35,000
Comparison of Tax Rate (2,242/35,000) × 100 6.41 %
Gross Averaging Amount
Tax on $ @ ordinary rates 35,000 × 6.41 % $2,243.5
Tax on $ @ comparison rates 35,000 × 7.47 % $2614.5
$4,858
Averaging Component 35,000 $35,000
Averaging Adjustment Tax Offset $6,497-$2,614 = $3,883 (35,000 x 4,858) /
35,000 $4,858
Tax Payable Calculation
Tax on $ $35,000
Less Averaging Tax Offset $4,858
Less Low Income Tax Offset $
Add Medicare Levy $700
Less PAYG Withheld $2,000
= Tax Payable $28,842
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 14 of 34

Units Covered: FNSACC601 & FNSACC603
Q8.5.9
(Trading account, average cost)
Clyde Wishbone breeds and sells sheep. During the 2016/17 year records disclosed the following:
Quantity Value ($)
Sheep on Hand – 30 June 2016 8,200 47,900
Purchases 500 9,200
Natural Increase 2,900
Sales 4,300 92,400
Rations 100
Deaths 300
Clyde chooses to use the prescribed value for natural increase and average cost for rations and closing stock.
Required:
Prepare the average cost calculations and the trading account for the 2016/17 tax year.
Average Cost Calculations
Qty. of Sheep $
Opening Stock 8200 $47,900
Purchases 500 $9,200
Natural Increase @ prescribed value 2900 at $4 per sheep $11,600
Total 11,600 $68,700
Average Cost of one sheep $5.92
Average Cost of Rations Qty Sheep for rations $592
Average Cost of Closing Stock Qty Sheep at Closing Stock
(6,900 × 5.92) $40,848
Sheep Trading Account
Qty. $ Qty. $
Opening Stock 8200 47,900 Sales 4300 92,400
Purchases 500 9,200 Rations 100 592
Natural Increase 2900 11,600 Deaths 300 1,776
Gross Profit 66,916 Closing Stock 6900 40,848
Total 135,616 Total 135,616
The following questions are based on the material in Chapter 6:
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 15 of 34

Units Covered: FNSACC601 & FNSACC603
Q9.6.3.
(Assessable contributions)
The Spotless Superannuation Fund is a complying superannuation fund. The fund received the following
contributions:
July 2016 Contributions from contributing employer relating to 2015/16 $ 27,800
Sep 2016 Superannuation Guarantee Shortfall received from ATO 11,400
Oct 2016 Contributions from employer relating to Sept 2016 quarter 34,500
Jan 2017 Contributions from employer relating to Dec 2016 quarter 36,100
Apr 2017 Contributions from employer relating to March 2017 quarter 27,450
July 2017 Contributions from employer relating to June 2017 quarter 19,320
All of the above amounts related to members who have supplied their TFN.
There was a further $8,340 of superannuation accrued and payable by the contributing employer in relation
to 2016/17 but not yet received by the fund.
Required:
Calculate the fund’s assessable income from contributions for the 2016/17 tax year.
Computation of Assessable Income From Fund
For the year ended 2016/17
Particulars Amount ($)
Contributions from employer 27800
Superannuation guarantee 11400
Contributions from employer 34500
contributions from employer 36100
contributions from employer 27450
contributions from employer 19320
Superannuation accrued 8340
Total Taxable Income 164910
Tax rate 15%
Total tax payable 24736.5
Q10.6.5
(Assessable income, ordinary income)
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 16 of 34

Units Covered: FNSACC601 & FNSACC603
The Blowhard Superannuation Fund, a complying fund, received the following amounts during the 2016/17 tax
year:
Unfranked Dividends from listed companies $ 12,450
Franked Dividends from listed companies (Fully franked. Company Tax rate 30%) 20,300
Interest from cash management account 8,250
Proceeds from redemption of term deposits (includes principal of $50,000) 59,400
Interest from at-call deposit (net of $4,900 TFN tax withheld) 5,100
Interest from investments segregated to meet the payment of current income
stream benefits
35,000
Required:
Calculate the fund’s assessable income from investments for the 2016/17 tax year.
Computation of Assessable Income
For the year ended 2016/17
Particulars Amount ($)
Assessable Income
Unfranked Dividends 12,450
Franked Dividends from Listed Company
Fully Franked (20300*70/100) 14210
Franking Credits 6090
Proceeds from Redemptions 59400
Interest from Call Deposits 5100
Interest from investment 3500
Total Income 1,00,750
Tax rate @15% 15112.5
Less: Franking Credits offset 6090
Less: PAYG Withheld 4900
Total tax payable 4122.5
The following questions are based on the material in Chapter 7:
Q11.7.3
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 17 of 34

