A s ae o . s h r d n. .

SCHOOL OF BUSINESS LAW AND TAXATION

GST Free Supplies

diffe.irom npur Taxed Supprtes for cST pu.poses in rhar:

LEGT 2751 BUSINESS TAXATION

MIJI,TIPI,IE CHOICE TEST 52
2OO9

(a)

Wilh an nput laxed suppy the enlerpnse makno the supoiv does nol charge GST on lh6 supply and does not gei an nput tax credit for GST paid on pu.chass lhat reate to the input iaxd supply With a GSTffee suppy lh ontsrprise making the suppy dos nol charge Gst on rhe suppy and does not pay GsT on ts purchases lhar relate io lhe suppy
charqe GST oi the suppy and dos not get an nput tax crdit for the GST pad on lne purchases that rerate 1o the suppy. With a csTf@e suppy tlre enloDrs maklng lhe supply does nol charae GsT on the suppy blt geG an input lax cedl lor the purchases rhat retab to lh

FEEDBACK TO STUDENTS
I hc rvcnsc

wlh

an inpul taxed suppy tlre enteQ se makng the suppy does nol

mrk

rbr rrc

'cs

&\

r:l rq

th. igh$tmrk wb

18/20

rhc lbllowingiocumcituo x,is

Wilh a GST tie supply lhe enterpdse makng the suppy does not pay GSTon ls purchass but musl charge GSI on ils suppties Wlthen npul taxed supply rhe ntlpris maki.g (he supply does nol charoe Gsr on
the supply and does notgol.n npul lax credit for GST pa d on puEhases thal relate to $e nputlaxd slppy

(r) (b)
r,

comncnron hoq $cll studq,ls!sawhol.pc'romrcdon cnch

lrchils orthc romcr rnswcr rbr
cach qucstioni and

J rbJ ".o-!dc qc, fn cd l q Fri l ' srrdcns vho lailcd rhc ra should .onracr John Taylor via c mail d.hiled fcedback .rtr . r'Lf\r.ntr b rtunsc an xppolntmcnt to obtain
l \Fl'n
'
aborl thcn pcrlbnaicc n
rhc tc$.

wirh a GsT fiee suppiy rhe enteDdse does notcha.ge GsT on rhe suppty bul gels an input l.x credit for the purchases thal bte to rhe suppy With an npul laxed supply the enteFrise makng tho suppy does not charge GsT on the suppy and does nol pay GsT on rhe purchases ihar

(e)

None orlhe above.

'norc

Mosr studenis answeiedihis quesrion

corecny.

'\or

.-f [-\ r-l-l

(- a-.>

suwty arc input tax.d supply' is ft.nt b convey that GST is payzble on yout pLtchases (ioputs) but that tou .1o n6t cha/ge cST on youl input tated sales and do n6t ger ao input ta' credit lor th. csf th.t you paid on wu. putchas.s. Hence you inputs ate taxed but your Bales arc not. fhe lffi csf fi@ is n.ant to conwy that you don t charge GSf on yo'l sates but get a credit for the GsI pald on yout inputs. fhis credit can be ofiset against GST payable on othet sales that you nay nake th.t arc not csr iee ot input tated, lf yout GSf lnprt ta' crediE exceed Wut othet cST liabitities the excess is refundable. Hence there has be.n no GST o, the purcha.e an.t sate tmnsaction.
13

Cotect answet

sonewh.t nislddlng. rhe

!b).

The

tens

tm

'input taxed suryly' an.J'GSr tee

The ment goods arcumentfor laxaton suggests ihal:

(a)

Thal setoi.es sucrr as heatth and dudalion. shoLd be prcvided by

govemment as padcu ar users cannot be erc uded

rom benefitng nom

LEGT 275

Muhiplc Choicc 1n*. Sl 1003

A s ae o . s h r d n. .

oo,e rc.r r. 1 on.r p .-. p:

dd

d ra.

^orro

[ "1 -o

..o, to

{ou,o o1\

o,,

.^j".l

be o.o, a6d o!
be1.r,.e har QUESTION'THREE

'"ltF.l

*rucs lchs helt(h trd education. shoutd dever be prcvided by govehmenl as parr c! ar usrs dannot be exctuded trom beneii( ng flo;
Thal

Thlt seruices such as heafih and educaUon sho!d etherb prcvjded or \,brdr.o

61ed b-.4

b, 9o,4 re I

rr

rhe

!o cure,

_q

re both esidnts ot rhe newty ,ndependent cou.t[, Euphora anler.ddE-ao. ,0 ,u.- o. $50000 aln ,"orh de Fd ro I T cataru oc a t.d, -e orL.al,t a. d ..o, d dno.agp. . ^d. dE rddaEubh'roae $ro0.o0011.qa:{torro-;"oron ile ecr-,-1-ru-o'ld bdn., Jrar'neE'o o.a1ld....!irdtal q d.pdar,.r r " o'2506 Ioa t sf ,e tsr".. r tr,"d dr d ra.e or'o;o Ior $I the Luon.,,in
Amie and Jane
() Consisten( wth hoizontat equ ly

i-La,.e. d. o @.rd o..ere 1.F. el 6

le)

