LAW6300.TutorialPaper.No.2.1.2017.Suggested.Answers.docx -...

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QUESTION 1 Mary is a senior bookkeeper employed by an accounting firm in Perth. She also carries on business, as a sole proprietor in Perth (during the weekends), selling second hand books. In the current income tax year, she received the following: (1) Gross salary from her employer of $98,000; (2) $4,200 interest derived from a bank term deposit of $50,000; (3) A gift received under a will of a deceased relative of $20,000; (4) A scholarship of $10,000 from her employer to complete her final year of study for a Bachelor of Business degree at ECU as a full-time student (there is an express condition of the scholarship that she continues employment with her employer upon completion of the course of study); (5) Proceeds from her business of $20,000; (6) Compensation from her insurance company for loss by fire of a warehouse which she owns in Belmont of $150,000 (the warehouse was not used for her business); and (7) Rent from a rental property she owns of $500 per week for 50 weeks. She has incurred allowable deductions totalling $5,000 in earning her employment, business and rental income. She is eligible for a tax offset of $1,452. Her employers withheld $7,966, as PAYG withholding, during the income tax year. Based on the above facts, calculate Mary’s tax liability (or tax refund), including Medicare levy, for the current income year. Give brief reasons to support your answers 2
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Answer i (i) The word “income” is not defined in ITAA36 nor in ITAA97.
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