CASE STUDY 1 (35 Marks)
(i) Salary from his employer: $48,000.
(ii) 15 Days annual leave owing to her which had accrued since May 2014:
$2,500.
- An annual allowance of $1,000 towards travel expenses.
- Compensation payments due to injuries sustained in an industrial accident as follows:
- Workers compensation: $1,000 × 5 weeks $5,000
- Compensation for loss of his right hand: $35,000
- Social security disability support pension: 7 weeks $1,000
- Interest from the Bank of America Term Deposit Account held in America: $850. This amount is after 15% tax has been withheld by the Bank of
(vi) Cash: $500 and an expensive bottle of Whisky from his co-workers as a get well gesture.
During the year his employer has deducted $11,500 in PAYG withholdings from his salary and workers compensation payment.
On the other hand, Marc spent $500 on firefighting gear and has kept all necessary documentation to support this expenditure. This expense will constitute a deduction.
Required:
Calculate the net income tax payable or refund due to the taxpayer for the 2015/2016 tax year. State the specific taxation rules relevant to the above events to support your arguments and calculations.
CASE STUDY 2 (25 Marks)
The Case of Jane Nobles
Jane Nobles aged 56 was employed by the CheeseCake Shop for 14 years as a pastry cook. On 1 April 2016 Jane received a genuine redundancy package of
$85,000 from her employer due to a business restructure. She also received a payment of $5,600 in lieu of annual leave on the termination of her employment.
After a month holiday in the Greek Islands Jane decided to start a cake decorating business and signs a lease with a monthly rental of $2,500. To encourage her to sign a long term lease the property manager of the building offered her a rent free period of six months.
Requirements:
- Determine whether the above events are assessable during the year ending 30 June 2016? Ensure you state the specific legislation, tax rulings and case law to support your
- Calculate the amount of tax to be withheld by the employer due to the termination of her