None

orrhe.bove

Itu- tle

i d,e.9to..e.crJ . oi^a\

as t raxes 91 of inieest ncome differnltv

About 70% ofsrudonrs answ.re

(b)Cons,slent w lh vedicat equry as il laxes someone on

c\c, qofoo.do. d .qne.in@f4

ower incooe a( a

a'sunent.hete is that these have to b? tunded by a totn of taxation not posstbte o. pacticar to have

is phhet dnT y .r thrcLsh su6'diest socicty as a whot. wi undwpend on them. Studenrs who a4swd ra) ere po.ribty contu,e.t beten thc tetn .he t goods, an.J the t.m soci.t soods. things that penkutat users cannot be.x.tuded non (such 6 steet tighttnst are s@ial goods. the gowtnnant c,pnditure

or srch seryices /o rhe wder cohnunny it gofthnenr d6es ptovt@ then ot subsidisc ben. tn othe, wotds nt6s the,enor eil]:,ct <one

fhe corect answ. Ms td). answet @t is ctose to c'tcct hut the nerit g.oods aryunent do.t not rcqui,e that theonty.uppti.t ot snch setukes be the gouptnnent. Rathet it say\ thar na*et p,hes wir not ftttect that vdhe

k) co.ssredtwith
same rale

.s

vedicatequ ry as rraxes someone on a hishe.incohe arrhe

it laxs someone on alowerincome.

(rd'I

o..,>re,,

^r

.-. .or-qur. r rra.cd<oreon

oFPo-P

or o h9-.

rnconssrenl with horzonlat equ ly as ir laxes intresl income lhan it lares salary li.one.

al:

.o1.

tower rare

a3

is

(e) lnconsistenl wlih horizontateq!ry as i( taxes nlercst tncohe al a tower rare

than I taxs sa ary interestal a lo@r rere prcmoles savings

with vo.licat

eqlly as

laxnq

trtost studenls answered this q!esdon corEcdy

bw ln.one tevets. tto;z;n@ o1ufiy the sane incotu ,..vet shoutd p.y the ,"." .^.,h ;t white this sounds tike sinpte connon icnse ii ia .tso usu,tty ,ad to heah that-a taxpayd e*nks t1 ot int rest iocome shoua pay ke sane anounl of k., on it a< a E payc' eaming S1 ot ,atary inco." u turp"y., @mks s1 ol dividend incone. "i t.x.
says

corecl ahswq @< p). ver cat equity ..ys that ta,payere .n diffdcnr hr6ne teftk shoutd be E e.t.tfihen y. Thc u,uat exp,eas equity prlncipte is rhat ta,par6 on hight h.one tevel; shoutd pay norc ta,
(.nd at

t!1t 6xe6vq' on

hishet tatet rhan u'payets an

Vr orn ar-AuJk r.,e oF- \rahrorTloto^,na nroa-a od,p-,.e.for

T,eFor h, one u rc*tT^a --.^u fo, o oor. ro F9' ..\.\rla . 'or Bo B" o,anau.qJa' "s'de.rbd-ij lnterestfom Bg Bank Ltd Rent from inveshenl prcpeny ar Manty NSW
r EcT 275r

g20ooo
t30OOO

$ 5.000
$15,OOO

MtrhipLcChoi.e resl. St 2003

MtrlriIeCl$iLe Ie{. Sl

2008

A s ae o . s h r d n. .

Ll.franked dividend from shares in No News Lrd

endnq loh iun 2003 wtlbe. 'd. (a) $r90,000(benslhesumorarhsi.come lems)ressglo,ooo(beinshis

nlerest deduclions) = 9130.00C

.h.tGn .\cdbr.q. e. FVdn..p,oo6r, i5a /.id d"dJcl'o- orAu.iar"n oF'd, o-.oo<esvJLotm. !,ab.. in6re ro..,c

nlereston oan usedloacqu6 Ma. y

pbperty

$1O,OOO

70% of sl udents . nswe.ed this question correcfly. Tha corcct answer was (h). Both the forcign in.ome tax offser retet.d to in la) and the hankinq credh ta, of8er retetred to in F) ate exanptes of tax oft'ets but ther are not the onry c,anptes or tax oflses. Answc, tc) is atso inconect as, 4fthough tax ofi.ets arc son tines apptied b th6e sjauations.

(b)$170.000 (beins the sum or

his rncome lems orhe. than lhe ncome exempl under s23AG) lss $10000 (beng his intresl dedlclons) ess hs lax offsel of$30000 for thedividend catcutared as $7o.ooox 30/70 rhe end
resultoflhe

th.y arc not atwys applied. Fot etanpte. sone typos ot toGign source

rcceived in rclatloD to thgtu,

cu

aton wiLbe

tax.b

e incomo of$130.000

\l 0ooo bqna rA <-n o an h , (--i\aro lha, n. ir.ore u-de .2)A', 16<. { 0.000 oa.nq 1 nEe,t d"du4o.ar
(d)$170 000 (beng rhe
exempt under s23AG).

1/

[-1]:,1.
c!
i -lz-, \ --\-\! -

slm of ar his ifcom

irems olher than

lhs tncome

l..i o i

?.Of

le) $190,c00 (beina the sum or aL his income Lleds) ress gloooo (beinq hts

fd the d v dend alc! atd as $70,000 x 30/70 The end resul ot lhis cualion wilbe a laxabte
nteresr deduclions) 6ss
h

s rax offset of $30.000

';)1--rA

(t

l-.{: '-''-')

income of $160 000.

