10 Multiple choice questions! (ALL based on Australian taxation law!!!)
5. Mary runs a small art gallery in Tasmania. Although the number of sales made each year is quite low, the artwork she sells are high profit items and she estimates that she earns approximately $200,000 annually from the business. She recently sold a painting by a new artist for $33,000. Which of the following statements is true?
(A) Mary must give the artist $3,000 from the $33,000 received.
(B) Mary must remit to the Australian Taxation Office $3,000 from the $33,000 received.
(C) Mary must charge the purchaser an extra $3,333 as GST.
(D) None of the above.
6. Andy is a plumber in the Northern Territory. He is registered for GST purposes. He recently completed a large job for one of his clients. He estimates that he should charge the client $10,000 for his services. How much should Andy invoice his client?
(D) None of the above
7. Joy runs a bakery business. She has tax losses from previous years which she wishes to use against her current year income. Which of the following statements is true?
(A) Joy can only carry forward the losses for a period of five years.
(B) Joy can choose how much of the loss she wants to utilise.
(C) Joy must satisfy either the continuity of ownership or the same business test in order to utilise prior year losses.
(D) Joy can carry forward any prior year losses which are not utilised in the current year for utilisation in future income years.
8. Which of the following statements is false? In order to claim a bad debt deduction:
(A) There must be an existing debt
(B) The taxpayer must be in the business of money-lending
(C) The debt must be bad
(D) The debt must be written-off
9. Andy is a plumber in the Northern Territory. He is registered for GST purposes. He recently completed a large job for one of his clients. He estimates that he should charge the client $10,000 for his services. How much should Andy invoice his client?
(D) None of the above
10. Rob owns an apartment near the local university which he rents to students. He currently receives rental income of $330 per week from the apartment. Rob owns a number of rental properties and is in the business of property rental. He is registered for GST.
(A) Rob is liable for GST of $33 on the rental income.
(B) Rob is liable for GST of $30 on the rental income.
(C) Rob is not liable for GST on the rental income.
11. Derek has a banana plantation in Far North Queensland. He is registered for GST. He sells his bananas to the local supermarket for $5.50 per kilogram. Which of the statements is correct?
(A) Derek is liable for GST of $0.50 per kilogram of bananas sold.
(B) Derek is liable for GST of $0.55 per kilogram of bananas sold.
(C) Derek is not liable for GST on the sale of the bananas.
(D) None of the above
12. Which of the following is not a “collectable”? (Select two)
(A) One of the first personal computers made in the 1980s
(B) A rare stamp celebrating the Queen’s birthday
(C)A pottery collection owned by an art gallery
(D) A toy doll dating back to the 1890s
13. Hans is a German citizen who is not an Australian resident for tax purposes. Which of the following would be subject to tax in Australia?
(A) Interest on Australian bank account
(B) Interest on German bank account
(C) Salary for services provided in Germany
(D) Dividend income from shares in a UK company
14. Which of the following tests must a company satisfy to be a resident of Australia for tax purposes? (Select the most appropriate option)
1. Ordinary resident test
2. Domicile test
3. 183 day test
4. Superannuation test
5. Place of incorporation
6. Central management and control
7. Controlling shareholders
(A) 4, 5, 6 or 7 5
(C) 1, 2, 3, or 4
(D) 5, 6 or 7
(E) Any of the above
15. Jackie inherited an empty warehouse from her mother in August 1992. Her mother had originally bought it in November 1986 for $40,000. It was worth $110,000 when Jackie inherited it. In 2015 Jackie spent $450,000 to convert the building into two apartments. What is the cost base (excluding indexation) of the building, if Jackie were to sell the two apartments today?
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