Q3.

Is it correct to say that the only role of taxation is to raise

government revenue? If taxation has other functions, what are they?
[1.3]
Q5. What structural features do many tax systems have in common?
[1.5]
Q6. What is the difference between a proportional tax, a
progressive tax and a regressive tax? [1.5]
Q7. Explain the different ways in which a taxpayers marginal,
average and effective tax rates are calculated. [1.5]
Q9. Discuss some of the characteristics of a good tax system.
What are some of the problems associated with working out
whether a tax system is equitable? [1.7]
Q10. What is the difference between a flow-through entity and an
opaque entity? Provide an example of each kind of entity. [1.8]
Q14. How do Australias general jurisdictional rules operate in
relation to income tax? [1.11]
Q1. What are the primary sources of tax law? [2.2]
Q6. What is the primary source of the Commonwealth Parliaments
taxation power? [3.4]
Q11. Why does the Commonwealth Parliament enact different kinds
of Assessment Acts and Taxing Acts instead of one General Taxation
Act? [3.6]
Q3. What is the respective tax base of each of the following taxes:
income tax, GST and FBT? Which statutes govern these taxes? [4.3]
Q1. Who administers the federal tax system? What are some of his

duties and powers? Which statutes confer these duties and powers?
[6.2]

Q4. Kit is a permanent resident of Australia. He was born in Chile

and retains his Chilean citizenship. Kit spends most of the year
working off the coast of Indonesia on an oil rig for a United States
company. He was recruited for this job in Australia and signed a
contract with the company here. For the last four years, Kits wife
has lived in Australia with their two children. They purchased a
home in Australia three years ago. Kit and his wife have a joint
account with Westpac Bank. Kits salary is paid directly into this
account. All of the familys other investments, including a share
portfolio that generates dividend income, remain in Chile. Kit gets
one month off from work every third month and, on these occasions,
he meets with his family either in Australia or on holidays around
South America (usually in Chile where his parents reside). Discuss
whether Kit is a resident of Australia and how his salary and
investment income would be taxed. [9.1], [9.2], [9.3]
Q9. Why is it important to distinguish between taxable supplies
and GST-free supplies and input taxed supplies? Provide some
examples of these different kinds of supplies. [7.6], [7.7]
Q11. Which taxpayers pay flat rates of income tax and which
taxpayers pay progressive rates of income tax? [8.7]
Q13. What are the differences between the tax rate scales for
resident ad non-resident individuals? [8.7]
Q15. Tom is a single resident who does not have private health
insurance. He earned $220,000 of taxable income during the
2014/15 income year. Calculation his tax liability for the year. [8.7]
Q16. What is the difference between a deduction and a tax
offset? Which tax offsets are refundable? Can non-refundable tax
offsets be used to reduce a taxpayers ML liability? [8.8]
Q6. Jenny has a deposit with a bank and owns shares in a public
company. She has not provided either the bank or the public

company with her TFN details. What is the consequence of this in

relation to interest and dividend payments which she might receive?
[48.2], [48.4]

Q8. What is the first strand of the decision in FC of T v The Myer

Emporium Ltd 87 ATC 4363? Did the courts apply the first strand in
any of the following cases: FC of T v Cooling 90 ATC 4472, Westfield
Ltd v FC of T 91 ATC4234, Henry Jones (IXL) Ltd v FC of T 91 ATC
4663 and SP Investments Pty Ltd v FC of T 93 ATC 4170? If the first
strand did not apply in some of these cases but amounts were
nevertheless assessable, on what basis was this so? [10.5], [10.6]
Q14. Explain why the payments received in Heavy Minerals Pty Ltd v
FC of T (1966) 115 CLR 512 and Allied Mills Industries Pty Ltd v FC of
T 89 ATC 4365 were regarded as income while the payments in
Glenboig Union Fireclay Co Ltd v IRC (1922) 12 TC 427, Van den
Berghs Ltd v Clark (Inspector of Taxes) [1935] AC 431 and
Californian Oil Products Ltd (in liq) v FC of T (1934) 52 CLR 28 were
treated as capital. [10.8]
Q8. Fletch borrowed $500,000 from a bank at a commercial interest
rate of 10% pa to purchase a negatively geared residential
investment property. Immediately after acquiring the property, he
engaged a real estate agent to advertise the property, but was
unable to secure a tenant for several months. Fletchs interest
expenditure for the current year is expected to be three times the
amount of the rent he will receive from the tenant. Advise Fletch
about the extent to which he is entitled to deductions in respect of
his interest expenditure. Would your answer be different if he had
leased the property to his brother at a 50% discount? [13.2], [13.3],
[13.4], [13.10]
Q10. Tony Iron borrowed $1m from a bank at an interest rate of 10%
pa to purchase a large parcel of vacant land near a proposed airport
site. He planned to operate a motel business on the site. Shortly
after purchasing the land he engaged an architect to draw up plans
for the construction of a motel. However, given the size of the loan
requested and his other financial obligations, the bank rejected his
application. Tony then approached other banks, but was
unsuccessful in raising the funds required. He subsequently incurred
various advertising costs to find partners who would invest in his
business. However, no one was interested as it subsequently turned