70'lo of students answered this question

corecrty,

he calcularlons in le) shoutd h.ve b@n s150p0o, fhe tnpo,lant rctunbet here js that faxabte Incore equar Assessable ,rcore ress Deductions. Non Assessabre o, Ex.npt tncone is not inctude.t in 4ssessab/e /r.ou e, A tax ofset is aot a deduction. A .te.Juction is subtt.cted ttud assessab/e lncore to dot.rhtne taxabte incore. A kx ofiset i. subtacredfrcm gro.sta\ otho ke payabre to detetninenet tax payabte.
rcsun of
thing to

nuturieally corect bul o.ly

fhe corcct aBMr was

(c).

atso becabe there was an enot in ad.thion. rhe end

rhe boton tine in aBwd (e)

.5 r

6e
O.
y avaiab e to taxpyers who have some fore gn source ncoms.

('

slblcted

aftr ta! othetuise payab e has been delem ned

always lppied aqalnst rhe ncome oi a taxpayer grossed up for foreign $urce income and lax pad by compan es on dividends. Sublracted from laxab e income betore appy nq th re evant lax rates. Onlyava iable to laxpayerc who receive divdends on shares.

IicT 2?1t

MultlrlCholcc lcn.

SL 2003

LtcTtT5r

Mu tipleChoi.eTen.Sl :008

v
A s ae o . s h r d n. .
,&tiiesrror,r etosr
Assume rhat lhese we th facls n Whilatds Baach: llislori dosl olthe land lo the company $100,000 va ue of th and when I was venlurd n the solted veitu.e bus ness afler
lhe dhange ofoMrship or the company $200 000 Cosl of intemed ale works a.d ofsrbdivson $500 000 Total sal prcotal lols ailer subdivis on $5 000.000 The efiecl ol th Hgh Couddecis on adoptnq th lax accounl ns agreed by counse Wh dr or lhe rollow ng was nol sbted 1o be a th Ofi was Lncome in Stull

vFcI

reev:nl faclor in delerminirc whelher

h s

(a) (b) (d) dl (e)

The racl thal the sol ctor had aways charged full profess ona fes for

The

r.ctthal the donor mad other glts atthe sam time.

(j,."-.prcrro
-$.00
d

rhe dono. s morives

."'rc hrrr'.qr^asou! lolh..d(6or'.F.-^.Fsoo.o-ob.

rhe lactlhatlhe s ftwas unso icr6d and unerpe.red. coiiectly,

6 c i200 000 .d .6 or d d 4L cn 000 m,. or w:s venturd n the busifessi = 54300000 was ncuden in Wh lrords Baach assessabLe ncone.s odinary ncome bul$l00,D00was a capila
oa n and was nollaxed

60% of sludents answercd this question

(b)The net proft rrom lhe venue. nmely 55000 000 (sae pEceds) lss $500000 (dosl or nle.medale works)l6ss 5200.000 (value orlandwhon il was venfured n lhe busnss) = $4.300,000 w6s n.uded in Whitfords
Beaoh assessabl income as drdnary income bulF100,000was taxed as

fhe co@ct.hswer @s (d). AII the othet factots wete henti.ned as beins rc|ev.nI in detetnlnhg whethet ot not the gfii was ordlnary (d) was nor mn oned at al and in fa.t tho gih horc no apparent rch o6hip to the valu. of the saic.s ptovid.d W S.ott- fh. gift was probahly grGsly in
ercess ot the vatue of the seNices sEvEN

(c)rhe

th.l S@I ptovided.

.r.-ouEsnoN
n

nt prorl om lhe venturc namery $5,000,000 {sae proceeds) ess $500,000 (cosl ot lnrerdedalo wolks) less $100,000 = 54400.000 was included ii Wlr lfods Beach assessab incom as ord narv n@me

arcrl vFcllhe paymentlo Mrs Brenl was nome bcausel

(d)The gross prodeds ol llre see, namely $5000.000 we/6 in.llded in

Whlfods Beach as*ssab ncome as

(a) (b) (:y (d) (e)

fhe

Sh nstructively recivd itwlren she Lwas a Aa n

.

*id

Donlpaym

ord nary ncom Whlllords Beech was a so alowed a ded!.lion lor lhe $500,000 dost ol inlemedial

wo Gbulwesnolalowedanydeducllonsforthecoslofte .o

end

fion th pbpedy thal she had in her siory

re

nd " rcrdd n',er .F,.rd

a Aa n from her business

p!

id.d in .Ll 9

\.