Units Covered: FNSACC601 & FNSACC603
(Calculation of income attributable to members)
Dockside Rowers Club disclosed the following data for the 2016/17 financial year:
Days Open 361
Financial members 900
Average % of members in attendance daily 15%
Total visitors for the year 4,200
Visitors accompanied by members 1,950
Net Trading Surplus for the year $ 200,000
Required:
Calculate the proportion of the receipts that would be deemed to be from non-members.
The required formula is as below:
{(B × 75%) + C)} / [{(R × S) × T} + A]
In the above formula,
A = total number of visitors of the year
B = Guests of the members and members accompany these guests to the club and signs into
the club,
C = A – B
R = the average number of subscribed members
S = the average daily percentage of attended members in the club
T = the number of trading days in the income year
Thus, A = 4200, B = 1950, C = 4200 – 1950 = 2250, R = 0, S = 15% (900), T = 361
Therefore,
{(B × 75%) + C)} / [{(R × S) × T} + A] = 0.883929 × 200000 = 176785.8
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 18 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 8:
Q12.8.1
(Professional and other income of an artist)
Sam Journeyman derives income as a professional beach dodge ball player.
During the 2016/17 tax year, Sam received the following amounts:
Tournament Prizemoney from dodge ball $ 85,000
Appearance fees from dodge ball tournaments 12,000
Cash sponsorship from Aussieboom 60,000
Jetski provided by Aussieboom as a benefit 8,000
Interest from bank account comprising savings from Prizemoney 3,700
Directors fees from Dodgeball Australia 14,500
Car provided by Dodgeball Australia as a benefit 7,200
Required:
a. Calculate Sam’s taxable professional income for the 2016/17 tax year.
Taxable Professional Income $
Prize money from the tournament 85000
Fees for appearance 12,000
Cash sponsorship 60,000
Jetski 8,000
Total 111,000
b. Calculate Sam’s other taxable income for the 2016/17 tax year.
Other Taxable Income $
Interest received from bank account 3,700
Fees of directors 14,500
Car 7,200
Total 25,400
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 19 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 9:
Q13.9.7
(False and misleading statements)
Randy Michaels has a client, Shonky Pty Ltd. The directors of Shonky have asked Randy to lodge their
company's 2016/17 income tax return with the correct taxable income, but with a false address and
contact details. They have also requested that Randy does not disclose the fact that the company has
made payments to associated persons during the year.
Required:
What are the possible consequences for Randy if he agrees to do either of these things?
As per the ruling of the Australian Taxation Office, an individual accused for providing
misleading or false information must be subject to a penalty that is called ‘False or Misleading
statement penalty’. In the same manner, it can be seen in case of Shonky Pty Ltd that the
company has requested for providing false or misleading information related to the wrong
address along with the contact details. Thus, as per the regulation of the Australian Taxation
Office, it will be required to impose the penalty on Shonky Pty Ltd since this was intentional
from the company for omitting the required information so that misleading results can be
provided.
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 20 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 10:
Q14.10.1
(Returns required for lodgement)
The following information relates to transactions during the 2016/17 tax year:
 Al Basic, an Australian resident aged 30, received a gross salary of $50,000 and had no other income or
deductions. Al does not use the services of a Registered Tax Agent.
 Brianna Minor, an Australian resident aged 15, received interest on an investment given to her by her
parents amounting to $750. She had no other income or deductions and does not use the services of a
Registered Tax Agent.
 Drew Toomuch, an Australian resident aged 39, derived net business losses of $15,000. He has no
other income or deductions and uses the services of a Registered Tax Agent.
 Fritz Watson, an Australian resident aged 19, received gross wages of $11,100 ($500 PAYG tax
withheld). Fritz did not have any other income or deductions and does not use the services of a
Registered Tax agent.
Required:
For each taxpayer state whether or not they are required to lodge an income tax return for the 2016/17
tax year and if so, when the return must be lodged.
Name Required to lodge? (Y/N)
(include brief comment/notes to
support your view)
If Yes,
due by date is
Al Basic Yes 31/10/2018
Brianna Minor No
Drew Toomuch No
Fritz Watson No
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 21 of 34

