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LT021288_TestA_WPS_FNSACC502_Ed4_5 copy 2 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 QUESTION 1. (15 Marks) (a) Glen and Roslyn (both aged 26 years old) are resident married taxpayers. During the 20154/16 tax year, Glen derived a taxable income of $130,000 and his PAYG payment summary showed reportable fringe benefits of $6,000 and P.A.Y.G deductions of $40,000. Roslyn had a taxable income of $25,000. They have 2 dependent children. They were not covered for private health insurance until 1 January 2016. From 1 January 2016 to 30 June 2016, they paid $3,200 of premiums to MBF for health insurance, which included hospital cover. The reduced premium option was not taken. Required: Calculate for Glen (only) his net tax payable or refundable for the 2015/16 tax year. Show all workings and calculate any tax offsets to which he is entitled. (5 marks) (b) Eamon, a 58 year old resident taxpayer, derived a taxable income of $53,000 solely from salary as a warehouse supervisor. His P.A.Y.G. payment summary showed P.A.Y.G. deducted of $10,000. Eamon lives with and contributes to the maintenance of his aged father. His father's only income is $3,200 from investments. Eamon paid $3,700 for a disability aid for his father. He did not receive any medical refund for this expense. He pays $1,600 for private health insurance and he takes the reduced premium option. Required: Calculate Eamon's net tax payable or refundable for the year ended 30th June 2016. Show all workings and calculate any tax offsets to which he is entitled. (6 marks) (c) Bev is a 68 year old resident taxpayer. Bev is single and derived a taxable income of $23,500 for the year ended 30 June 2016. The taxable income consisted of Old age social security pension paid by Centrelink 13,500 Fully franked dividends 7,000 Franking credits 3,000 TAXABLE INCOME $23,500 Required: Calculate Bev’s net tax payable or refundable for the year 2015/16 tax year. Show all workings and calculate any tax offsets to which she is entitled. (4 marks) 3 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 QUESTION 2. (20 Marks) Janice Jolly a resident taxpayer purchased a house as an investment property on 1 July 2015. Purchase price of the property was $500,000 (see note 1). The previous owner provided a statement to Janice certifying that the property was constructed and completed on 1st January 1993 at a construction cost of $150,000. The house was in good repair except that the interior required complete repainting. Janice recorded the following receipts and payments for the 2015/16 tax year in respect of the rental property: RECEIPTS Rent received (net of agents commission withheld $2,000) Compensation from the Rental Bond Board for tenants who left and did not pay the rent they owed (see note 2) $ 22,000 1,200 Rent in advance from new tenants for the period 1 June 2016 to 31 August 2016 4,200 Reimbursement of lease preparation fee (partial only) 150 Insurance recovery for storm damage to fence PAYMENTS Mortgage repayments to Westpac Bank - principal 8,000 5,000 - interest Loan application fees to the Bank for a 10 year mortgage...loan to buy the investment property - paid on approval of the loan 1 July 2015 12,000 1,500 Council Rates 2,500 Building Insurance premiums Payments to solicitors - for lease preparation fees 900 250 - to eject tenants for non-payment of rent 800 Repairs - to paint the interior of the house - carried out on 10 July 2015 Repairs - to fix storm damage to the fence - carried out on 12 August 2015 3,100 1,500 Construction costs of brick room to store garbage bins and gardening equipment - carried out on 1 May 2016. 