Which of the following is an expense that is deductible to a business taxpayer

1. Which of the following is an expense that is deductible to a business taxpayer?

Select one:

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Extra food bought by a rugby player who needs to bulk up in order to play first grade and get paid more match fees

Interest costs on a loan taken out during a business activity which has not been paid out after the business stopped.

Travel expenses overseas in order to set up a new business

All of these are deductible business expenses.

None of these are deductible business expenses.

2. Which of the following statements in relation to a sole trader is FALSE?

Select one:

Sole traders have unlimited liability.

A sole trader must lodge both an individual and a company tax return.

None of these

A sole trader declares their business profit or loss in their personal income tax return.

The income earned by a sole trader is taxed wholly in the individual’s hands.

3. Susan works part-time with an accounting firm while she completes her accounting degree. She hopes to then be offered a full-time position. She also does some waitressing to supplement her income while studying. Which of the following are deductible to Susan under s8-1?

Select one:

None of these

Purchase of a black skirt and white shirt as required for her waitressing job.

Purchase of suits as required by her accounting firm.

Cost of travel from home to her accounting job.

Cost of travel from her accounting job to her waitressing job.

4. What is the decline in value deduction for the year ending 30/6/2020 for a machine purchased for $75,000 on 1/7/2018 under the prime cost if the effective life is 5 years?

Select one:

$35,000

None of these

$0

$30,000

$15,000

5. Shannon is a resident for the full year and has given you the following information for the preparation of her income tax return for 2019/20:

Wage income$27,000Investment income$1,700Allowable Deductions$175PAYG (W) per payment summary$3,576PAYG (I) on investment income paid$43 per quarter

Calculate Shannon’s tax credits for the 2019/20.

Select one:

$43

$3,619

None of these

$3,748

$3,576

6. Peter and Paul form a partnership to run their lawn-mowing business. They agree to share the profits and losses of the partnership equally.

The partnership agreed the following salaries be paid:

Peter$40,000Paul$24,000

The partnership accounting profit after salaries had been paid was $30,000.

What is the partnership net income (s90) to be shown on the partnership return statement of distribution?

Select one:

$64,000

None of these

$94,000

$15,000

$30,000

7. If the price of an item displayed as $44 (GST inclusive) then what is the GST component?

Select one:

11% of $44

10% of $44

None of these

$44 divided by 1/11

$44 multiply by 1/11

8. Tina owns an investment property. As the property is coming up to 20 years of age, there are a few things Tina has to spend money on to keep the property in good order.

She currently rents out the property, and provides a clothes dryer in the property for the tenants. The clothes dryer has recently broken down and is out of warranty, so Tina decides to replace it. The new dryer costs $1,100, plus $100 delivery and installation.

Which of the following statements is TRUE?

Select one:

Tina can elect to depreciate or claim the full amount as she wishes

None of these

Tina can claim an immediate deduction for the delivery and installation costs.

Tina must depreciate the dryer over its effective life.

Tina can claim an immediate deduction for the cost of the dryer.

9. Which one of the following is an advantage of a discretionary trust over a private company?

Select one:

Ability of the trustee to vary distribution ratios from year to year.

None of these

Limited liability.

Trusts can distribute losses whilst companies cannot

High income earners pay less tax on distributions from a trust than from a company.

10. Sally has given you the following information in relation to her tax return for the current income year (CIY).

Salary income$55,000

Capital gains:

Gain on CBA shares$7,000 (bought 1 May 2 years ago, sold 30 June this year)

Gain on BHP shares$2,500 (bought 15 October last year, sold 1 April this year)

She has no applicable capital losses.

Sally’s assessable income for the current income year is;

Select one:

None of these

$63,250

$55,000

$61,000

$64,500

11. The income tax rates applicable to a taxpayer in Australia depend upon:

Select one:

Whether you use the cash or accruals method to recognise income.

Whether you are a minor or not.

All of these

Which state you live in

Whether you are an employee or a contractor.

12. Jessica Sampson is running a small consultancy business. For the current year, she had the following transactions:

  • She collected fees from clients of $125,000
  • She had debtors at the start of the tax year of $10,000
  • She has debtors of $45,000 at the end of the tax year
  • During the year she paid expenses of $77,000 and has $12,000 in accounts payable at year end.

Jessica is currently operating on a cash basis.

Jessica’s taxable income for the current year is:

Select one:

$71,000

$125,000

None of these

$83,000

$48,000

13. Which of the following is not a requirement for a taxable supply?

Select one:

All of these

It is for consideration

It is made in the course of an enterprise

It is connected with Australia

It is GST free or input taxed

14. Which of the following will not give rise to a CGT event?

Select one:

Destruction of a factory by fire.

None of these

Liquidator or administrator declares shares in an entity are worthless

Sale of a residential property.

The subdivision of land by an owner of land in preparation for development.

15.  Lennart is currently working as a kitchen hand. Which of the following expenses incurred by Rebel can be claimed as a deduction?

Select one:

All of the above.

None of these

The cost of parking near the restaurant on the day of the seminar, as she needed to drive directly to the seminar after work.

A food hygiene seminar she paid to attend

A vocational course Lennart is undertaking in real estate.

16.  Which one of the following is correct as per section 4-10 of ITAA97 tax offsets?

Select one:

are subtracted from the tax calculated on assessable income

None of these

are subtracted from the tax calculated on total tax liability

are subtracted from the tax calculated on tax payable

are subtracted from the tax calculated on taxable income

17.  The Jones Family Trust has the following income characteristics for the year available to distribute to the two beneficiaries, A and B:

Net business income$10,000Net capital gains$36,000Interest income$4,200Franked dividends$7,000Total$57,200

Beneficiary A has capital losses from other share sales in its name of $45,000.

Beneficiary B has no capital losses but has business losses in its name of $35,000.

What would be the best approach for the trustee to distribute the net income of the Trust (assuming specific entitlement)?

Select one:

Net capital gains to be distributed to Beneficiary A (to offset against capital losses) and remaining income to Beneficiary B (to offset against revenue losses).

Distribute a grossed-up/nominal gain of $45,000 to Beneficiary A, $5,000 to Beneficiary B and retain the balance in the trust, as trusts do not pay tax on undistributed net income.

Each beneficiary needs to receive 50% of each item of income/gain in their distribution.

None of these

Accumulate the funds in the trust with no presently entitled beneficiaries

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