(e) lhe trading slock provis ons included the gross proceds of$5.000,000 n Whifods Bach s assassabl income and Wh lfords Beach was. rowed

l was a prcducl ol heremploymenl by the newspapr and TV slaton

.d.du.rontrndersB l tdthohstorcalcostotthe
30% ot students answerd this

and

ltwas

oflurninq hff Ialnl to.c@!nl fbr profrt

a'estion corectlv

Mosl stud.nts answered this

qu*tion coiiecdy.

she did 3onething tike this .nd therc was no finding that she was t' t e 6/srress of lelrlrg storres ,el atone lurning het talent lo account fot profil. Ahhough thete waj discussion of lhe iss@ of eonstuctive Beipt in the ase that was in rctation lo the batanee ot the anaunt payable, fhe question was dneated al the anount paid to he. the paynent to Mrs Brcnt . The recejpa was tabhle as a rcwatd b. the seryic6 she Novided, nndy t6 inq hq stoty to

c. ect answet Ms (c). Mts Brcnt had no opedy in the sto.! because she didn't have .oMight in it as she didnl wrile it. she was not an enployee of eithet rhe ne*papet ot the fv stati6h. This was the fi6t aid onty lime that

atthe ne

fhe cnect answor was (a). fhe dfiference between the Voceens ol sate and s venturcd in the buskess was l3mble undet the thq equivalent of s6-5. Alsthlia did not have a qenenl capital gains ta'
the $1oo,ooo being the difference hetw@a hislorical cosl ahd the s connitted to the busk6s was a ta' tree

d Egenon WahLnon tne

anolnls civd

by lhe

hlher were:
5 as a businssqan.

(a)

Texab e under lhe then equ valani

of TM97 s6

LECT 275t

Mulirpi! Choice Tes. Sl 1003

Nrulriple choicc Tesr.

s!

2003

A s ae o . s h r d n. .

G'

TaxlbLe undr (h lhen quvaent ol TMST s6 5 as a perlod c recipl because no ixed gross sum was pavable (o lhe lallrer lnder rh-" contacl

the payhents wete able to he chahctetised as the purchase Nlce of a capiEl

N.l'r,br

underrhe rhe^ eauva enl of 1TM97 s6-5 as thev represented

(he sale price lor a

apilalassel

Taxabe under the (hen equivalent of lTM97 s6_5 as a gan lrcm

'e

61cou,a an o J65orral codecllv

lhe ourchase or.e ol an annuit

70% ot srudents answered this question

fhe cotect ats@t was (b). Although the fathet hznsfetred th' Fopedv to th' .iii n etcnanqe Ar ne ,iqat b iceive thc pavnents the p'tncipte th't was .^i"a ;" o" i.. *". oai ttt d. une of a caoitat.seet, as no ftxed srcss sun w's as'edatntbta hon ';; contaa. ror exinpte it was inpossibte to knos how tons the t'thet wttd rne
fi@ .fter entedig into lhe agreemenl QUESTIONTEN
ln Faftsay v

/Fcthe

ounts paid bv (he denlisl who p!rchasd (he pradice weG

a lixed gtuss sum

(a) oeduclble because thev presedled

pad io acqu
e a

>se'.rolc '@n. oF o ie6 r\'/ w' ' orosrq,m Fre8ed on lhe sale ota.aeilalassel

ficd

\ D.c .o"@ a

a.@rd'nq lowha rhe prc[ls oflrre bus'nes5wre

"oloo:'

ould

/"\

*c.crv oerc' reo 01 p!r'ro *"-"0r" 'ii.*. qross "",,. "' sum srrted in thednxacr would be pavable v
(e) None ol tre above.

in'rar1 e'

! r'' vs

20% ol

srrdnts answeBd thls qustion correctlv,

fhe corcct answet w.s (d) Although we Each this case in the contett of .ssessabte lncone lhe.ritial i*ue in the case was *helher the dentst could obtain a deductoo fo/ the payhen,3 The cold nonelhel$s applied lhe sane &si, ,n ,?xed grcss sud l;. a s it awti.s in the lncone context bul stetched i h h. timits. Alrhourh lhe qi.e under the contact coutd ary dccurling to ;h" the bus;ess, the coud tocussed on lhe hct th.t. 6 the event of ","fiE "t det';uh. the ti'ad qost sun seted in the conxa.t wout.t be p'vahte Hen'e
MulL p e Cho(e

LLCT 2?5]

Mulhple Chol.o Tcsl. Sl 2003

LECT 2r5l

T.e. Sl

200R

A s ae o . s h r d n. .

,r'-ouEsroN

ETEVEN

*
c.!d hor.rh,r
au<d The key d srinction belween ihe facts in Ro/s Ro/ce y Jetrrey and Evans MBdicat Supplies was:

ln Federrr cor-" lhe Federar

th.sein Ma

air

6; (b) (c) (d) (e)

r{F . .016 *-*,", a ae'e o, tr'10,d sa,lbe ^:< rlF"^". op ,i./of o ? be *Fe- FedFs'r LotFddLc\'.Fi d
Tlre .eceipt by Federa Coke was income beuse it income if Belambi had received il

(a) tbi, v
(c)

mutd have

The taxpayer n Ralls Ray6 v Jetney \|as pi\tig up an ex slin harket whe@as the taxpayer in Morirdy v Fvads Medl.at Slppres was nor

ben

The receipt by Federa Coke was incom conslruclively ceived by Belehbi

to Belambibecause il was

?.G - n Mana-' \ rt--. MeoLr ,rodFs qd o,,no -p a.,sr,g -e,.-t 1,.r.'z.pd.6i,1Ror.po,!d Jdh. ^d.d,por m.*els were il was unabre lo pmdue iGef
-1e
Bumese govefrmnl.

a.

Ihe payment to Fede6lCoke was deductbte ro Le Nickt.