12,000 Garden hose and attachments 150 Travel costs (see note 3) 1,250 Pest control costs to eliminate a cockroach infestation 400 Payments to a registered tax agent - preparing 2011/12 tax return Payments to the Australian Taxation Office- - additional tax on an amended assessment 200 500 - fine for late lodgment of 2014/15 tax return 900 4 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 OTHER INFORMATION Note 1 - The purchase price of the property is broken up as follows: - Land and buildings 472,800 Depreciating assets - Carpets 9,000 - Hot water system electric 1,200 - Ceiling fans 1,600 - Barbecue – fixed 1,400 - Window blinds internal 8,000 - Window curtains 6,000 500,000 Note 2 - The Rental Bond Board paid the money owed by the tenants. Note 3 - Janice lives in Sydney. Once during the year she went to Brisbane by aero plane to inspect the property and meet with the real estate agents and tenants. She also took the opportunity to take a holiday in Brisbane and see the sights. She estimates that 60% of her time was spent on matters related to the rental property. Costs were $500 for airfares and $750 for accommodation. Note 4 - Janice will use the Commissioners estimate of effective life for calculation decline in value which can be found under Rental, Hiring and Real Estate Services (MTG 43-065) Required: Calculate Janice's taxable income for the 2015/16 tax year 5 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 QUESTION 3. (12 Marks) Harry Wilson, a forklift driver with Hoist Ltd, received a severe injury while driving a forklift at work on 1 February 2016. As a result of the injury, Harry received the following amounts; Workers Compensation $5,000 Reimbursement of medical expenses by Hoist Ltd $1,800 Damages for personal injury $8,000 Briefly discuss whether any of the amounts are assessable. You can refer to the relevant paragraphs of the Master Tax Guide. QUESTION 4. (15 Marks) Tan Eames a resident Australian taxpayer aged 62 years is employed as a Software expert. Tan works for Generic IT Machines maintaining computer systems. Tan resigned from his job on 30 June 2016 to become a grey nomad and travel around Australia. His P.A.Y.G. statement showed the following for the year ended 30 June 2016: • Gross wages 160,000 • Total tax withheld (P.A.Y.G. deducted) 35,000 • Unused annual leave payment (post 17/8/93) 4,100 • Reportable Fringe Benefits 4,000 • Health insurance premiums deducted and forwarded to HCF 1,500 • Union fees deducted 400 Tan provided the following information to his accountant to assist in the preparation of his 2015/16 tax return. Other money received: • A cash gift from his friends and boss at work on leaving the job 400 • Refunds from HCF and Medicare for medical expenses 1,200 • A superannuation income stream benefit (taxed in the fund) 20,000 Cash payments made: • Purchase of suits and shoes 1,400 6 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 Tan uses plant and equipment in his job details as follows: ASSET COST $ DATE EFFECTIVE ADJUSTABLE BUSINESS DIV PURCHASE LIFE VALUE $ USAGE METHOD (30/6/15) Mobile 1,500 1/6/2014 4 800 60% Diminishing Phone Value Office 3,600 1/6/2014 10 3,100 60% Prime Cost Furniture Overhead 860 1/2/2016 8 100% Projector Laptop 1,800 1/11/2015 3 100% Computer 280 1/8/2015 2 60% Printer Tan began a low value pool in the 2014/15 tax year. • The balance of the pool at 1st July 2015 was $650. Required: a) Calculate Tan's taxable income for the year ended 30 June 2016 • Tan wishes to maximise his deductions. • Show how you derived the amount for decline in value as a separate calculation. (10 marks) b) Calculate the value of the low value pool balance as at 30 June 2016 as a separate calculation. (5 marks) 7 LT021288; Workplace Simulation Test A; FNSACC502 Ed 4&5 © New South Wales Technical and Further Education Commission, 2016 (TAFE NSW – WSI), Archive version 1, May 2016 QUESTION 5. (8 Marks) During the tax year ended 30 June 2016, Russell Evans incurred expenditure in respect of money paid to his tax agent for the following transactions: Lodgments of his 2014/2015 individual tax return $400 Preparation and lodgment of the objection to his assessment $750 GST advice on his business arrangements $400 Income tax advice on creating a family trust $300 Required: Briefly discuss whether any of the amounts are deductible for 2015/16 tax year. You can refer to the relevant paragraphs of the Master Tax Guide. QUESTION 6. (10 Marks) Liam Limerick is single