Taxation Law Assessment on Commonwealth Taxes, Tax Liability Calculation, Partnership Definition, GST Consequences, and Tax Returns

Student Number: (enter on the line below)
Student Name: (enter on the line below)
HI6028
TAXATION THEORY, PRACTICE AND LAW
SUPPLEMENTARY ASSESSMENT
TRIMESTER 1, 2021
TIME ALLOWED: 4.5 hours
All answers must be submitted within this time frame. Late submissions are not
accepted.
Assessment Weight: 50 total marks
Instructions:
 All questions must be answered by using the answer boxes provided in this paper.
 Completed answers must be submitted to Blackboard by the published due date
and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HI6028 Online Supp T1 2021

HI6028 Online Supp T1 2021

Question 1 (7 marks)
What are the key commonwealth taxes levied in Australia? Explain at least four taxes and the key
features of these taxes.
ANSWER: ** Answer box will enlarge as you type
The most significant of Commonwealth taxes levied in australia are:
1. Income taxes for individuals and companies: It is the most significant form of taxation in
australia which is collected by the federal government through ATO. Australia maintains a lower
tax burden in cmparison to the other wealthy countries. Australia makes use of progressive tax
scale system for taxing indivdiual snad companies.
2. Superannuation taxes: It taxed in australia by ATO at three points which are contribution
received by the superannuation fund, income on the investment earned by the fund and the last
is the benefit paid by the fund. In Australia, every employee is required to pay minimum level of
superannuation to its employees in order to ensure workers have enough moneyset aside for
their retirement.
3. Customs and excise duties: It is the key source for the purpose taxation which is very easy to
manage and is also less likely to interest negative attention in contrast to the other direct form of
taxation. The rules which are applicable to the customs duty within Australia are very complex
and the importers are required to take advice for every case. The excise duty is being paid by the
producer at the given rate. Also, the respective rate of excise might rise twice in a year in order
to replicate changes due to inflation.
4. Taxes on capital gains: It is imposed on the capital gains which is realised on the sale of assets
and for the taxation purpose the list of assets which are subjected to CGT are very broad. CG is
incorporated within taxpayer’s assessable income and is thus, also taxed at each taxpayer’s
applicable income tax slab rate.
Question 2 (7 marks)
Nick is working for an Indian mining company in an Australian city. Nick is a single resident who
does not have private health insurance. He earned $120,000 and has a $ 15,000 deduction during
the 2020/2021 income year. Calculate his tax liability (income tax, medicare levy, medicare levy
surcharge (if applicable) and low and middle income tax offset for the 2020/2021 income year.
ANSWER:
Income earned = $120000
HI6028 Online Supp T1 2021

Student Number: (enter on the line below)
Student Name: (enter on the line below)
HI6028
TAXATION THEORY, PRACTICE AND LAW
SUPPLEMENTARY ASSESSMENT
TRIMESTER 1, 2021
TIME ALLOWED: 4.5 hours
All answers must be submitted within this time frame. Late submissions are not
accepted.
Assessment Weight: 50 total marks
Instructions:
 All questions must be answered by using the answer boxes provided in this paper.
 Completed answers must be submitted to Blackboard by the published due date
and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HI6028 Online Supp T1 2021

Question 1 (7 marks)
What are the key commonwealth taxes levied in Australia? Explain at least four taxes and the key
features of these taxes.
ANSWER: ** Answer box will enlarge as you type
The most significant of Commonwealth taxes levied in australia are:
1. Income taxes for individuals and companies: It is the most significant form of taxation in
australia which is collected by the federal government through ATO. Australia maintains a lower
tax burden in cmparison to the other wealthy countries. Australia makes use of progressive tax
scale system for taxing indivdiual snad companies.
2. Superannuation taxes: It taxed in australia by ATO at three points which are contribution
received by the superannuation fund, income on the investment earned by the fund and the last
is the benefit paid by the fund. In Australia, every employee is required to pay minimum level of
superannuation to its employees in order to ensure workers have enough moneyset aside for
their retirement.
3. Customs and excise duties: It is the primary source of taxation which is easy to administer and
is also less likely to attract negtaive attention in contrast to the other direct form of taxation. The
rules applying to customs duty in Australia are very complex and the importers are required to
seek advice for every case. The excise duty is paid by the manufacturer at a flat rate. The
applicable rate of excise might increase twice a year in order to reflect inflationary changes.
4. Taxes on capital gains: It is imposed on the capital gains which is realised on the sale of assets
and for the taxation purpose the list of assets which are subjected to CGT are very broad. CG are
included in taxpayer’s assessable income and therefore taxed at each taxpayer’s applicable
income tax rate.
Question 2 (7 marks)
Nick is working for an Indian mining company in an Australian city. Nick is a single resident who
does not have private health insurance. He earned $120,000 and has a $ 15,000 deduction during
the 2020/2021 income year. Calculate his tax liability (income tax, medicare levy, medicare levy
surcharge (if applicable) and low and middle income tax offset for the 2020/2021 income year.
ANSWER:
Income earned = $120000
Less: Deductions = $15000
HI6028 Online Supp T1 2021

Total taxable income = $105000
Computation of tax liability on $105000
No tax on income between $1 - $18,200 $0
19c for every dollar between $18,201 - $45,000 $5092
32.5c for every dollar between $45,001 - $120,000 $19500
Income tax payable $24592
Medicare levy payable @2% of total taxable income $2100
Income after tax & Medicare levy (105000 – 24592 - 2100) $78308
Marginal tax rate 32.5%
Medicare levy surcharge @1% on total taxable income $1050
Question 3 (11 marks)
Ronald runs his own public relations business. During the year he incurred the following
expenses:
(a) salary costs of $350,000;
(b) travel expenses of $7,000 for travel between home and work;
(c) travel expenses of $3,000 for travel from a client's premises to his home;
(d) $1,500 on a new suit to impress his clients;
(e) $700 on membership of the local sports club where he entertains clients;
(f) $8,000 in meal expenses on entertaining clients.
Required:
State whether the above would be allowed as allowable deduction against assessable income.
Provide a justification for your argument based on statute and case law
ANSWER:
a) Salary costs of $350,000
Salary expenses is deductible under section 8-1 of ITAA97 as it is necessarily incurred in respect
to carrying out the business in order to gain or prduce assessable income and also does not fall
into any of the Negative limbs of Section 8-1.
b) Travel expenses of $7,000 for travel between home and work
Since the expense is incurred pertaining to travel between home and work, then these expenses
are not deductible as it is being incurred in order to put him in the position to gain or produce
assessable income instead of being incurred in gaining or producing assessable incoem Lunney.
HI6028 Online Supp T1 2021