FNS50215 Diploma of Accounting Module 4.1 Assignment Solution

This assignment solution addresses the requirements of the FNS50215 Diploma of Accounting Module 4.1, focusing on preparing tax documentation for individuals. The assignment includes various assessment activities, such as calculating Medicare Levy liabilities for different taxpayers based on their taxable income and family status. It also involves tax calculations for individuals with diverse income sources, including employment income, fringe benefits, and dividend income, and determining the net tax payable or refundable, considering factors like PAYG installments, Medicare Levy Surcharge, and franking credits. The solution covers the application of tax regulations to various financial scenarios, including income from both Australian and foreign sources, and requires the use of the textbook 'Prepare Tax Documentation for Individuals' by Peter Baker, Geoff Cliff & Sonia Deaner, 14th Edition. The document provides detailed calculations and explanations for each question, demonstrating the application of relevant tax principles and legislation.

FNS50215 Diploma of Accounting
Module 4.1 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 4.1
Assignment” in the Module 4.1 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 4.1 Assignment (2017, 14Ed) 1803 Page 1 of 33

Units Covered: FNSACC502
Important assessment information
Aims of this assessment
This assessment focuses on preparing tax documentation for individuals.
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:
 FNSACC502 Prepare tax documentation for individuals
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 4.1 Assignment (2017, 14Ed) 1803 Page 2 of 33

Units Covered: FNSACC502
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 4.1 Assignment (2017, 14Ed) 1803 Page 3 of 33

Units Covered: FNSACC502
Assessment Activities
Short Answer and Worked Answer Questions
FNSACC502 – Prepare tax documentation for individuals
The following questions are based on the material in the textbook “Prepare Tax Documentation for
Individuals” 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 4.1 Assignment (2017, 14Ed) 1803 Page 4 of 33

Units Covered: FNSACC502
The following questions are based on the material in Chapter 1:
Q1.1.5.
(Application of Medicare Levy using family thresholds)
Required: For each taxpayer, calculate their liability for Medicare Levy.
The following persons are resident taxpayers who are not liable for the Medicare Levy Surcharge. The
information given relates to the 2015/16 tax year:
a. Glenn derived taxable income of $22,000 and his wife Rowena derived taxable income of $6,000. They
do not have any children.
It is not needed for Glen for bearing any medicine levy because of the fact that the taxable income is less than
the family threshold where $6000. Thus, it cannot be applied to medical levy.
b. Kath derived taxable income of $41,000 and her husband Fred derived taxable income of $18,000.
They have three dependent children.
Taxable income of Kath = $41,000
Taxable income of Fred = $18,000
3 Dependent Children
{(1500 × 3) – 1500} = $3000
Total = $62,000
= ($62,000 × 2%)
= $1240
c. Beck derived taxable income of $29,000 and her de facto partner Roy derived taxable income $40,000.
They have four dependent children.
Taxable income of Beck = $29,000
Taxable income of Roy = $40,000
3 Dependent Children
(1500 × 3) = $4500
Total = $73500
= ($73500 × 2%)
= $1,470
d. Will derived taxable income of $36,000 and his wife Tina derived taxable income of $22,000. They
have three dependent children.
Taxable income of Will = $36,000
Taxable income of Tina = $22,000
3 Dependent Children
(1500 × 2) = $3000
Total = $61,000
= ($61,000 × 2%)
= $1,220
Q2.1.19.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 5 of 33

Units Covered: FNSACC502
(Tax calculation for family)
Fred, a resident taxpayer aged 47, has taxable income of $145,345 and reportable fringe benefits of $17,170.
During the year Fred has paid PAYG tax instalments totalling $13,480. His wife, Jani, has taxable income of
$27,000.
They have seven children and no private health insurance.
Required: Calculate Fred’s net tax payable for the 2016/17 tax year.
Tip: Check if Medicare Levy Surcharge will apply to Fred and, if applicable, include in your calculations.
The following questions are based on the material in Chapter 2:
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 6 of 33
Particulars Amount
Taxable Income of Fred 145345
Reportable Fringe Benefits 27000
Taxable income of Jani 27000
PAYG instalment -13480
Taxable Income 185865
Dependent children (3*1500) 4500
Less: Exemption of First Child 1500 3000
Taxable income for Medicare levy 188865
Medicare levy 3777.3
Medicare levy surcharge 1888.65
Net Medicare levy 5665.95

