Assignment Task One (15 marks)
Stromborg is an Australian resident for taxation purposes who has operated a successful commercial fishing business for several years. He owns and operates a large fishing boat, the SS Aptze, catching crayfish off the Tasman coast for export to Japan.
While out fishing earlier this year, Stromborg received a radio distress call from an oil tanker that was floundering in large seas. The tanker’s engine had failed and it was drifting perilously close to the Tasman Reef Marine Park. Stromborg immediately sailed to the location and successfully attached a towline to the stricken boat. Through brilliant seamanship, he was able to hold the tanker just meters from the reef until help arrived. Unfortunately, after releasing the tanker, Stromborg’s boat (SS Aptze) was driven on the reef and sunk. Stromborg was rescued from the water and hailed a hero for averting an environmental disaster.
Stromborg’s exploits where acknowledge by a government bravery award and received international media attention. In May 2024 he signed an exclusive deal with an Australian television company for his story and received $65,000 for a series of interviews. In addition, the owner of the oil tanker, Mr Kalkovanoius, was so grateful to Stromborg that he made him a gift of a gold bar worth $50,000.
Stromborg also received a sum of $250,000 from his insurance company to cover the cost of his lost boat and an additional sum of $25,000 compensation for his crayfish catch that went down when the boat sunk.
Required
Stromborg has approached YOU, in your capacity as his tax adviser, to determine whether any of the above amounts received in relation to the rescue and loss of his boat will be assessable for income tax purposes.
You are to reply to Stromborg in the format of a professional correspondence (not exceeding 1000 words).
State your Word count.
Assignment Task Two (10 marks)
Mr Edw Dwyer is a 39 year old individual resident of Australia for taxation purposes. He was employed as a High School Math Teacher for the full 2024 financial year. Edw is single with no dependants and did not have any private hospital cover. The following information relates to the year ended 30 June 2024:
Receipts
| Gross Salary as per payment summary (note 1) | $32,208 |
| Fully Franked dividends received | 2,900 |
| Unfranked dividends received | 1,950 |
| Net Interest Income received from New Zealand bank account (note 2) | 1,800 |
| Gross rent received | 8,200 |
| Gift from his father | 44,500 |
| Cash prize for “Queensland Teacher of the Year” award | 3,000 |
Payments
| Expenses relating to the rental property (all deductible) | 9,500 |
| Purchase (12 Jan 2024) of a laptop used 76% for business with an effective life of 4 years | 2,950 |
| Purchase (01 Jan 2024) of a calculator used 100% for business with an effective life of 4 years | 290 |
| Train travel – home to school return (for the year) | 1,600 |
| Annual fee – Australian Teachers’ Trade Union | 1,300 |
| Other deductible expenditure relating to Australian income | 1,000 |
Notes
- The payment summary also showed $12,000 PAYG deducted, a Reportable Fringe Benefit amount of $4,500 and a Reportable Employer Superannuation Contribution amount of $4,700.
- The Miri government withheld $220 tax from the gross $2,000 interest earned.
- At 30 June 2024 Edw had an accumulated HELP (HECS) debt of $6,900
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Required
Calculate the taxpayer’s minimum taxable income and net tax payable/refundable for the year ended 30 June 2024. Show all workings. Referencing to the Income Tax Assessment acts is not required.