Australian Taxation Law

  

Assessment item

Problem solving question

Length: 3,000 word

Task

Question 1

Henry, a tax resident of Australia, was a famous jazz singer who passed away recently. Jack,

a publisher was interested on Henry's life story and wanted to write a bibliography on Henry's

life. Jack approached Henry's wife, Jenny (also a tax resident of Australia) to interview her on

Henry's life story. She was offered $1 million for Henry story. Jenny was paid $500,000

deposit before the interview. After the interview she was paid the balance of the money.

Would the tax consequences have changed if Jenny had written the book herself?

Required

Advise Jenny on her tax consequences.

You must cite the relevant case law and legislation

(10 marks)

Question 2

Sally is a single parent who is employed as an accountant. In order to attend employment she

must put her young child in a day-care centre. Sally considers the expense is necessarily

incurred in gaining her income. Would she be entitled to a tax deduction under s8-1?

Required

Advise Sally of her tax consequences

(10 marks)

Question 3

Joseph conducts an plumbing business. With a view to future retirement he purchases 20ha of land and

plants native wildflowers that he plans to harvest and sell. As a preliminary measure he arranges to

clear the land and plough in compost. It is expected that the first commercial crop will not be

harvested for five years. He incurs interest on a loan to finance the land purchase, land preparation

costs, fertilizer costs and costs of acquiring native seedlings.

Advise Joseph of the tax consequences of the venture.

You must cite the relevant case law and legislation

(15 marks)