Units Covered: FNSACC502
Q3.2.3
(Income from personal exertion)
Ned Markson is a resident taxpayer employed by Acme Holdings Ltd. The following transactions were all as a
consequence of Ned’s employment:
 Net weekly wages totalled $78,000 for the year.
 Total PAYG tax withheld from Ned’s weekly wages from Acme and forwarded to the ATO amounted to
$19,000.
 Additional wages paid to Ned as a Christmas bonus of $6,000 net (net of $4,200 PAYG tax withheld).
 Reimbursement of out-of-pocket travel costs of $1,200 that Ned incurred during his employment.
 A taxable travel allowance totalling $2,800. No PAYG was withheld from this amount.
 Acme paid health insurance premiums for Ned and his wife to the value of $2,750.
 Superannuation contributed $10,000 to Acme Holdings Superannuation Fund on behalf of Ned.
Required:
For each of these transactions indicate which amounts are to be included in Ned’s assessable income and
provide Ned’s total assessable income.
Particulars Amount ($) Amount ($)
Net weekly wages 78000
Additional wages paid 10200
Fringe Benefit for Travelling Cost 1200
Travel allowance 2800
Health insurance premium 2750
94950
Less: Deductions
Superannuation -10000
PAYG on weekly wages -19000
PAYG on Additional Wages -4200 -33200
Assessable Income 61750
Q4.2.13
(Calculation of tax payable from dividend income)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 7 of 33

Units Covered: FNSACC502
Jim Dough, a single resident taxpayer, received the following amounts from investments during the 2016/17
tax year:
Fully Franked Dividends – Dynamic Ltd (franking credit $9,000) $ 21,000
Partly Franked Dividends – Static Ltd (franking credit $2,400) 15,000
Unfranked Dividends – Lost Ground Ltd 20,000
Jim had no other income or deductions during the year.
Required:
a. Calculate Dough’s taxable income for the 2016/17 tax year.
b. Calculate Dough’s net tax payable or refundable for the 2016/17 tax year.
a.
Assessable Income
Fully Franked Dividend Amount ($) Amount ($)
Fully Franked (Net) 12000
Franking Credits 9000 21000
Static Ltd
Fully Franked (Net) 12600
Franking Credits 2400 15000
Unfranked Dividend 20000
Total Taxable Income 56000
b.
Assessable Income
Fully Franked Dividend Amount ($) Amount ($)
Fully Franked (Net) 12000
Franking Credits 9000 21000
Static Ltd
Fully Franked (Net) 12600
Franking Credits 2400 15000
Unfranked Dividend 20000
Total Taxable Income 56000
Tax on Taxable Income 9647
Add: Medicare Levy 1120
Less: Franking offset 15000
Net Tax Refundable 4233
The following questions are based on the material in Chapter 3:
Q5.3.5
(Taxable income from Australian and foreign sources)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 8 of 33

Units Covered: FNSACC502
Yvette Jankic, a resident single taxpayer aged 31, worked in New Zealand from 1 July 2016 until 15 November
2016 and has provided the following information for the 2016/17 tax year:
Receipts $
Interest (net of TFN tax withheld $490) 510
Interest from United Kingdom (net of withholding tax $300) 2,700
Dividend from the U.S. state of Georgia (net of withholding tax $2,100) 3,900
Gross salary – Australian employment (PAYG tax $5,285 withheld) 21,000
Reportable fringe benefit as per PAYG Summary 6,252
Net salary – New Zealand employment (tax withheld $2,540) 12,650
Bonus from Australian Employer for exceptional performance 2,000
Payments $
Interest and Dividend deductions relating to United Kingdom and Georgia investments 250
Work-related deductions relating to Australian employment 300
Note – Yvette does not have private health insurance.
Required:
a. Calculate Yvette’s taxable income for the 2016/17 tax year.
b. Calculate Yvette’s net tax payable or refundable for the 2016/17 tax year.
a.
Calculation of Assessable income
Particulars Amount ($) Amount ($)
Interest (Net) 510
TFN tax withheld 490 1000
Interest from United Kingdom (net) 2700
Withholding tax 300 3000
Dividend from the U.S. state of Georgia 3900
Withholding tax 2100 6000
Gross salary – Australian employment 21000
PAYG tax 5285 26285
Reportable fringe benefit as per PAYG Summary 6252
Net salary – New Zealand employment (Net) 12650
Tax withheld 2540 15190
Bonus from Australian Employer for exceptional performance 2,000
Taxable Income 59727
b.
Calculation of Assessable income
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 9 of 33

Units Covered: FNSACC502
Particulars
Amount
($)
Amount
($)
Interest (Net) 510
TFN tax withheld 490 1000
Interest from United Kingdom (net) 2700
Withholding tax 300 3000
Dividend from the U.S. state of Georgia 3900
Withholding tax 2100 6000
Gross salary – Australian employment 21000
PAYG tax 5285 26285
Reportable fringe benefit as per PAYG Summary 6252
Net salary – New Zealand employment (Net) 12650
Tax withheld 2540 15190
Bonus from Australian Employer for exceptional performance 2,000
59727
Deductions
Interest and Dividend deductions relating to United Kingdom and Georgia
investments 250
Work-related deductions relating to Australian employment 300
Total allowable deductions 550
Taxable Income 59177
Tax on Income 10760
Medicare levy 1183.54
Less: Tax offset 10715
Net Tax Payable 1228.54
The following questions are based on the material in Chapter 4:
Q6.4.3
(Disposal of two assets)
On 10 April 1988, Penny Pleb, an Australian resident, purchased a block of land for $74,000 as an
investment. On 19 February 2017, she sold the land for $125,000.
Penny also sold shares in Prosperous Ltd for $32,000 on 1 August 2016. The shares had cost Penny $8,000 on
17 July 2008. Penny did not dispose of any other assets during the year, nor did she have any capital losses
from previous years.
Required:
Calculate the minimum net capital gain to be included in Penny's assessable income or capital loss to be
carried forward from the 2016/17 tax year.
Calculate using the indexed cost base method and also using only the discount method (without indexing) to
determine the most favourable outcome for Penny. Show your workings for each method.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 10 of 33

