Can I get the solution for question 2(a) & 2(b)? thank you so much
Assignment questions for semester three of 2016
60 marks in total
The assignment consists of 5 questions in total – all questions must be answered
Case study one– June and Bill Quinton
June (aged 50) has a husband Bill (aged 55) and a son Mel (aged 22). She has no other
dependants. June and Bill are both Australian residents for the income year and only June has
private health insurance.
June’s employment details
June is a guest lecturer at local universities and volunteers at a local women’s refuge
providing free legal advice.
Salary from university lectures: $22,500
Due to an oversight, June was not paid $1,000 for lectures she gave the previous year. The
salary received this year includes the $1,000. PAYG (withholding) of $3,400 was deducted
from the total salary, of which $300 related to the fees from the previous year.
The refuge gave her four tickets to West Coast Eagles football games valued at 400.
Meals purchased at university cafeterias before evening classes and after work. $250. June
purchased a portable printer on 10 November CIY which she used 50% for printing lecture
notes and the remaining 50% for printing family photos and private emails. The effective life
of the printer is three years. $280
June’s business income
June is the owner of a law firm, June’s Law. June employs three senior lawyers, 10 junior
lawyers, four receptionists and two research assistants in this business.
Fees received: $2,840,000
Invoices totalling $3,536,000 were issued. $80,000 from the previous year was
received in the current year.
Retainers received on 30 June CIY: $250,000
June has a number of clients who pay an annual retainer on 30 June each year in advance for
the following year, and June always receives these amounts on the same date that they are
paid. The retainer guarantees clients to access a lawyer within one hour of their call and
expedites the handling of their issues by the firm. Clients must still pay June an additional
amount for any services she provides. Compensation payment received on 30 July CIY:
$400,000 The office was damaged by fire during the previous year and the insurer paid June
$63,000 for loss of business profits. The balance was used to refurbish the office.
June borrowed $150,000 for working capital and to carry out some minor renovations to the
office. The loan is for eight years, commencing on 1 June CIY. June paid the lender a total of
$2,100 in application and valuation fees in order to secure the loan. The loan required the
repayment of interest only.
June prepaid one year’s interest on 1 June CIY. $30,000
Repairs to a recently acquired office building which was purchased on
30 June PIY: $100,000 The repairs were carried out on 15 September CIY prior to the
building being used in the business. Reimbursement of telephone expenses as part of the
remuneration package of a senior lawyer who often worked from home and used her home
1 telephone for work-related calls. The business paid the full amount of their telephone
expenses even though business calls constituted about 40% of the bills (the remainder was
Fixed deposit redeemed on 30 June CIY: $54,600
Two years ago June deposited $50,000 in a fixed deposit. Interest accrued at the end of the
first income year, but June rolled over the total amount of $52,500 on 30 June PIY until she
required the money for other purposes.
Dividends received from Baby-boomers Ltd on 18 December CIY: $36,000
Franking credits of $15,429 were attached to this dividend.
Additional information June is registered for GST purposes, however you should ignore any GST issues in
Part A. If relevant, June always prefers to use the prime cost method of depreciation.
Question 1 [4 marks]
Calculate the amounts which must be included in June’s assessable income from her work as
a guest lecturer and in the women’s refuge for the CIY.
Provide brief reasons for including or excluding any amounts. 2 Question 2(a) [4 marks]
Complete the following table for June’s work-related expense in relation to her meals.
Determine what deductions, if any, she is entitled to claim under s 8-1 of the ITAA97 for the
WORK-RELATED EXPENSES – ANSWER YES OR NO AND PROVIDE AMOUNT
OF DEDUCTION 3 Question 2(b) [6 marks]
Calculate the amount of any specific deduction (eg capital allowance) that June may be
entitled to claim in respect of the printer. Provide a reason for your answer and show your
workings. Question 3 [6 marks]
Calculate the amounts which must be included in June’s assessable income from her business
for the CIY. Provide brief reasons for any amounts included or excluded. 4 Case study two - Luke Lilly-White Lockridge
Luke Lockridge bought a second house as a holiday home at the beach for $90,000. The
contract was signed on 23rd December 1991, but settlement only took place on 16 th February
1992. The legal fees, stamp duty and search fees incurred and paid on 16th February 1992
totalled $2,000. On 3rd July 1992, a dispute arose between Luke and his neighbour, James
Littleton, over the boundary between Luke’s holiday home and the neighbour’s property.
Luke paid a solicitor $10,000 during the next two months to settle the matter.
Luke is also a lawyer by training, and estimates that he spent about 20 hours resolving the
dispute. He estimates that he would have charged $2,000 if he were to perform a similar
service for a client. On 1st January 1995, Luke spent $23,000 improving the holiday home by
adding an internal staircase. On 1st March 2000, he spent $8,000 to extend the veranda to the
house. Unfortunately, Luke failed to consult his wife on the extensions, and was forced to
demolish the veranda extension on 1 September 2000.
On 1 February 2008, he spent $2,000 on ordinary repairs to some of the windows in the
house following a severe thunderstorm.
The house was sold on 21st October (Current Income Year) CIY for $500,000. Advertising
costs and legal fees amounted to $1,400.
For the purposes of this question, ignore any potential implications arising from CGT event
C1 happening in relation to the demolition of the veranda extension on 1 September 2000.
QUESTION 4 (20 marks)
Calculate the capital gain in the CIY for Luke as a result of the sale of the holiday
Your answer must be set out in a table. The table must have two columns. (Use the first
column for very brief descriptions. Use the second column for numbers.) Below is an
example of an extract of the table that is required for the entire/ full answer:
xxxx QUESTION 5 (20 marks)
Critically discuss very briefly in no more than 125 words whether the CGT discount has an
impact on the effective rate of tax. Your answer for question 5 should be properly referenced
where appropriate. 5
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