Australian Taxation Law

Assessment item
Problem solving question
Length: 3,000 word
Question 1
Henry, a tax resident of Australia, was a famous jazz singer who passed away recently. Jack,
a publisher was interested on Henry’s life story and wanted to write a bibliography on Henry’s
life. Jack approached Henry’s wife, Jenny (also a tax resident of Australia) to interview her on
Henry’s life story. She was offered $1 million for Henry story. Jenny was paid $500,000
deposit before the interview. After the interview she was paid the balance of the money.
Would the tax consequences have changed if Jenny had written the book herself?
Advise Jenny on her tax consequences.
You must cite the relevant case law and legislation
(10 marks)
Question 2
Sally is a single parent who is employed as an accountant. In order to attend employment she
must put her young child in a day-care centre. Sally considers the expense is necessarily
incurred in gaining her income. Would she be entitled to a tax deduction under s8-1?
Advise Sally of her tax consequences
(10 marks)
Question 3
Joseph conducts an plumbing business. With a view to future retirement he purchases 20ha of land and
plants native wildflowers that he plans to harvest and sell. As a preliminary measure he arranges to
clear the land and plough in compost. It is expected that the first commercial crop will not be
harvested for five years. He incurs interest on a loan to finance the land purchase, land preparation
costs, fertilizer costs and costs of acquiring native seedlings.
Advise Joseph of the tax consequences of the venture.
You must cite the relevant case law and legislation
(15 marks)

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