Units Covered: FNSACC502
Indexation Method
Particulars Amount ($) Amount ($)
Sale of shares 32000
Indexed cost of shared 37764.83279
Net tax Refunded 5764.832794
There is not any need to consider the vacant land due to the fact that this does not qualify the criteria of
applicability of Indexation Method. Thus, it is not demonstrated in the above calculation.
Particulars Amount ($) Amount ($)
Sale of Shares 32000
Sales of Land 125000
Less: Cost of Land 74000
Cost of Shares 8000 82000
75000
Net capital Gains 37500
Q7.4.15
(Losses with indexed gains)
Brad Emerson, a resident taxpayer, sold the following CGT assets during the 2016/17 tax year:
ASSET COST
BASE
ACQUISITION
DATE
DISPOSAL
DATE
SALE
PRICE
Shares - AAA $48,000 19 Jan 87 20 Feb 17 $71,000
Shares - BBB $62,000 30 May 05 17 Apr 17 $77,000
Shares - CCC $49,000 8 Jun 09 24 Mar 17 $35,000
Required:
Determine the minimum amount of capital gains that Brad is able to include as assessable income in his
2016/17 income tax return.
Calculate using the indexed cost base method and also using only the discount method (without indexing) to
determine the most favourable outcome for Brad. Show your workings for each method.
Capital Gains Tax Calculations
For the year ended 2017
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 11 of 33

Units Covered: FNSACC502
Indexed Capital gains
Particulars Amount ($) Amount ($)
Shares in AAA
Sales Proceeds 71000
Cost Price 48000
Capital gains 23000
Indexed Capital gains 2917
Shares in BBB
Sales Proceeds 77000
Cost Price 62000
Capital gains 15000
Indexed Capital gains 1755
Shares - CCC
Sales Proceeds 35000
Cost Price 49000
Capital loss -14000
-9328
Capital Gains Tax Calculations
For the year ended 2017
50% CGT Discount
Particulars Amount ($) Amount ($)
Shares in AAA
Sales Proceeds 71000
Cost Price 48000
Capital gains 23000
50% CGT Discount 11500
Shares in BBB
Sales Proceeds 77000
Cost Price 62000
Capital gains 15000
50% CGT Discount 7500
Shares - CCC
Sales Proceeds 35000
Cost Price 49000
Capital loss -14000
Capital gains tax payable 5000
Q8.4.37
(Partial main residence exemption)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 12 of 33

Units Covered: FNSACC502
Benita Ford, a resident taxpayer purchased a house on 30 June 2007 which she used as her main residence
for 2 years until 30 June 2009. She then leased the property to tenants for 8 years until the property was sold
on 30 June 2017. Benita will apply the main residence exemption for 6 years of this period.
 The house was originally purchased for $420,000.
 The market value of the property on 30 June 2009 was $475,000.
 The house was sold for $705,000.
Benita did not dispose of any other assets during the 2016/17 tax year.
Required:
Calculate Benita’s Net Capital Gain in respect of the 2016/17 tax year (after allowing for the partial main
residence exemption).
Particulars Amount ($)
Sales Proceeds 705000
Cost Price 475000
Assessable Capital Gains 230000
Rule of 6 years exemption
Total number of days as main evidence = 365 Days × 6 Years = 2190 Days
Total number of days that the property was not the main evidence = 365 Days × 2 Years = 730 Days
Total capital gains from CGT event
Number of days in ownership period
when the dwelling was not main
residence
Total number of days when the property
was under ownership
The amount of assessable capital gains = $76666.67 and the calculation is shown below
230000 730 76666.67
2190
The following questions are based on the material in Chapter 5:
Q9.5.29
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 13 of 33

Units Covered: FNSACC502
(Foreign Pension)
Leonard Expat, a 58 year-old resident taxpayer with private health insurance, received a government pension
from the United Kingdom that is taxable in Australia, but not in the United Kingdom. Leonard is exempt from
tax in the United Kingdom, but subject to tax as an Australian resident taxpayer.
During the 2016/17 tax year, Leonard received $15,000 of pension, and also derived interest and unfranked
dividends of $48,000.
Required:
a. Calculate Leonard’s taxable income for the 2016/17 tax year.
b. Calculate Leonard’s tax payable or refundable for the 2016/17 tax year.
a.
Calculation of Leonard Taxable Income
For the year ended 2016/17
Particulars Amount ($)
Assessable Income
Receipt of Pension 15000
Unfranked Dividend 48000
Total Taxable Income 63000
b.
Calculation of Leonard Taxable Income
For the year ended 2016/17
Particulars Amount ($)
Assessable Income
Receipt of Pension 15000
Unfranked Dividend 48000
Total Taxable Income 63000
Tax on Taxable Income 12022
Medicare Levy 1260
Less: Withholding on Dividend 14400
Total tax Refundable 1118
The following questions are based on the material in Chapter 5
Q10.5.3
(Superannuation lump sum, low cap amount)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 14 of 33