Units Covered: FNSACC601 & FNSACC603
Q15.10.5
(Rulings and determinations)
The following tax rulings were issued in relation to the application of tax legislation:
a. A ruling is issued by the tax office relating to investment in a publicly available trust which aims to
breed and sell Three-Legged Northern Mongolian Parrots.
The prospectus claims that investors will be able to claim the cost of any units subscribed as an
immediate tax deduction. In the ruling, the Commissioner has indicated that not only will there be no
immediate deduction, but investors will be ineligible to claim any interest expenses in acquiring the
units until the trust has commenced deriving sales.
b. Joanne Royal has applied for and received a ruling relating to her ability to claim a net medical
expenses tax offset for massage oils. The ruling stated that Joanne cannot include the oils in
determining her tax offset.
c. The Commissioner released a ruling that ‘frequent flyer’ bonuses received by employees as a result of
employer expenditure are not subject to FBT.
d. Frank phoned the ATO regarding a meal allowance received from his employer. In the course of the
phone conversation, he provided full identification and was advised by a tax officer that the allowance
is assessable income.
Required:
For each of these examples, indicate the type of ruling or decision that has been made by the Commissioner
and the extent to which it is binding on the taxpayers involved.
Taxpayer Type of Ruling
[Oral, Public, Private,
Product, Class, Tax
Determination]
Extent to which it is binding
(provide your explanation/reasons)
a. Product Ruling It explains the interest deductibility regarding the interest
expenses
b. Public ruling It is considered as the manifestation of the opinion of the
commissioners in relation to the manner in which one can claim
the net medical tax offset for massage oil as tax offset
c. Tax
Determination
(TD95/61)
It has association with the received benefits of the taxpayer
gaining from the program of frequent flyer. In this case, there is no
need to treat the frequent flyer point as assessable income.
d. Public Learning It has major relation with the allowance for meal expenses.
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 22 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 11:
Q16.11.1
(Due dates for payment)
The following taxpayers are required to lodge income tax returns and each has a tax liability in respect of the
2016/17 tax year:
a. Sophie Wilson, an individual resident, has lodged her 2016/17 income tax return on 15 September
2017. Based on the return, she will have tax payable of $2,000 She is not on the lodgement list of a
registered tax agent.
b. Payable Pty Ltd, a resident corporate entity, has lodged their 2016/17 income tax return on 10
August 2017. They were not on the lodgement list of a registered tax agent. Based on the return,
Payable Pty Ltd will have $1,200 of tax payable.
c. On 20 August 2017, Dianne Porterhouse received her 2016/17 assessment indicating that she had
$4,000 payable on 22 November 2017. Dianne lodged an objection and on 15 November 2017
received an amended assessment showing that $2,900 was now payable.
Required:
For each of these taxpayers, specify the date due for payment of amounts owed to the tax office.
Taxpayer Due Date for payment to ATO
a.
Sophie Wilson
31 October
b.
Payable Pty. Ltd.
30 September
c.
Dianne Porterhouse
21 December
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 23 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 12:
Q17.12.5
(Previous offences)
Cheryl, a single resident taxpayer, is employed as an elite full-time soccer referee and claims that she plays
video games for ‘practice in making decisions’. In her 2016/17 income tax return, Cheryl disclosed taxable
income of $153,000 after claiming video game expenses of $1,500.
Cheryl is also subject to the Medicare Levy Surcharge (Tier 3). Cheryl has been penalised previously following
an audit of her 2013/14 income tax return.
Required:
Calculate the likely penalties that would be imposed on Cheryl if the resulting shortfall were uncovered during
ATO audit activity.
Cheryl Disclosed
Taxable Income
Amended
Taxable Income
Taxable Income $153,000 $153,170
Tax on income $44,242 $44,412
Medicare Levy 2% $3,060 $3,230
Medicare Levy Surcharge 1.5% $2,295 $2,465
Total $49,597 $50,170
Total shortfall of tax payable (= Amended Total less Disclosed Total) $510
Penalties Calculation details Amount $
Base penalty amount $170
Increase for previous
offences
$340
Total Penalty $510
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 24 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 13:
Q18.13.7
(Successful appeal)
Stefan Hawkins has been successful with an appeal to the AAT against his 2016/17 income tax assessment. The
basis for the challenge was $20,000 of deductions that were disallowed by the Commissioner.
The AAT indicated that the entire amount should have been properly allowed as a deduction. The
Commissioner has advised that he will not seek to have the AAT decision overturned.
The amount that was challenged by Stefan comprised $8,000 of income tax, $2,000 of additional penalties,
and $1,500 of general interest charge. Stefan had paid these amounts in full.
Required:
a. Which of the above amounts is the Commissioner obliged to refund to Stefan?
The commissioner is permitted for refunding to Stefan the amount of $8,000 of income and
$1,500 of general interest charges that needs to be imposed on deduction disallowances.
b. Are there any other amounts that may be paid to Stefan as a result of the AAT decision?
The taxpayer in this case named Stefan will have the right of claiming the refund in relation to
the interest charge amount of $1,500.
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 25 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 14:
Q19.14.9
(Tax planning, Superannuation co-contributions)
Jim’s taxable total income is $37,000. In addition to this he received reportable fringe benefits of $3,500.
Required:
Calculate the maximum Superannuation co-contribution he can receive for the 2016/17 year.
(Show your workings)
Period Estimated super guarantee amount
01/07/2016 - 30/09/2016 $961.88
01/10/2016 - 31/12/2016 $961.88
01/01/2017 - 31/03/2017 $961.88
01/04/2017 - 30/06/2017 $961.88
Total estimated super guarantee amount: $3847.52
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 26 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 15:
Q20.15.1
(Personal service income)
Required:
For each of the following, state whether the income described would be classed as Personal Services Income
(include a brief explanation/reason for your decision):
(a) Sally, a marketing consultant, provides consulting services to a soft drink company.
(b) Greg owns a block of holiday apartments that he leases for holiday letting.
(c) Rochelle is a music producer. She does not use her own studio, but employs a team of five engineers
and producers who contract to produce complete projects for various artists.
(d) Howard receives monthly payments from a produce co-operative for the right to use software that he
has developed. The software records all classification, inventory and financial transactions.
(e) Mal receives contract receipts to act as general manager of a lighting company. His contract is for
eighteen months only. Mal is provided with an office, furniture and a computer for the duration of the
contract.
Taxpayer Is this Personal Services Income? (Yes/No)
(provide your explanation/reason)
a. Sally Yes, personal service income because of its derivation from the
Sally’s personal skills and efforts.
b. Greg No since the income has not been derived from the taxpayer’s
personal skill or income.
c. Rochelle Yes, personal service income because of the fact that Rochelle
derives the income from personal efforts and skills since he is a
professional.
d. Howard Yes, personal service income as Howard developed the software
from his personal skills and efforts.
e. Mal No, the taxpayer is given contract which does not involve in the
exercise of personal efforts and skills for deriving the income.
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 27 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 16:
Q21.16.3
(Definition of tax havens)
Required:
What are two key factors that the OECD identifies in considering whether a jurisdiction is a tax haven?
The vital factors have been recognized by the organization for economic co-operation and
development in making the decision related to the jurisdiction of tax; and the two factors are
shown blow:
1. There is not any or only nominal tax sum
2. There is not enough transparency or lack of transparency
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 28 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 17:
Q22.17.5
(Calculation of FBT liability, gross up values)
Hook, Line and Plunger Coffee Shop provide their employees with the following fringe benefits during the
2016/17 FBT year. The employer is registered for GST and able to claim input tax credits.
Description of Fringe Benefit Taxable Value
Low interest loan $2,450
Payment of private telephone account 1,940
Use of a Volkswagen car (purchased January 2000) 3,380
Use of a Holden car (purchased March 2015) 9,415
Payment of private school fees (no GST) 10,825
The employer has not paid any FBT instalments during the year.
Required:
Calculate Fringe Benefits Tax payable by Hook, Line and Plunger Coffee Shop for the 2016/17 FBT year.
Show separate calculations for any Type 1 and Type 2 fringe benefits.
Type 1 (only) Fringe Benefits:
Taxable Values of Fringe Benefits: (List by description)
Use of a Volkswagen car $3,380
Use of a Holden car $9,415
= Total Taxable Value (Type 1 only) $12,975
Gross-Up Factor (Type 1 only)
= Total Grossed-Up Value of Benefits (Type 1 only) $26,616.16
@ FB Tax Rate % 47%
= Total FB Tax Payable (Type 1 Benefits only) $12,509.59
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 29 of 34

