Mark 8.00 out of
ACBUS203A Income Tax Law Student Multi-Groups
S2 2020

Started on Monday, 7 September 2020, 5:45 PM
State Finished
Completed on Monday, 7 September 2020, 7:52 PM
Time taken 2 hours 6 mins
Grade 21.50 out of 50.00 (43%)

Attempt ALL questions in this part.
Answers must be in your OWN words – not copied from the legislation/internet/textbook.
a) What is the diàerence between ‘Õrst class’ and ‘second class’ exempt income? (2 marks)
b) Give THREE examples of each (6 marks)
a) First class of exempt income (s11-1): income of certain kinds of entities are exempt regardless of nature,
while Second class of exempt income (s11-15): certain kinds of income.
b) First class examples:
Charitable institutions
Religious institutions
ScientiÕc institutions
Second class examples:
Pooled development fund company dividends
Interest on a judgment debt for personal injuries
Scholarships and educational allowances paid to full-time students

 Dashboard Bac 202 Yea Se ACB
Mark 1.00 out of
Don MacDonald is a dairy farmer in Wagga Wagga and sells all his milk to the Reverina Dairy Co-operative.
He provides the following information regarding the 2020 tax year:

Proceeds on sales of milk $450,000
Inheritance $120,000
Interest received – ANZ Bank term deposits 2,000
Interest received ATO re: overpaid 2019 tax 1,000
Farm operating expenses (all deductible) 172,000
Royalty received from Wagga Hay being $50 per ton of hay
they harvested on one of his paddocks
Purchase of new milking machinery 19,000
Rent of shed to Wagga Hay 8,000

Calculate his ORDINARY income for 2020
Assesable Income
Proceeds on sales of milk 450,000
Interest received – ANZ Bank term deposits – 2000
Interest receved ato 1000

Royalty received $17,850
total assessable income 470850
Farm operating expenses

Purchase of new milking machinery 19,000
Rent of shed to Wagga Hay 8,000
total deductions: 199,000
ORDINARY income : $271850
Ordinary income:
Milk sales, ANZ interest, Rent of shed.

Mark 3.00 out of
Mark 0.00 out of
The Acts Interpretation Act 1901 contains rules and presumptions for interpreting Commonwealth
a) Name TWO rules and presumptions for interpreting Commonwealth legislation. (2 marks)
b) Explain the ‘golden rule’ that the courts have devised in common law to assist with interpretation of
legislation. (1 mark)
Section 15A: Acts should be read subject to the Constitution
– Section 15AA: constructions in the Act that promote the purpose or object of the Act are preferred
over those that do not promote the purpose or object of the Act
– Section 15AB: if extrinsic material that would not ordinarily form part of the Act is capable of
assisting in ascertaining the meaning of a provision in the Act, then consideration should be given to
that extrinsic material
b) The golden rule is used where the literal rule produces as absurd, irrational, capricious or unjust
outcome. It allows courts to interpret legislation in a common sense way that avoids these rules.
Calculate the 2020 tax depreciation in each of these situations, providing reason and/or
a) Yendi Zoot purchased a 10-year old residential rental property in the year. Included in the purchase
price were a washing machine and drier valued at $1,200 (2 marks)
b) Yendi Zoot bought new window blinds costing $5,500 including installation of $500, for a diàerent
rental property. Yendi uses the Pooling rules, and the Pool balance at the end of 2019 was $10,000 and all
Pool assets have an eàective life of 4 years. (3 marks)
c) Yendi Zoot bought a used Triton ute for $20,000 to use in his small business. (2 marks)
Don’t know, too hard.

Mark 6.00 out of
Taren owns an apartment in Homebush that she rents out to a long-term residential tenant.
She provides you with the following information:
Rent received, net of agent’s commission of $1,040 $24,960
Mortgage interest 8,000
Council rates (1/3 relates to next year) 1,500
Plumbing repairs 675
Painting 1,125
Strata levies 2,200
Travel to property re: quarterly inspections (has Uber receipts) 175
Total expenses $13,675
During the year Taren borrowed against the mortgage to purchase a new car. You calculate that $540 of
the above interest is attributable to the new car for her son.
At the beginning of the year the agent quoted $683 (incl GST) administration fee for the property. Taren
decided to do it all herself.
Calculate the net rental income to include in Taren’s taxable income.
Show all workings including brief explanations of inclusions and exclusions.
Rent received, $24,960 + 1,040 = 26,000
Plumbing repairs 675
Council rates (1/3 relates to next year) 1,500
Mortgage interest 8,000
interest income 540
totoal deductions = 10715
Tarsen taxable income: 15285
tax on
Agent fee deductible.
Interest needs private portion removed, not added.

Mark 2.50 out of
Andy DeMangler is a sales executive at A2Z Pharmaceuticals Ltd, based in North Ryde, Sydney. His gross
employment income is $275,000 including a base salary, commission on sales, and a bonus for exceeding
his sales target. All his customers are within a 25 km radius of A2Z’s oÞces.
Andy incurs the following expenses:

Expense Amount $
Petrol, car wash, repairs and parking re: his company
vehicle (all receipts submitted to A2Z for re-imbursement)
Laundry and dry-cleaning of business suits and shirts – A2Z
requires all staà who meet with customers to dress
professionally. Andy never wears a suit except for work,
$25/week x 52
Parking Õnes re: client visits, not re-imbursed by A2Z 497
TAFE fees for Diploma in marketing (part-time) 1,250
Home oÞce expenses $10 per week. A2Z has a dedicated
oÞce at for sales executives, but Andy prefers doing all his
work-related paper-work at home whilst watching TV with
his family

Which of the above expenses is deductible or non-deductible, and provide the reason(s) in the table.
Click here to access table to edit and upload
1. deductible because it is company vehicle.
2. Laundry and dry-cleaning of business suits and shirts – A2Z if is registered compulsory uniform is
deductible, if the uniform is not registered then non deducitble because it is private.
3. Parking Fines are non duductiable Excluded by s.26-5
4.TAFE fees for Diploma in marketing – are deductible related to improving skills in present occupation.
5. Non dedutible because because Andy did not do the work, only watch tv which is private.
1. Vehicle costs not deductible [reimbursed].
2. Clothing not deductible [private].
4. Self-education; Õrst $250 not deductible. [1/2]

Mark 1.00 out of
Mark 0.00 out of
Outline 5 rules relating to the two methods for claiming car expenses under Div 28 ITAA97 for 2020
Car expenses that are incidental and relevant to the taxpayer’s derivation of assessable income are
deductible under the general deduction provision, s 8-1. The amount of the deduction must be calculated
using one of the 2 methods in Div 28:
the cents per kilometre method or
the log book method.
1 mark for identifying the two methods available.
Note the question asked for ‘5 rules relating to’ these methods.
Milly’s 2020 income tax return shows a taxable income of $70,000 that includes:
Salary sacriÕce superannuation contributions – $10,000
Franking credits – $5,000
PAYG deducted by her employer – $25,000
Company car fringe beneÕt – $8,000
Milly is single and has no private medical insurance
Milly has a HELP loan of $6,426
Investment loss – negatively geared property – $12,000
a) Calculate Milly’s Repayment Income
b) Calculate Milly’s HELP repayment for 2020
don’t know, too hard
Consider the rules at tiny.cc/HELP [capitals are important in that URL]

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