| Country : | Australia |
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Assignment Task
Task
Question 1:
John is a student studying accounting at SCU. The following information relates to the financial year ending 30 June 2021. From 1 July 2020 to 31 January 2021, John works as a waiter at a local restaurant and is paid $18.00 per hour. He works 3 x 5 hour shifts each week. In addition, he often receives tips from diners. The amount he receives varies, but is generally between $30 - $50 each shift. In September 2020, John’s employer gives him an “employee of the month” award. This award is given to an employee each month based on positive feedback received from customers. The award is a $200 bonus. When John leaves the restaurant at the end of January 2021, his employer gives him a ‘farewell’ present. The present is an expensive bottle of champagne, valued at $150.
In February 2021, John starts a graduate position with an accounting firm in the Sydney CBD. His annual salary is $60,000 plus 9.5% compulsory superannuation. He signed the contract for the job in November 2020. He was offered a $2,000 sign-on bonus which was paid once he completed his first week of work. His employment contract states he can quit his job if 2 weeks’ notice is given. In April 2021, the accounting firm pays John’s private health insurance ($2,000 for the period 1 April 2021 to 31 March 2022); and gym membership ($900 for the period 1 April 2021 to 31 March 2022). At the request of his employer, John is undertaking a Master of Taxation at SCU. In June 2021, his employer pays SCU $9,000 in fees associated with the course.
Required:
Advise John as to whether any of the amounts or benefits he receives under the above transactions are assessable income to him. Also identify the fringe benefits he has received (if any).
What is the accounting firm’s FBT liability in relation to the benefits provided to John (for the FBT year 1 April 2021 to 31 March 2022)?
Question 2:
Mechel Pty Ltd is a resident company carrying on business as an 'on-line' mail-order business. The company has two employees, John and Betty, who are also the shareholders and directors. The business is conducted from their private residence, a seven room house.One of three bedrooms is set aside as an office.
The following data relates to the year ended 30 June:
- Gross sales receipts $210,000
- Advertising 18,000
- Purchases of trading stock 90,000 (Note 1)
- Administrative expenses 15,000
- Franchise fee 20,000 (Note 2)
- Lease payments on two cars 10,400 (Note 3)
- Salaries 100,000
- Fringe benefits tax 10,500 Depreciation 1,200 (Note 4)
Required 1:
Advise the directors on the tax treatment of matters covered in Notes 1 to 4.
Required 2:
Administration expenses include the following total outlays relating to the premises from which the business is conducted:
- Council rates $2,500
- Electricity $3,000
- Telephone $1,500
Advise the directors of the tax issues and offer suggestions as to how much is deductible.
Required 3:
The directors were approached by Oz-Mart Ltd with an offer to buy the business.Advise them of the CGT consequences if they accept the offer.
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