Units Covered: FNSACC601 & FNSACC603
Type 2 (only) Fringe Benefits:
Taxable Values of FB: (List by description)
Low interest loan $2,450
Payment of private telephone account $1,940
Payment of private school fees (no GST) $10,825
= Total Taxable Value (Type 2 only) $15,215
Gross-Up Factor (Type 2 only)
= Total Grossed-Up Value of Benefits (Type 2 only) $28,707.66
@ FB Tax Rate % 47%
= Total FB Tax Payable (Type 2 Benefits only) $13,492
Total FB Tax Payable (Type 1 plus Type 2) $26,002.19
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 30 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 18:
Q23.18.5
(Active asset reduction and retirement exemption)
On 1 July 2016, Micah Wong, a resident taxpayer aged 58, sold his mortgage broking business for $2,675,000
and retired. The proceeds are entirely for goodwill and the cost base for this asset consists solely of second
element costs on disposal of $35,000.
Micah commenced business in 2007 and does not have any other current or prior year capital gains or losses.
His business satisfies the requirements of Subdivision 152-C.
Required:
Yes / No?
a. Does the 50% CGT discount apply? Yes
b. Does the Small Business Active Asset reduction apply? No
c. Does the Small Business Retirement Concession apply? Yes
d. Calculate Micah's net capital gain for the 2016/17 tax year (use grid provided to show your workings):
Calculation details (if any) $
Gain on Sales of business Selling price $2,675,000
Add: Asset cost base $35,000
Gross Capital Gains $26,78,500
50% CGT Discount $13,39,250
Net Capital Gain $13,39,250
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 31 of 34