Thal rece ol bv Fede.al Cok was ncome

Therc was no pdvity ol conlract berween Ev.rs r'redical Sdpp/tes and rhe

lo it as it cosen down

ils

ld) (e)

The taxpayer in Ma ady v Evans Medicol Srpp/tes wes expoirng a marker where it was uiab e to prdduce tsetfwhereas rhe taxpayer ii Rol/

Mosr{ude.ts answerd lhjs quesllon cotrectly.

corect aBwet was (a). fhe key point of the ca3e ls that the cha@ctet of a receipt depends on hs quafttes in rhe hands of the reciptent. what its chaactet hight have bee, if had been re@ift.t by anothet aaxpayot (such .s Be ahbi) was htetevaoa, Son. .onnentatots point out ahat, if the Comnissrorer had assessed Be anbi it woutd have been incone to Beltanbi as a constuctve rcceipt but the Connissionet did not do this aad the point
The

Rolr

v Jetr@y was e vina up an exislina

ha*ei

None ot lhe above

Mosr studenG answered thisquestion c6rectty.

w6

not at issue in the

a.e.

j4
lfan amounl
s ord nary indome to a recipent

{a) (bl

ltwil never beforeiqn source ndone

ll may.lso be included in rhe

statutory

'ncohe

recip ents ossessabe in6me va a provis on but trre ru es about ordinary income wt prevait.

#
(

wherc you Neviousty have not been abre to prcduce (Ro s Royce) and being conpensated for the toss ot an exbttns na*et tEvans Itedlc.t Suppties), fhe na*et w.s significant enough to Evans Medicat Supplies fot cohpensatio, f.r iis ,oss ro be charaderised as a c.p at re.eipt. rhe orhet point to note about Rotts RoWe v Jeffrey k that the .hatactq of an asset can b. changed because of the circunstarces of lts rcatisation, That is the patenb and t chnlcal knowledge that Ro|s-Royce pdtted with had onty be4 c.pit t assets ol its uK nanufacturi.g opehtions hut by exptoitins then in the My lhey did they werc corctdercd to be revenue assets to sone extqt,

.set in darkeE

fhe conecr ansret was (b). the distincton dawn w.s bet eeo exptoi ng .n

ll

may

slalutory income p6v son

aso be incuded n the recipienls

assessabte income via a

fthe lacls in Cook r She/de, were (o omuraga

n today:

ta

t a,o

.ro,.'

ano

()

n rhe rcipenls assessabe ircofre via a slarutory inomepovision lhed gener. ry the statltory incone provision w tprevat.

lfitisarso ncuded

paoroC@ladc"d"

-lA n. o' o'1J'o rouo de.errne hdr rne,"tue

holldays d sreo.rding

llw lalways beasscssbre

ncomeeven

ifilisexempt ncone
(b)

by any rhe non deductibte enlerrainmenr perceniaqe and any amounl remainlnq woud be rexed as a business gain under tTM 1997 s6-5
The przcwourd belaxen under

^asrrparsp'St lhe facr lhar the hoidays we@ nol tnsfe.abie

," ue o.r'e
reduced

Mosl studnis .nssered rhis question correctty.

lTM36 s21 aid s21A in combiarion

rhe curcct answet eas ld). answet (c) was atso p.tti.Iy coaect in the sense that the sane lten can be included in a reciplenl's assessahte ircone undd both a s6tutoty ptoelsion and as odinary incohe btt answr (d) is nore correct as it goes on to s.y vhat happans in this sluation - that is, generatty the rules about otdlnary ihcone prevail.

lTM36 ss2r and 21A n combinelioi woutd determine rhat rhe vaue ot lhe consideralion pad ro Cook an! Sherdei was (he ams enqrh veue of rhe horidays dsegarding rhe facl rhat lhe hotidays were nor rransrerabte and TAA07 s15 2 wourd rax lhe anounr so delermined
1TM36 ss21 and 21A in combinaton woud derermine that rhe vatue of the consideralion pid lo Cook and Sherden was the arm's teigth vaue ot the

Nlu l

tle Cholcc Tc$. S12003

MLI'inlcah,,i.c leq. Sl

2UUB

A s ae o . s h r d n. .

hoid.ys disro!ardna the fa.r that the hoidays werc nor transfebre end the
amounrso delemned

wo!d be(arcd

as a businessgain undr TAA97 s6-5

l't

OUESTION FIFTEEN Oaze lndustes Lld s an Auslmian residen(companywilh fourdvsons These are (i)the srease divsion (i)lhesumpordivson (ii)the landrrldvis'oniand (iv)lhe bEke tlud divson Allthe sales oflh b6k6llud dvsion areton dis(ribulon of Fasl Slop Brake F ud a product manufaclured by a Ch nese company FromlJuly 2000 unll30 June 2009 Ooze ndustres Lld has hld thesore ALsrraran dslributon r ghts for Fasr Slop Brake F uid. Sals fiom the bke fud dvson presenl5% ol the revenue ot Ooze lndustrios Ltd On I Juy 2009 the Chrnese company canco s ooze rndustdes Lld s d strbutro. rjqhls lor Fasl stoD Brake Flu As a rcsulr ooze nduslies Ltd decdes to cos down ls brak nuid division entiry. The Ch ies company pays Ooze lndustries Ltd: lump sum of$500,000 as compnsalion ror the ross of ls bdketluid divison. Thecompensation paymenlwolld b6lkelytobe:

(f)
,10ql.