Units Covered: FNSACC502
Stan Eckhardt, aged 57, received a superannuation lump sum of $310,000 from his superannuation fund
upon retirement on 15 April 2017. PAYG tax of $28,170 was withheld from the lump sum. The lump sum
comprised entirely of an element taxed in the fund.
Stan also received gross wages of $85,000 up to the date of his retirement. PAYG tax of $22,110 was
withheld from Stan’s wages. Stan has adequate private health insurance.
Required:
a. Calculate Stan’s taxable income for the 2016/17 tax year.
b. Calculate Stan’s net tax payable or refundable for the 2016/17 tax year.
a.
Calculation of Stan Taxable Income
For the year ended 2016/17
Particulars Amount ($)
Assessable Income
Gross Wages 85000
Receipt of Superannuation Lump sum
Taxable Component - Taxed element (up to low rate cap of $195, 000) 115000
Total Taxable Income 200000
b.
Calculation of Stan Taxable Income
For the year ended 2016/17
Particulars Amount ($)
Assessable Income
Gross Wages 85000
Receipt of Superannuation Lump sum
Taxable Component - Taxed element (up to low rate cap of $195, 000) 115000
Total Taxable Income 200000
Tax on Taxable Income 63232
Add: Taxable Component - taxed element (over the low rate cap) 115000 @
17% 19550
Add: Medicare Levy 4000
Less: PayG Lump sum 28170
Less: PayG Tax withheld from salary 22110
Total Tax Payable 36502
Q11.5.5
(Superannuation lump sum and income stream)
On 14 August 2016, Tammy Gochi, aged 53, retired from her job as chief executive officer of Megacorp
Limited to commence service as a volunteer for Whalepeace International. She received a superannuation
lump sum of $160,000 which entirely comprised an element taxed in the fund. PAYG tax of $34,500 was
withheld from the lump sum.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 15 of 33

Units Covered: FNSACC502
During the remainder of the 2016/17 tax year, Tammy also received a superannuation income stream benefit
of $40,000 from the fund. PAYG tax of $9,780 was withheld from this amount. The entire amount was taxed
in the fund.
Tammy’s only other income during the 2016/17 tax year was gross salary of $36,290 for the period up to the
date of her retirement. PAYG tax of $9,035 was withheld by her employer. Tammy has private hospital
insurance.
Required:
a. Calculate Tammy’s taxable income for the 2016/17 tax year.
b. Calculate Tammy’s net tax payable or refundable for the 2016/17 tax year.
a.
Calculation of Tammy's Taxable Income
For the year ended 2016/17
Particulars Amount ($) Amount ($)
Assessable Income 36290
Super Income stream benefit 40000
Total assessable Income 76290
b.
Calculation of Tammy's Taxable Income
For the year ended 2016/17
Particulars Amount ($) Amount ($)
Assessable Income 36290
Super Income stream benefit 40000
Total assessable Income 76290
Tax on Taxable Income 16341.25
Add: Medicare Levy 1525.8
Less: PayG Withheld 9780
Less: PayG Tax 9035
Less: Superannuation lump sum PayG 34500
Total Tax Payable -35447.95
The following questions are based on the material in Chapter 6:
Q12.6.5
(Small business asset pool, additions)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 16 of 33

Units Covered: FNSACC502
Gwyneth is a resident, individual small business taxpayer. As at 30 June 2016, she had a General small
business pool balance of $ 41,800.
During the year Gwyneth purchased an asset for $34,800 with an effective life of 5 years and another asset
for $40,400 with an effective life of 30 years.
There were no disposals during the year.
Required:
a. Calculate any amounts that are deductible for the 2016/17 tax year.
b. Calculate the closing balance of the asset pool.
a.
Calculation of Small business pool balance
Items for Calculation Pool Balance ($) Depreciation claim ($)
Closing balance of pool from previous year 41800
Opening pool balance for the current year 41800
Add: New purchase of asset 34800
Add: New purchase of asset 40400
Subtotal 158800
Pool deduction claim (30% of 41800) 12540 12540
Subtotal 146260
New Asset deduction claim (15% of 34800) 5220 5220
New Asset deduction claim (15% of 40400) 6060 6060
Total Depreciation for current year 23820
Closing pool balance 134980
b.
Calculation of Small business pool balance
Items for Calculation Pool Balance ($) Depreciation claim ($)
Closing balance of pool from previous year 41800
Opening pool balance for the current year 41800
Add: New purchase of asset 34800
Add: New purchase of asset 40400
Subtotal 158800
Pool deduction claim (30% of 41800) 12540 12540
Subtotal 146260
New Asset deduction claim (15% of 34800) 5220 5220
New Asset deduction claim (15% of 40400) 6060 6060
Total Depreciation for current year 23820
Closing pool balance 134980
The following questions are based on the material in Chapter 7:
Q13.7.1
(Identification of trading stock)
Required: Identify which of the following would be classed as trading stock under Section 70-10:
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 17 of 33

