Taxation lawStrictly 2000 words no more than 100 words up down

TAXATION
TAXATION
STUDENT NAME -
STUDENT ID -
WORD COUNT – 2004
REFERENCING – HARVARD
Part A:
Zara is an IT graduate and has completed her MBA from University of Sydney by 30th June, 2016. Currently she is working in Sydney as an American Express team leader. She married another University of Sydney graduate who is now a pharmacist on 20th December, 2016. She has an income of $225,000 and the amount of withholding tax is $75,000. In January, 2017, the couple started a home based business together in the name of Pharmacy Hero to market computer software for Australian pharmacy industry.
The details have been provided regarding the expenses of Zara as on 30th June, 2020:
During interstate travelling, Air ticket, other transport, food and accommodation - $20,000
Dress, jewellery, personal fitness - $10,000
At an international IT conference, conference fee - $5,000
                    Air ticket - $4,000
                    Food and accommodation - $1,500
                    First prize of Rolex watch in the lucky draw - $35,000
The business statement of Pharmacy Hero is as follows:
30th June, 2017: Income – Nil
        Revenue outgoing - $500
30th June, 2018: Income – $2,000
        Revenue outgoing - $15,000
30th June, 2019: Income – $16,000
        Revenue outgoing - $26,000
30th June, 2020: Income – $80,000
        Revenue outgoing - $40,000
Business car - $25,000
Accountant Bill:
Preparation and lodgment of tax for personal tax (Zara) - $2,750
Preparation and lodgment of tax for tax (Pharmacy Hero) - $1,100
Accounting and other business services (Pharmacy Hero) - $3,300
(i) Analysis of the income and expenses for the tax purpose:
From salary $75,000 is already taken for purpose of tax and so that amount will be stated in the tax statement. Total salary is $225,000. After the calculation of tax the amount of tax withheld will be deducted from the total tax amount.
It is not clear if the interstate travelling is because of the job or for personal purpose. If it is assumed that the interstate travelling was for the purpose of the job since she holds a high post in her company then the amount of $20,000 spent on air ticket, other transport, food and accommodation will be allowed as deduction. As per Australian tax law, work related expenses are allowed for deduction but there are certain conditions which are to be followed, which are as follows:
· Record of the expenses for proof.
· The expense must be directly related to the income.
· The money has been spent by the assessee and no reimbursement has been received.
It can be assumed that the travelling was necessary for the job and the money was spent by Zara herself. There is no mention of reimbursement. Zara must have kept records for proof. So, all the conditions are being satisfied and the deduction for the above expense can be claimed.
Dress, jewellery, personal fitness is totally personal expense and so will not be allowed for deduction.
Zara went to IT conference and made certain expenses. Zara is an IT graduate but currently she is not working in IT sector. She is a team leader in American express. The company is an American based company which provides fincial services at worldwide level. So, basically Zara works in finance sector and not in IT sector. So, attending the IT conference is not work related. So, the expenses incurred there cannot be claimed for deduction. But the gift of Rolex watch will be considered as a income.
Zara is partner with her husband in the pharmacy business naming ‘Pharmacy Hero’. But it is not clear as to what is the partnership ratio among both of them. So, the ratio by which profit will be shared among them is not clear. But it can be assumed that the profit sharing ratio between them is 50%. It is assumed that in the business till now there has been no profit distribution. So, in the assessment year 2020 all the profit figures will be shared and Zara will receive 50% of that.
30th June, 2017: Income – Nil
        Revenue outgoing - $500
    Loss = $500
30th June, 2018: Income – $2,000
        Revenue outgoing - $15,000
        Loss - $13,000
30th June, 2019: Income – $16,000
        Revenue outgoing - $26,000
        Loss - $10,000
30th June, 2020:...