Tho solt drlnk manufaclur would pay Frnge Bonlits Tar on at the rat .146.5% on lhe qrossed up laxable va ue ol the holdays

ofstudenls answered this quslion cotrocdy.

,he cotect answe. was (a). fhe idpo anl point to note here is that s21aod s21A ate valuation prevkions rol asessirg prcvisions. fhe oths inpotEnt point to note b that .21A is only concsed with non bustness beretls. Cook and Shetden the non convenibilw ol the holidays lnto cash prcrented then lrcn helng tated undet the then equivzlent of s6-5. The L& th.t the

/t

activities

business activitis and werc not in rcspect atry

ol cbok and sheden eerc in

the soft dtirk nanufa.tutet

them undet the then equivalenl of s1r2. fhe cotubine.t eEe.l or ss21 aad 21A is that the holidays witt be valued at thet artu s lenglh vatue dErcgatding ben non tansfetabitity. section 21A then saes on lo rcduce the vatue by a',y amount th.l reprcs.nts non dedu. ble enlethn.nt .xpenditurc ro the payer

@nt

enploytunt by ot setuice lo lhat lhe hoti.hys werc not assessable to

rcspect ol hen owa in&pen.tenl

(a)

AapilalreciptloOoze nduslrsasilwasa umpsumdalculaledwlhout

A.

Cook and Shsden w.rc cl.a y in business th. valEtion ru|. rculd then hav. ov.rcone tha only rcton why they were not ass*ed undar the then equivalent of s6-5. llence they would be assessed under s6-5 or ary ramahing amount attet vatuing the holidays at theh an s length anouot ard rcducing that valuaion hy any non deductible entertainnqt conponent.

returence to Ooze ndustes ostsals ol brake iluid. (b) Taxedassiatutory ncomeundersl5-20asabyaltyunderlheordlnary meaning ol royalty whch is not incomo undr ord nary donceprs (c) A cap ralreceiptlo Ooze ndushs as mmponsaton for the oss ofa structural asset be.use diskibu106hLp accounled for all the sales of th

bEk flud

d vision
F

^brrL 1-d rl (e,lNoned he

(d) Taxd as odlnary income beuse il was cohpensation for oss ofsales of

ser

rh

.,

'b.ve
coiiectly.

Less than 1ovo olstudenls answ6r.d this quoslton

fhe host conect answer Ms (e). I the sales fron the bruk. fluid divislon had ep@ented a hote siabte propodtutn of ooE lndustrias Lrd's sares f,en answet (c) woutd have been co.rect as tt was wn rhese sates reprcsentins onty s% of totat sats lhe principte in alied Mitts (narely that you have to take inro accoanr rhe rckttue significa'Ge or t e asser !o &e bustss as a whote ]n detetnlnlng whethq ot not it is a stuctuht asset) @utd be rctewant. This wutd man ttnt note of tho auenatives (a) to (.1) werc M6l which heans
rhat

atGnative (e) is the nosr cotecr answ6-

-{

ouEsloN srrrEEN
Undr the

fi6t strand of rels 6dtnq n Mrcr Enpaiun:

Alga

ns fmm commercaltransaclions enlercd iolo by laxpayers who are othMise in business w r be ordrnary income

wh ch

interestpayable over mo.e lhai oneyea. s onydeduclble in the yarto il s Pbperly referab e.

Ihe chense D the share ownership ol lhe @mpany was a c lca evidentary ractor in establishing thal lhe purpose of lho company had

6
MultlplcChoicc

A proft from a lEnsacton outslde tho ordinary colEe

.l

the laxpayls

bus ness may be in.oma t the raxpayer had rhe nrenrion ol pror I makng by the (ransaction lmm lhe nception .l tho thnsaclion

ld(

Sl 2003

Mulrip

e Cho

ce

'ei.

Sl 2008

A s ae o . s h r d n. .

Ia- eueslor severreen

Most srudenrs answerd this questton cor@cuy,

lTM97 s15-20 rzvpi

hktton

cource ol a

t xpaye, s business lt nay stitt be incone ll the taxpayet had the of pt'fit making by the tansaction fren its tnception, Answt (a) too br@d to be conect and wuld not take into account cases tike wes$ietd.

fhe corcct answet was (d). fhat is ir a trcnsaction k oLtside the otdinaty

@
{b)

Amolnts lhar are rcya ls under the od nary mean nq ot rcyaty.thal a/

A.oL

{
'lq

ar d e

'o\ari."

o.,

Amdnrs lhalare rci Dyallies underlh ordinary meannq ofhyary.bul \ara..o.dna\ nd.r'hFod. ronp.op.n p.- pd

'.oac

Amounrs paid to non rsidonts thar meninc of'my.rly in TM97.