Units Covered: FNSACC502
(a) Pairs of shoes held by a retailer for resale.
(b) Shares held by an investor.
(c) Blocks of land held by a property developer.
(d) Clothing held by a retail clothes shop, currently under lay by.
(e) Petrol held in underground tanks by a service station.
(f) Raw materials held in store by a manufacturer.
(g) Stationery supplies held for office use by an insurance company.
(h) Videos held for hire by a video store.
(a) Trading stock as per section 70-10 of the Act of ITAA 1997
(b) It cannot be considered and treated as trading stock as per section 70-10 of the Act of ITAA 1997
(c) It cannot be considered and treated as trading stock as per section 70-10 of the Act of ITAA 1997
(d) Trading stock as per section 70-10 of the Act of ITAA 1997
(e) Trading stock as per section 70-10 of the Act of ITAA 1997
(f) Trading stock as per section 70-10 of the Act of ITAA 1997
(g) It cannot be considered and treated as trading stock as per section 70-10 of the Act of ITAA 1997
(h) Trading stock as per section 70-10 of the Act of ITAA 1997
The following questions are based on the material in Chapter 8:
Q14.8.13
(Business deductions for employing others)
Zac Harris operates a retail outlet selling kitchen utensils. During the 2016/17 tax year, Zac had the
following transactions relating to his employees:
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 18 of 33

Units Covered: FNSACC502
(a) Zac paid net wages to his employees totalling $215,000.
(b) As at 30 June 2017, there was one week’s worth of wages that remained unpaid amounting to
$4,500. Zac made a journal entry accruing this amount as an expense.
(c) Zac deducted $74,000 of PAYG tax from his employee’s wages. Of this amount, $9,000 was
paid on 5 July 2017.
(d) Zac paid a retiring employee $7,000 of annual leave entitlements on termination.
(e) Zac paid an employee a redundancy payment of $15,000. The employee had given 7 years’
service to Zac.
(f)Zac provided for an increase in annual and long service leave of $8,500.
(g) Zac paid travel allowances amounting to $3,400.
Required: Identify which amounts are allowed as deductions for Zac’s business for the 2016/17 tax year.
(a) It will be needed to treat wages payment as deductions
(b) It is non-eligible as deduction
(c) It needs to be considered as non-allowable deductions
(d) It needs to be considered as deduction as per Section 8-1
(e) It needs to be considered as deduction as per Section 8-1
(f) It needs to be considered as deduction as per Section 8-1
(g) It needs to be considered as deduction as per Section 8-1
The following questions are based on the material in Chapter 9:
Q15.9.1
(Tax related expenditure)
Required: For each of the following resident individual taxpayers, calculate the amount that they would
be entitled to claim as a deduction for the 2016/17 tax year:
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 19 of 33

Units Covered: FNSACC502
(a) On 10 August 2016, Dennis paid $100 to Australia Post to lodge his income tax return via Tax Pack
Express.
(b) Daniel paid three PAYG tax instalments of $6,000 each in October 2016, January 2017 and April 2017.
(c) On 24 August 2017, Wilson paid his tax agent a fee of $300 for preparing his 2016/17 income tax
return during July 2017.
(d) On 5 October 2016, Hope paid her cousin who is studying to be an accountant $200 to prepare her
2015/16 income tax return.
(e) During the year, Jacqueline paid a total of $42,000 in payroll tax.
(f) On 15 April 2017, Josh paid $13,600 in fringe benefits tax.
(g) During the year, Krystal travelled a total of 400 kilometres in her 2,800cc Ford Falcon driving to her tax
agent for meetings involving tax planning and attending to her income tax and fringe benefits tax
returns. She did not use her car for any other work or business related trips during the year.
(h) On 15 February 2017, Raelene paid $11,800 land tax on her business premises.
(i) On 27 January 2017, Dirk paid $18,900 in NSW land tax on his family’s holiday house. He did not use
this property for business or producing rental income.
(j) On 1 August 2016, Troy paid his solicitor $700 to prepare a submission to the Administrative Appeals
Tribunal relating to his 2013 income tax assessment which Troy was disputing.
(k) On 15 March 2017, Leonie paid $7,000 on her 2015 income tax assessment. This amount included
$6,000 of income tax, $800 of penalties and $200 from the shortfall interest charge.
Your answers to Q15.9.1:
(a)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment to Australia Post 100
Total Allowable Deductions 100
(b)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment of PayG tax Instalment
Instalments for October 6000
Instalments for January 6000
Instalments for April 6000
Total Allowable Deductions 18000
(c)
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Units Covered: FNSACC502
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment to tax agent 300
Total Allowable Deductions 300
(d) Needs to be considered as non-deductable expenses
(e)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment of Payroll tax 42000
Total Allowable Deductions 42000
(f) Needs to be considered as non-deductable expenses
(g) Needs to be considered as non-deductable expenses
(h)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment of Land tax 13600
Total Allowable Deductions 13600
(i) It is non-deductable
(j)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment to Solicitor 700
Total Allowable Deductions 700
(k)
Calculations of Deductions
For the year ended 2016/17
Particulars Amount ($)
Payment to Solicitor 800
Shortfall Interest charge 200
Total Allowable Deductions 1000
Q16.9.21
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 21 of 33

