Case Studies of Specific Deductions and Tax Liability

Question 1                                                                                                                                                                        

MJ Limited purchased a machinery for $50,000 for its operations on 1 October 2015 and have been using it for income producing activities. In the current financial year (2019-2020), the machinery broke down and it was replaced with another machinerywith the cost of $70,000 which could improve(?) the production,  a feature that was not available in previous machinery.

Explain in detail using relevant tax laws and cases whether this amount of $70,000 is deductible for MJ limited.

Kindly use the four sections of:

1.      Facts of the scenario

2.      Relevant laws and cases

3.      Application of laws and cases

4.      Conclusion 

QUESTION 2 

Calculate Total Assessable Income, Taxable Income, Tax Liability, Medicare Levy and Medicare Levy Surcharge, if applicable, for the tax payer (Jenny) with information below:

·         Jenny is a resident single mom with one dependent child (7 years old) tax payer of Australia for the tax year 2019-2020

·         Her Taxable Salary earned is $120,000 (Including tax withheld) having no private health insurance.

·         Jenny has a student loan outstanding for his previous studies at Queensland University of $32,000.

·         Jenny’s employer pays superannuation guarantee charge of 9.5% on top of her salary to her nominated fund.

·         Jenny earned a passive income of $5,000 from the investments in shares in the same tax year.

complete case study is attached below