A

ae

rcyattes wrhin ihe exlended

-o.n

'ov.lv
M

s odd ro -on..nde- s - d a'p no. buL Lhar are nol 0rd na^ ncome
qu

ath

"r"

o d

-"D

nr"n

q o

ost stude nts answered th is

estion cotr clly_

rhe cottect .ns@t was (a). fhis rolow ftom the |'oftts ot the prevldM irsefi, fhd is h taxs .noun! thar ae rcydfiies undet the Mcc."iv neanns ot 'totElt'y but which .ft hot otdioary tncone. Royahi6 undet the otdi;aty Mnlng rhich are otdn.ty ircome ate taxed tndet s6-5, fhe $econditiona for the opehtion ot s1r20 tuan that there can onty be retativety fea ir anv, receipb nhich a.e tax.d undet it. L is inportant to note that the sktutoty delinition of 'rcyafty is not r.levant ro. s1r20 putposes. one area where the st.tutory doflnttton ot toyatty is is rcyahy w hhotdins tat pay.btc fi4 a rcyalty is patd by a .esident'etevad ro a for.tsn reeide .

*r

oUEsTloN EIGHTEEN
DrOOer

Lld. an AusrGrian resdent company, has ben nvo ved in @d mnnq operalions tor many yea6 Oigler Ltd devetops a new systm (lhe ,Dtg Deep syslam )for lhe min nq ol coa. The unque tealure ol lhe Oiq DeeD syslm ia that il does nor invove exvation. DiOOe. Lld enterc rnlo a @nlcl wirh Oz Mne Ltd fd.on aoo Do Deep,yser to o.Mac -ndF w !h rag e-. ro o-o,'de

tu

't.ho

system. D gger hes nver tod anyone aboul rhe detar s or the Dig Deep syslem previousy The rece pls bv D qoer Ud wi be:

(d ln @d d - b itol e u.oc. !b.1 r. vbusnessoa,n oras a rw:rd r"'."^.".

(b) n.luded

o rD

n assessabe dcone undersl5-20 asan amount that is a.oyatry n Iheodinary meaning bulis nolordinary ncome ro D qqeras

{c) Noltaxable

il snotl

ggered by the exer.ise ota rohl

ldl Td,"be o Diaq"r

de[nironor royaly 'rd

s c.ro ".

i..

(e) None or lhe abov.

i\lullipcChons en S

2003

LEG

t 2r5r

\'Ttrlrflr Ch, rs lcn.

200q

A s ae o . s h r d n. .

30%

ofstudenrs answered rhis quostion corEc y.

QUESTIOII NINE'EEN

fhe conect answt was (a). fhe racts are very sinllat t6 sheri', cudon Mins wirh the difier.nce lhat the laxpayer is an austatiai resident mrhs th.h a CAnadian rcsident. Sheu,tt G'rdon Mioes is authdfty that the paynenE wse not rcyatties hecause they @te not in rcspect ol the exercise of a dght. Rathet they w.te p.yments for the proision ol lnfornation_ As a Canadian Nident the Double Tax Agteenent betwen Arst@tia and Canada neanl that sherilt Godon Mines @uld only he taxe.r 6n Austmtian some I'usrress ptoftts if they wde ad.ibutahle to a petnaneot estabtishnent that the conpany had in Australh- As Sheftitt Gddon ttinos djd not have a p nanent stablishment in Australla h coutd not be taxed on that basis, Ot the olhet

Drew s Vc Chance or of Euphoria Univers'ty pty Lrd (a new prtvare un vebrty n lhe Northern subuds of sydfey). Euphora univercty pty Lrd s takn ov;by s.ienta Ltd (!n AuslEtan res deit company) Drew is irnhappy aboul the rakeo; and lhreatns b res qn fmd his empoyment as V Chancetor. Scienta Lrd to encouge DGw to renain in h s pos tion as Vce Chancetor ol Euphora Un versty
Ply Lld agrees Io pay h

wlh a new B[,lW each year wilh a lease va]ue of

an eddronatannue bonus ofgl0O.OOO and to pbvide hi; 9200 OOO. The provsion ofthe

hand

withholding tat wouid be rcqui.ed to be deducte.t lron then by the paveL Thar js why the cohnissionet aryued that the payments rere rcy.hi6. tn Digge/s case as the Expayar is an Austatkn resident thar is t, business and is providing a setvice to another taxpdyer it is tikety that tbe paynent wutd b. assesebte t6 Disset un.tet s6-5 as otther a business gain seNic6. Myet Enpoiun shoutd neaa that the f.ct that Digg.r h.s nevet dbne ahis hoforc w||l nor prcvent the .ecejpt fron being drdinaty incone. Rotr Royce v Jetuey should ne.n that the ract that the tntotnation has previou3ty be6 a @pital asser of Digget .toes hat prevent gains lrcn s e'ploitation trcn being otdinary incon.. fhe p.ynents wi still rct be 'rcyatties urdet the ddinaty neankg af layaky' fot the satue reasons as wrc stated in shenj( Cotdon Mines. Thaa is the paytunts rete not in respect .r the s6nt ot exercise ol a ight in retation to propett that Digget has. Not th.t the slatutory delinhion of rcyafty, which woutd he., that rcyahy withholding t.x woutd be payable if the actuat facts i, sherjtt 6ordon Mires occutred .gaih, is not
rclevant tot elthd s6-5 or s15-20

if the pawents derc rcyatties, at the rlne, a rm of n.r b*is

(a) (b) (c) (d)

( G) j
30% of

Od nary n6me to Drew as a reward for seryices provided n retation

h s employmenr by Euphora Universry Ply Ltd.