Units Covered: FNSACC502
(Calculation of deductions – business taxpayer)
Ricky Falzano conducts business operating a waste removal service and has provided the following data in
respect of the 2016/17 tax year:
INCOME
Gross Income $ 1,638,940
EXPENDITURE
Net Wages paid to employees 743,900
PAYG tax withheld from employees' wages 296,720
PAYG tax instalments paid 87,845
Fringe Benefits Tax paid 5,155
Entertainment of employees (subject to FBT) 5,380
Entertainment of clients (not subject to FBT) 9,235
Annual leave paid 14,780
Annual leave provided 5,560
Rent paid to Ricky’s brother for the business premises 137,000
Payroll Tax paid 19,430
Employees superannuation contributions 98,020
Personal superannuation contributions for Ricky 50,000
Superannuation Guarantee Charge paid 11,315
Other overheads paid 69,330
Note 1 – The market value of rent for the business premises was $65,000.
Note 2 – The deduction available to Ricky for decline in value on his equipment and office fittings was $46,780.
Required: Calculate Ricky’s taxable income for the 2016/17 tax year.
Calculations of Taxable Income
In the books of Ricky
For the year ended 2016/17
Particulars Amount ($) Amount ($)
Assessable Income
Gross Income 1638940
Total Assessable Income 1638940
Expenses Eligible as Deductions
Net Wages to employees 743900
Entertainment of Employees 5380
Entertainment to Clients 9235
Annual Leave Paid 14780
Rent paid 65000
Payroll tax paid 19430
Employees superannuation contributions 98020
Personal superannuation 50000
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 22 of 33

Units Covered: FNSACC502
Superannuation guarantee charge 11315
Decline in value 46780
Other overheads paid 69330
Total Allowable expenses 1133170
Total taxable Income 505770
The following questions are based on the material in Chapter 10:
Q17.10.3
(Application of decline in value methods)
On 1 July 2016, Di Lifter commenced business operating a retail nursery. Di chooses to apply her own
estimates of effective life to various assets purchased during her first year of trading.
Asset Cost ($) Date of
Purchase
Effective
Life
(years)
Depreciation Method
Chemical Sprayer 40,000 1 July 16 10 Prime Cost
Temperature Gauge 12,000 1 July 16 6 Diminishing Value
Soil Elevator 37,500 1 Nov 16 15 Prime Cost
Deleafer 10,500 1 Feb 17 7 Diminishing Value
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 23 of 33

Units Covered: FNSACC502
Required:
For each asset, calculate only the deduction for decline in value available to Di for the 2016/17 tax year.
Chemical Sprayer
Prime Cost Method = Asset Cost × (365/365) × (100%/Asset’s Efficiency Life)
= $40,000 × 100%/10
= $4,0000
Temperature Gauge
Diminishing Value Method = Asset Cost × (365/365) × (100%/Asset’s Efficiency Life)
= $12,000 × 150%/6
= $3,000
Soil Elevator
Prime Cost Method = Asset Cost × (272/365) × (100%/Asset’s Efficiency Life)
= $37,500 × (272/365) × (100%/15)
= 1,863.014
Deleafer
Diminishing Value Method = Asset Cost × (181/365) × (100%/Asset’s Efficiency Life)
= $10,500 × (181/365) × (150%/7)
= $ 1,115.753
Q18.10.15
(Disposal of depreciating assets)
Required: The following are all resident taxpayers. In each case, calculate the deduction available for
decline in value as well as any assessable income (if any) arising from the disposals during the 2016/17 tax
year.
(a) Trevor sold shop fittings from his retail store on 31 October 2016 for $3,700. The fittings had
originally cost $5,600 and were depreciated using the diminishing value method using an effective life
of 10 years. The opening adjustable value was $4,000 on 1 July 2016. The fittings were originally
purchased in 2008/09. Decline in value on Trevor’s other assets was $15,000.
Trevor
Depreciable value Computation
Particulars Amount
Fitting
Opening adjustable value $ 5,600.00
Effective life (years) $ 10.00
Depreciable value $ 280.77
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 24 of 33

