Taxation Theory, Practice & Law 

Question 1                                                                                                                                                                          (10 Marks)

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 - (15 MARKS)

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.

Hint: The following website can be used to cross check your answers but you need to provide the detailed calculations, rates and explanations with the screenshots of rates from ATO website.

https://www.paycalculator.com.au/

Submission guide: Strictly NO excel sheet(s) or the screenshots of excel calculations and/or tables are allowed and NO marks will be granted if these are submitted. But, no referencing is required for this question. Kindly use word document tables for your answers and please avoid writing the calculations in narration format.  

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