TAX305 Lecture Notes - Ordinary Income, Windfall Gain, Satay

21 views6 pages

m.saeed.khan123

20 Apr 2023

School

CDU

Department

Accounting

Course

TAX305

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Bonus received from her employer for successful completion of a large project. Interest on 5 years saving bond with interest at the end lump sum. Received an award from the institute of managers for her contribution to the profession. Each month this is done so routine activity and in connection with employment also read gain to tax payer and it is cash or cash convertible so it is income. Gifts are ordinary income if derived by exercising degree of skill that outweighs luck kelly v fct(1985) so this is assessable income. this is assessable statutory income (ato, 2020)s 15-2. Second requirement is that taxpayer has received the bonus which is yes. Third requirement is relation that this gain should be due to employment or services rendered. So this bonus is taxable because this bonus is connected with the employment and it is received in cash. (laidler vs.

Related Questions

Income

11. A receipt can be seen asâincomeâ in one of two ways. What are they?

12. What is âordinaryincomeâ?

What is âstatutory incomeâ?

What is the relationship between assessable income, ordinaryincome and statutory income?

What is the role of Div. 10?

What is the effect of s 15-2?

What is the effect of s 15-15?

What is meant by âincome must be derivedâ?

When is income âderivedâ?

Define a âwindfall gainâ.

Briefly explain what âmutual paymentsâ are and how they aretaxed.

A sporting club receives income from membership subscriptions,hire of its facilities and bar takings in its clubhouse. To whatextent are these receipts taxable?

Briefly explain when gambling winnings will be taxable.

Briefly explain when gifts will be taxable.

A plays club football in the North Queensland League. Last yearhe was named as the Leagueâs Best and Fairest player and received a$5,000 prize donated by a local television station. Explain whetherhe is taxable on his prize.

In what circumstances will a compensation payment be regarded astaxable income?

B received $1,000,000 for heroin he had illegally imported intoAustralia. The heroin had cost him $200,000. To what extent, if atall, is he liable for tax on his âprofitâ?

If B is taxable on that profit can he claim the bribes he paidvarious overseas customs officials as deductions?

As part of her salary package, C receives the use of a companycar. She estimates that the value to her of the company car is$5,000 per year. To what extent, if at all, is she assessable onthat value?

To what extent, if at all, is her employer assessable to taxbecause it provides her with the car?

How are loan premiums and discounts treated for income taxpurposes?

How are premiums that tenants pay their landlords assessed inthe landlordâs hands under the income provisions of the Income TaxAssessment Acts?

A farmer subdivides his farm into housing blocks and sells themat a substantial profit. To what extent, if at all, are theproceeds of those sales assessable income in his hands? Why?

Trading Stock

How are purchases and sales of trading stock treated fortaxation purposes?

What impact does a change in trading stock levels between thestart and end of an income year have on your taxable income?

What are your options in valuing closing stock for taxationpurposes?

Can you change your valuation mechanism for closing stock fromyear to year?

What is the relationship between opening stockin tax year 1 and opening stock in tax year 2?

What is the relationship between closing stockin tax year 1 and opening stock in tax year 2?

General Deductibility

The ITAA 97 contains two principal provisions governingdeductibility. What are they?

What are the two (2) positive limbs of s.8-1?

What is the difference between the situations in which the firstpositive limb applies and the situations in which the secondpositive limb applies?

What are the four (4) negative limbs of s.8-1?

Explain when each of the four negative limbs will operate todeny deductibility?

If you are looking for a provision denying deductibility to anoutgoing (under the 4^th negative limb) where would youlook for it?

In general terms it can be said that there are three (3)âclassesâ of provision in the ITAA that deal with the question ofdeductibility. What are they?

What is the role of Div 12?

Briefly explain the âessential character testâ forclassification of outgoings.

What other tests are used to classify losses and outgoings aseither deductible or not deductible? How do those testsoperate?

A competition body builder is placed on a high protein andcarbohydrate diet by his coach. To what extent, if at all, are thecosts of his dietary requirements deductible against his income asa professional bodybuilder?

Deductibility of Specific Expenses

To what extent, if at all, are the following expenses deductibleagainst assessable income:

(a) travel expensesbetween home and work;

(b) travel expenses between twoplaces of employment;

(d) self educationexpenses;

(e) home officeexpenses;

(f) work relatedclothing;

(g) fines and penalties;

(h) prepaid expenses.

To what extent, if at all, is HECS deductible?

What is the practical effect of s 82A of the ITAA1936?

G spends $200 entertaining potential clients at dinner. To whatextent, if at all, is this amount deductible?

lavenderwombat170

10. Which of the following statements is true with regard to the reimbursement of employee business expense?

A. Excess reimbursements of ordinary and necessary expenses are never subject to withholding.

B. Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures.

C. Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding.

D. Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding.

E. All of these choices are true.

silverelephant187

Prepare journal entries for the following related transactions in the fund and activity journals affected. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. A capital projects fund issued $5,000,000, 4 percent bonds for $5,050,000 to finance improvements of a park. Premiums received are to be used to service the debt issue. Requirements:

a) Record the issue of 4 percent bonds in the Capital Projects fund.
b) Record the issue of 4 percent bonds in the governemental Activities fund.
c) Record the issue of 4 percent bonds in the Debt service fund.

2. The Parks and Recreation Special Revenue Fund transferred $250,000 for use in construction. Requirements:

a) Record the receipt from the Parks and Recreation Special Revenue for use in construction in the capital projects fund.
b) Record the payment to the capital projects fund for use in construction in the capital projects fund.

3. A construction contract was awarded in the amount of $5,200,000. Requirements:

a) Record the award of the construction contract in the capital projects fund.

4. A bill was received from the contractor for $2,600,000. Requirements:

a) Record the bill received from the contractor in the capital projects fund.
b) Record the adjustment to the encumbrances outstanding in the capital projects fund.
c) Record the bill received from the contractor in the Governmental activities.

5. The contractorâs bill is paid. 5% retainage is withheld. Record the 5% retainage withheld in the Capital Projects and Governmental Funds. 6. The park renovations were completed and the final bill of $2,600,000 was received. The contractorâs bill and retainages are approved for payment in full. Total construction expenditures were allocated as follows: $5,000,000 to building, and the remainder to equipment. Requirements:

a) Record the final bill received from the contractor in the capital projects fund.
b) Record the adjustment to the encumbrances outstanding in the capital projects fund.
c) Record the payment of the bill and the retainage in the Capital Projects Fund.
d) Record the final bill received from the contractor in the Governemental activities journal. Record the payment of the bill and the retainage in the governmental activities journal. e) Record the construction completion in the governmental activities fund.

7. The capital projects fund temporary accounts were closed, and the capital projects fund was closed by transferring remaining funds to the debt service fund for use in debt repayment. Requirements:

a) Record the entry to close nominal accounts in the capital projects fund.
b) Record the entry to transfer the balance in the capital projects fund.
c) Record the entry to close the capital projects fund.
d) Record the receipt on closure of the capital projects fund in the Debt Service Fund.

ceruleanotter126

TAX305 Lecture Notes - Ordinary Income, Windfall Gain, Satay

Document Summary

Get access

Related Documents

BTF3931 Study Guide - Final Guide: Ordinary Income, Capital Gains Tax, Westpac

MLC301 Lecture Notes - Lecture 2: Embezzlement, Gambling, Ordinary Income

MLC101 Study Guide - Final Guide: Double Taxation, Myer, Owen Dixon

Related Questions