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TABL2751 Tutorial Week 3.docx - INCOME – TAX ACCOUNTING...

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INCOME – TAX ACCOUNTINGTutorial ProblemsPhilip is a student studying accounting at UNSW.The following information relates to the financial year ending 30 June 2021.From 1 July 2020 to 31 January 2021, Philipworks as a waiterat a local restaurant and is paid$23.00 per hour. He works 3 x 5 hour shifts each week. You can assume thetotal amount receivedin wages during this period is $9,600.In addition, he often receives tips from diners. The amount hereceives varies, but is generally between $30 – $50 each shift. You can assume that the total amountoftips received during this period was $3,200.In September 2020, Philip’s employer gives him an “employee of the month” award. This award isgiven to an employee each month based on positive feedback received from customers.The awardis a $500 bonus.In November 2020, Philip received a prize for receiving the highest mark in the subject “AdvancedTaxation”. The prize wasa non-transferrable $200 gift voucherto the UNSW Bookshop.In the period from 1 July 2020 to 15 November 2020 when Philip was still at university, hereceivedYouth Allowance from the Australian Government, with the total amount received being$2,400.In February 2020, Philip starts a graduate position with an accounting firm in the Sydney CBD. Hisannual salary is $80,000 plus $7,600 compulsory superannuation. You can assume thesalaryreceived by 30 June 2020 was $33,000.Require: Advise Philip as to whether any of the amounts or benefits he receives under the abovetransactions are ordinary income to him (i.e. do not consider statutory income provisions, FBT orCGT). Assuming Philip does not receive any other benefits/amounts apart from those listed above,calculate his assessable income for the year ended 30 June 2021.Answer:Ordinary income:1. $9,600 wages for waiter – amounts received in connection with employment:ITAA36 s6personal exertion2.$3,200 tips – it is related to his employment (provision of service), regular recurrence3.$500 bonus – it is easily convertible into cash and is incidental to employment4.$2,400 Youth Allowance5.$33,000 salary ($80,000 annual salary)Assessable income for the year ended 30 June 2021=9,600 + 3,200 + 500 + 2,400 + 33,000 =$48,700Not ordinary income:1. $200 non-transferable gift voucher – neither related to his employment nor providingservices, the amount is not convertible into money.
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