Units Covered: FNSACC601 & FNSACC603
The following questions are based on the material in Chapter 19:
Q24.19.7
(GST attribution transactions)
Jack Ramjet owns a clothing store in Melbourne. The following transactions occurred in the September 2016
quarter:
All applicable transactions include GST.
Cash sales $ 65,000
Credit sales (accounts receivable customers) 120,000
Collections of accounts receivables 90,000
Cash purchases 50,000
Credit purchases to suppliers (accounts payable customers) 55,000
Payment of accounts payables 68,000
Wages paid to employees 24,000
Interest received 200
Interest paid 1,200
Required:
Calculate the GST payable for the September quarter:
(a) On a cash basis.
(b) On an accrual basis.
( a ) Cash Basis
GST Collected: Amount $ (incl. GST) GST $
Cash Sales 65,000 6500
Interest Received 200 20
Total GST Collected $6,520
GST Paid: Amount $ (incl. GST) GST $
Cash Purchase 50,000 5,000
Wages payment to employees 24,000 2,400
Payment of Interest 1,200 120
Total GST Paid $7,520
Net GST (specify if Payable or
Refundable) $1000
( b ) Accrual Basis
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 32 of 34

Units Covered: FNSACC601 & FNSACC603
GST Collected: Amount $ (incl. GST) GST $
Credit Sales 120,000 12,000
Interest Received 200 20
Total GST Collected $12,020
GST Paid: Amount $ (incl. GST) GST $
Credit purchase 55,000 5,500
Wages payment to employees 24,000 2,400
Interest paid 1,200 120
Total GST Paid $8,020
Net GST (specify if Payable or
Refundable) $4000
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 33 of 34

Units Covered: FNSACC601 & FNSACC603
The following question is based on the material in Chapter 20:
Q25.20.1
(What is tax crime?)
Required:
Provide five (5) methods of “criminal attack” that are most commonly used by criminals to evade taxation
obligations or fraudulently use the system to obtain an improper financial benefit.
5 Most common ‘criminal attack’ methods on the tax system:
1. Fraud related to payment of GST
2. Fraud claim related to tax relief
3. Processing of GST payments against zero-rated items
4. Good smuggling like tobacco and alcohol
5. Payment made to the charities under gift aid
Diploma of Accounting - Module 4.2 Assignment (2017, 14Ed) 1704 Page 34 of 34