Accounting- Income Tax Assessment Act

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Income Tax Assessment Act
Instruction:
In answering the question it is required to refer to relevant case law, sections of the Income Tax Assessment Act 136 and 17 and Tax Rulings issued by the Tax Office. An analysis of the key issues is required.
It is required to include a bibliography of reference materials and harvard style referencing.
Question 1
ASSIGNMENT QUESTIONS:
Peter and Jill are in a partnership as retailers of electrical goods. The partnership records, exclusive of GST, for this income year disclose:
Receipts ($):
3,
Gross receipts from trading
Payments ($):
1,
Purchases of trading stocks
3,
Partners’ salaries (each)
,
Interest on cash advance made to the partnership by Peter
6,
Salaries for employees and rent paid
,
Legal expenses in recovering bad debts
Other details:
• PeterandJillsharepartnershipprofitsequally • Tradingstockonhand1July:$1,• Tradingstockonhand3June:$,• Peter’spersonalrecordsdisclose:
• Gamblingwinnings:$,• Netsalaryasapart-timeinstructor(excludingPAYGtaxinstalments
of $,): $5,• Subscriptiontoprofessionaljournals:$5
• Peterisamemberofaprivatehealthfund
Calculate Peter’s taxable income for the income year explaining your treatment of each item in this question.
Question
Viktor is a director of Excel Mining Ltd a coal mining company in Victoria.
The company had the following transactions during the year ended 3 June 18. He wishes to know how they are treated for income tax purposes by the company.
You can assume in this question that the numbers exclude GST unless otherwise stated.
PurchasedaMercedesBenzmotorvehicleforacostof$1,on1 October 17. The car is used by the managing director 7% of the time for work purposes. The effective life of the car is 6 years. On 16 May 18 the car was crushed by a forklift. The insurance company wrote off the car and paid the company $87,.
$78,56wasspentonhiringadditionalfireequipmenttofightafireat the mine site.
$583,1wasspentonlegalfeesandadvertisingtorepresentthe company and its directors at a Government enquiry into coal mining activities.
Thecompanyalsomadeaprovisioninthecompanyaccountsfor $568,38 for future liabilities from claims by the townspeople against illnesses that may arise from the effects of the coal mine fire.
Italsodonated$55,tothelocalcommunitySESFireservices.
Viktor also advises you that he wants the company to maximise its tax deductions and minimise its taxable income.
REQUIRED:
Explain to the company how each of the above items is treated. In your answer please carry out calculations where necessary.
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