out that the construction of the airport would be delayed for several
years. Eventually, after five years, Tony decided to abandon his
plans and he sold the land. Advise Tony as to whether any of his
expenditure incurred over the years is deductible. [13.2], [13.3],
[13.4], [13.10]

Q14. Sandra is an accountant who works at a chartered accounting

firm in the city. She is a member of a professional accounting
society for which she pays an annual fee of $550 and she is
undertaking a professional accounting qualification for which she
pays fess of $1,100. She is also undertaking a post-graduate degree
in media studies at a university for which she pays course fees of
$2,000. She is undertaking this course as she hopes to eventually
become a financial journalist once she has gained enough practical
experience at her accounting firm. Sandras employer requires her
to dress appropriately at wok and last year she spent $1,100 on
make-up and $2,200 on a designer work suit. Sandra prefers to
dress casually and, on leaving the office, she usually changes into
casual clothes. Sandra also ha s a one-day per week part-time job at
a night club which starts soon after her accounting job finishes on
Friday nights. The night club is far away from the city and she
therefore drives her car to work on Fridays so that she can get to
her part-time job in time. On all other days of the week, Sandra
takes a train between home and work and spends $44 per week on
tickets. Advise Sandra as to whether she is entitled to deductions for
any of the above expenses. [13.2], [13.3], [13.4], [13.5], [13.6],
[13,7]
Q2. In year 1, Martha had assessable income of $60,000, net
exempt income of $30,000 and deductions of $100,000. In Year 2,
she has assessable income of $50,000 and net exempt income of
$5,000. Calculate her tax loss and taxable income for the relevant
years. [25.2]
Q6. Freddie is an experienced stockbroker and operates an
investment training business, in which he teaches other
stockbrokers how to improve their investment skills in the stock
market. In January 2014, Fannie, a stockbroker, pays $1,320 fir a 12month course of lessons. There are 12 lessons in the course (each

offered on the first day of each month over the duration of the
course). Although the terms of the contract between Freddie and
Fannie provide that no refunds for the unexpired portions of their
course if they are unsatisfied and decide to quit part-way through.
Advise how Freddie and Fannie will account for the course fees.
[16.2]
Q1. Abercrombie and Associates (AA) is a firm of architects that
occupy a seven-storey building in the city. AA engages No Spots Ltd
(NSL), a national cleaning firm, to service their offices on a weekly
basis for the next seven years. Under the arrangement, AA is
required to pay NSL a lump sum amount of $220,000 on signing the
contract. Advise AA and NSL as to how they should account for their
income and outgoings under this arrangement. [45.2], [45.3]
Q2. Sonny is employed as a vacuum cleaner salesman. His
employer requires him to travel extensively during the year for
work-related purposes. Discuss the ways in which Sonny might be
able to claim deductions for his car expenses. [15.3]
Q3. B Co operates a construction business. Can it deduct its income
tax, FBT and payroll tax liabilities? [15.4]
Q5. Barry is a barrister. On the days he appears in court, he usually
takes his instructing solicitors out to lunch to discuss the cases he is
working on. Over the last few months, Barry has incurred $3,300
(inclusive of GST) in restaurant bils. Is Barry entitled to deductions
for his expenses? [15.5]
Q7. Ted is an employee of a large accounting firm in the city. On
weekends, to earn extra income, he established a small business
selling handicrafts at the local market. In the first year of operating
his business, he made a loss of $10,000. Can be offset this loss
against his salary income of $80,000? [15.7]