Units Covered: FNSACC502
This transaction will lead to capital gain of $20 in accordance with the above calculation
(b) Hannah sold equipment from her factory on 31 May 2017 for $9,200. The equipment had originally
cost $11,000 and was depreciated using the prime cost method using an effective life of 5 years. The
opening adjustable value was $6,000 on 1 July 2016. Decline in value on Hannah’s other assets was
$1,700.
Hannah
Depreciable value Computation
Particulars Amount
Fitting
Opening adjustable value $ 11,000.00
Effective life (years) 5
Depreciable value $ 1,832.33
Following is the calculation of capital gain:
{$9200 – ($6000 - $1000)} = $4,200
(c) Joe sold office equipment from his law practice on 1 November 2016 for $600. The office equipment
had an original cost of $1,800 but was added to the low value pool in 2014 when it became a low
value asset. The low value pool had an opening balance of $3,500 and there were no additions to the
pool during the year.
Joe
Depreciable value Computation
Particulars Amount
Fitting
Opening adjustable value $ 1,800.00
Effective life (years) $ 10.00
Depreciable value $ 90.25
(d) Tommy, an employee of Kwikee Couriers, sold a phone on 15 May 2017 for $50. He had purchased
the phone in 2015 for $250 and had claimed the full cost of the phone as a deduction in that year.
Depreciable value Computation
Closing Pool balance $ 3,500.00
Add: New purchases $ -
Subtotal $ 3,500.00
Less: Disposal of equipment $ 1,800.00
Subtotal $ 1,700.00
Depreciation $ 510.00
The following questions are based on the material in Chapter 11:
Q19.11.7
(Calculation of zone tax offsets with notional offsets)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 25 of 33

Units Covered: FNSACC502
During the 2016/17 tax year, each of the following resident taxpayers resided in prescribed areas that are
subject to zone tax offsets:
(a) Emmett (sole parent) resided in the ordinary are of Zone A for the entire year. He lives with his
daughter Beth, aged 9, who has no adjusted taxable income.
(b) Guillame (not a sole parent) resided in the special are of Zone B for the entire year. He lives with Deni,
his 24 year old daughter who is engaged in full-time studies. Deni has adjusted taxable income of
$200.
(c) Yanni lived alone in the special are of Zone A up until his death on 31 December 2016.
(d) Karyn resided alone in the ordinary area of Zone A until 30 April 2017 when she returned to Perth to
live.
For each of these taxpayers, calculate the zone tax offset (if any) that they are entitled to claim for the
2016/17 tax year.
(a) According to the provision covered under the Australian Tax Office, it is needed to entitle
Emmett for zone tax offsets as the person because of residing in Zone A for more than 183 days.
(b) it is also needed to consider Guillame eligible for zonal tax offset due to the fact that Guillame
has been residing in the special area for 1 year that is more than 183 days.
(c) It is also needed to consider Yanni eligible for zonal offset due to the fact that she has met the
suitability criteria that allows the system of offset.
(d) Karyn should not be considered as tax offset in the presence of the fact that Karyn has not
been able in satisfying the required eligibility criteria.
The following questions are based on the material in Chapter 12:
Q20.12.7
(Tax losses, partner in partnership)
The following data relates to Stephanie Garner, a resident taxpayer. Stephanie derives income from a public
relations business and is also a partner in a marketing business.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 26 of 33

Units Covered: FNSACC502
2014/15 2015/16 2016/17
Assessable business income $ 93,400 $ 126,000 $ 133,400
General business deductions 80,000 129,000 119,200
Share of Partnership Net Income (Loss) (21,800) 14,900 (5,600)
Superannuation and Gifts 4,000 11,000 8,000
Net exempt income 1,500 3,000 2,000
General business deductions are separate from personal superannuation, gifts, partnership losses and losses of
previous years.
Please assume that the necessary tests have been satisfied such that any partnership losses from Stephanie's
share in the marketing business may be deducted from other income as appropriate.
Required: For each year, determine Stephanie’s Taxable Income and any losses that may be carried forward.
2014/15:
2014/15
Assessable Business Income $ 93,400.00
Superannuation and Gift $ 4,000.00
Less: Deduction $ 80,000.00
Subtotal $ 17,400.00
Set off of Partnership losses $ 21,800.00
Carried Forward loss -$ 4,400.00
2015/16:
2016/17:
2015/16
Assessable Business Income 126000
Superannuation and Gift 11000
Partnership Income 14900
Less: Deduction 129000
Subtotal 22900
Set off of Partnership losses -$ 4,400.00
Carried Forward loss $ 18,500.00
2016/17
Assessable Business Income $ 1,33,400.00
Superannuation and Gift $ 8,000.00
Less: Deduction $ 1,19,200.00
Subtotal $ 22,200.00
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Units Covered: FNSACC502
Set off of Partnership losses $ 5,600.00
Carried Forward loss $ 16,600.00
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 28 of 33

