HI6028 | Taxation Theory, Practice and Law Solution
Individual Assignment Guidelines and Specifications
Question 1 (30 Marks)
You are working as a staff member at Pacific Accounting and Tax Services Pty Ltd in Sydney. Your client,
Melissa, owns and operates a mechanical centre in Sydney as a sole trader. The business is known as
“Melissa’s Workshop.” Melissa has an ABN, a registered business name, and is also registered for GST.
In addition to her business, Melissa has other sources of investment income that she owns individually
and works part-time, earning a salary. The following figures are as at the end of the financial year, 30
June 2024, and do not include GST. (Do not make any adjustments for GST)
Receipts
4,500 Interest on Bank deposits
96,700 Sale of car parts
48,500 Rent from her investment property
3,240 Refund from the ATO for the last year’s tax return
25,000 Lottery win – Melissa was just very lucky.
Payments
36,000 Rent on her workshop
3,400 Body Corporate fees on income producing property.
85,000 Employee salaries
10,800 Superannuation contribution for employees
1,500 Fees paid to a registered Tax Agent
2,000 Travel to and from work to home
Please advise Melissa on the above-stated transactions with reference to the relevant statutory and
common law provisions (14 Marks)
Additionally,
a. Her taxable salary from her part-time work is $109,000 (including tax withheld).
b. She does not have private health insurance.
c. She is a resident taxpayer.
d. Melissa has an outstanding student loan of $57,000 from her studies at Sydney University.
e. Melissa’s employer paid a superannuation guarantee charge of 12% on top of her salary to
her nominated fund.
REQUIRED
Calculate Melissa’s personal tax liability for the year ended 30 June 2024. You should explain your
treatment of each item in this question.
Your answer should be in the correct format of Assessable Incomeless Allowable Deductions along the
lines of the income tax formula. This gives you Taxable Income and you multiply this by the different
marginal tax rates plus Medicare levy, Medicare levy surcharge (if apply) and education loan. This gives
you tax payable less any tax offsets. (16 Marks)
QUESTION : Income Tax Calculation and explanation Weighting
Total Taxable Income 3 marks
Tax Rates (formula) 2 marks
HELP repayment amount 2 marks
Medicare Levy 2 marks
Medicare Levy Surcharge 2 marks
Total Tax Liability 3 marks
Net Tax Liability (Total Tax Liability less any applicable tax offset if any) 2 marks
Total marks 16 Marks
QUESTION 2 (10 MARKS)
Suresh is a technician working at Melissa’s car repair centre. Due to a dangerous workplace accident,
Suresh became seriously ill and received compensation of $131,000. The lump sum was divided as
follows: $57,000 for loss of earnings, $43,000 for loss of future earning capacity, and $31,000 for pain
and suffering. Based on legal provisions and case law, advise Suresh on whether any of these amounts
will be considered assessable income.
Furthermore, advise Suresh whether it would be better to accept a lesser sum of $110,000 without
any specified allocation between current earnings, future earnings, and pain and suffering.
REQUIRED
Advise Suresh, referencing both Statutory Law and relevant Case Law.