Units Covered: FNSACC502
The following questions are based on the material in Chapter 13:
Q21.13.3
(Investor, capital gains)
Karl Kruger is a 38 year-old single Australian resident taxpayer. During the 2016/17 tax year, Karl received and
retained the following records:
Account Summary received from XYZ Bank
Interest from Term Deposits $ 17,200
Interest from Savings Account 350
Bank Charges relating to Term Deposits 40
Interest charged on line of credit (used for personal expenses) 715
4 February 2017 Dividend Statement from Eccy Ltd
Franked Dividend 2,100
Franking Credits 900
Rental Summary from Hawkeye Real Estate
Gross Rent Received 15,200
Rental expenses:
Agent’s Commission 920
Council Rates 1,490
Landlord Insurance 290
Other Information:
 Karl’s rental property was built in 1999 when total construction costs of $200,000 were incurred. Karl
has owned and leased the property since 2008.
 Karl made mortgage repayments on his rental property of $20,000, of which $12,100 was principal.
 Karl also sold the following assets during the year:
ASSET PURCHASE
COST
ACQUISITION
DATE
DISPOSAL
DATE
SALE
PRICE
Quality shares $12,000 12 Apr 11 10 May 17 $18,600
Oil Painting 6,000 03 Mar 98 26 Feb 17 5,200
Crummy shares 4,000 21 Aug 06 03 May 17 2,500
Required:
a. Calculate Karl’s net capital gain/loss for the 2016/17 tax year.
Calculations of Capital gains
Particulars Amount ($) Amount ($)
Quality Shares
Sales Proceeds 18600
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 29 of 33

Units Covered: FNSACC502
Purchase Price 12000
Net Capital gains 6600
Oil Painting
Sales Proceeds 5200
Purchase Price 6000
Net Capital Loss -800
Crummy Shares
Sales Proceeds 2500
Purchase Price 4000
Net Capital Loss -1500
Net Capital Gains 4300
b. Calculate Karl’s taxable income for the 2016/17 tax year.
c. Prepare a statement calculating Karl’s tax payable/refundable.
Calculations of Taxable Income
Particulars Amount ($) Amount ($)
Assessable Income
Interest from Term Deposits 17200
Interest on Savings Account 350
Australian sourced rental income
Gross rent received 15200
Australian Sourced Dividend Income
Franked Dividend 2100
Franking Credits 900 3000
Net capital gains on disposal of shares
Sales Proceeds of Quality Shares 18600
Purchase Price 12000
Gross Capital gains 6600
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Units Covered: FNSACC502
Less: Capital loss from Crummy shares 1500
Net capital gains 5100
50% CGT Discount 2550 2550
Total Assessable Income 38300
Allowable Deductions
Bank Charges 40
Agent Commission 920
Council Rates 1490
Mortgage Repayments 7900
Land Lord Insurance 290
Total Allowable Deductions 10640
Total Taxable Income 27660
Calculations of Taxable Income
Particulars Amount ($) Amount ($)
Assessable Income
Interest from Term Deposits 17200
Interest on Savings Account 350
Australian sourced rental income
Gross rent received 15200
Australian Sourced Dividend Income
Franked Dividend 2100
Franking Credits 900 3000
Net capital gains on disposal of shares
Sales Proceeds of Quality Shares 18600
Purchase Price 12000
Gross Capital gains 6600
Less: Capital loss from Crummy shares 1500
Net capital gains 5100
50% CGT Discount 2550 2550
Total Assessable Income 38300
Allowable Deductions
Bank Charges 40
Agent Commission 920
Council Rates 1490
Mortgage Repayments 7900
Land Lord Insurance 290
Total Allowable Deductions 10640
Total Taxable Income 27660
Tax on Taxable Income 1797.4
Add: Medicare Levy 553.2
Less: Franking Credits 900
Total Net Tax Payable 1450.6
The following questions are based on the material in Chapter 14:
Q22.14.1
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 31 of 33

Units Covered: FNSACC502
(Regulatory framework)
Required:
Explain the function of the Tax Agent Services Act 2009 (TASA) and the Tax Agent Services Regulations
2009 (TASR)?
The main objective of the function of Tax Agent Services Act 2009, commonly known as TASA, is
to set up Tax Practitioners Board along with providing the required regulations in order to
maintain as well as regulate the functions and activities of tax agents, tax advisors and BAS
agents. Another major aim of this act is to register the tax agents along with the financial
advisors regarding the tax rulings.
The functions of Tax agents Service Regulations, commonly known as TASR, is to deliver the
specifications in relation to the qualifications needed for the tax agents on the basis of the
requirement of privilege taxation. This act also takes into consideration BAS agents and others
tax related advisors. This particular act also helps by providing information related to the
requirements of registration and fees that the businesses are needed to meet as per the
provision of taxation rulings.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 32 of 33

Units Covered: FNSACC502
Q23.14.9
(Tax Avoidance)
Required:
What are the three necessary criteria for the anti-avoidance provisions of part IVA ITAA36 to apply?
1. The way in which the scheme was applied is a significant consideration in the presence of its
relevance with the business tax ruling application. It will be needed to consider the application as
the substance over form principles along with the issue of timing of the situation.
2. The tax results, financial charges and the magnitude of the scheme for tax individuals are
required to be considered as crucial considerations along with the relevant parties in the
business. Simple tax benefits does not imply that there will be applicability of the provision of
Part IVA.
3. It needs to be mentioned that the linking between the involved parties in the transactions
needs to be regarded as a crucial criteria in order to justify the applicability of Part IVA provision.
This aspect makes it essential for looking at connections between the taxpayer and other parties
of the scheme in the assessments of any manners, substances, tax results, financial alterations
and others.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 33 of 33