A non cash busne$ benefit to Drew whtch w I be laxed ar irs markel

value under s21A.

Not subrecr ro Frinse Benetits

No( subjc1lo Frince Benenls
waqes iiom Sc enua Ltd

rar Td

as Drew was nor an enpoyee or

as Drew does nor receive satato or

Noneo

he abov.

stqd.rs answered this qu.stion corec(y.

putpo*s.

fhe @rect ansEt Ms (e). fi th. ptovision of the cat had been thn.fe,abte wuld have been otdinary iicohe to Drcw but I the cat is pravided by an a*ociate of Drew's emptoyet in respect of Drew's enptoyment it ts nost likety to be a hinge benelil which woukJ nean thaa jt wolt.r b non exenpt ihcore under lfAA 1936 s23L_ fhere i. no evjdence that Drew is h business which wil nean that ss21 and 21A in conbinaton wil not apply in his situation to v. tue the caL Fot FBT putpose s it js hreh4vant that Drcw is not an enploy.e of Scientk as long as the benefrt is prcvtded by ar asso.i{e ot
then it

ot eag* trcn scientla (which woutd ftan that he would be a. enptoyee of

Pty

orew\ enployrent ln rcspect ot Drew,s enptoyrent wjth Euphotia UnireBity Ltd. CorsisEntly with Dean & McL.., Dew is prcbably in rcceipt ot sal.ty

if

scientk fd FBf putposes) but in any ewnt ||hethd he is o. k not is ndtevant the prcvisiot is by an assocraie of hts ehptoyet in respect of that

fthe facls

ii

Payre we.e to recur today th mosr rikey tax consequences woutd be

(a)The frequenl ilye. befenls woud be assessabte ncom to pavne under

(b) Ihe ams efglh vatueofft frequeit flyer b enet rs woutd be ncuded n Paynes assessab e income undr TM1936s21A

fl

'lriplcO

un. l<{

(l

luu3

Ltct )ri

Mu lpleChorco

Tc\i,St

2003

A s ae o . s h r d n. .

(c) KPMG wou d have been subject b rnnge benerIs tax oi rhe taxabte va ue of the ifequenl flyer benefls od Ihe bas s lhat ih benefil uas provided by an associate ot he. emptoyer to an empoyee in respecr of her efrpoymenr Because KpMG woud be subicl b FaT on lhe bentits
lhey would be non .ssessabte non exempr income lo payne under |TAA

(d) KP[/C wou d nol have been subjecr lo tnge benetils lax on rhe taxab]e value olthe frequenl tyer benefils bemuse payne was n @ceipt of satary

o rrporre

lor.d^ dr TAA'd10s ,Aqouo

nol appry to the tequenl flyer benefits as lhey wore ndl bus ness benefih KPMG rculd not be subict 10 tinge benlib lax on lhe lrcquent fryer

benerlsastheywer norprovdedto respclorheremploymeni

Moslsludenrs answe.ed thb question coiiec{y, Ihe corcct answt eas (e). pryre wo!/d ror be assessed un.rer s1S-2 for the \ane tsonasshe Ms nor assetsed undet th. dlcn equiv.t nto!s15-2inrhe

business and hen.e s21A eoutd not .ppty b valrc then as lt onty arylt s to 6usiness berei?rs, XPMG would Dot be a;t;ject b Faf. fher. w.s no suggestion i4 the case of therc t6ins an atange;ent h.treen KpMc and eantas tot the prevision of beoef^E which woulitflgger the opehtion ol FBfaa s'4a,

St 2003

^luh,pl.ChoiceTe!.

f
THE UNIVERSITY OF NEW SOUTH WALES
Fred onducts a l-la al butcher shop in He bulcheE lhe sheep

A s ae o . s h r d n. .

Hu6tvire. He purchases 10 trho e sheep$es

lor$l10each. Healsopurchasesl0 live sheep ior $ ss ea.h

@ss

wh ich he slauqhle6 h msell and the s aughteed sh@p inro wdous cuts such as chops

ir@i'l

leg of lamb, shouder of lamb and so on. His totaleles eeipts lor the cuts fbF each sheep @ss aE $220 whl e tlre lolal sa es elds nom ihe cuts trcm eacn s aughlered sheep are $220. Assume that Fd has a suffcjenl annua lumover to reOisteEd fo. GST and do6 in lacl s sler ior GsT The GsT consequences for Fred of rhese tGnsactions

ffi +6
SCHOOL OF BUSINESS LAW A}ID TAXATION LEGT 2751 BUSINESS TAXATION
MULTIPLIE CHOICE TI]ST SI
DURATION:40 MINUTES READING TIME: 10 MINUTf,S
ansser
sheet provided

(a)

Al the purcnases are GST lree and al lhe sa es are GST fr as purchases and sles of t@d Hene F@d does not e @ any inpd lax crediis on the purc$ases
aid is not liable lor GST on hls
sa es

(b) The purchase ol the sheep rcases is GST fe as a purchase of food The purchas ot the live sheep ws rol a purchae of lood and hen@ Fd reres an nput lax credit of s55 x 11]10 x 1cy! = $5 for each live sheep he purchass. Ho@ver, lhe lnput tar credits inol be funded to Fd as h s sates a cST fce (c) The p!rchase of the shep erssses is GST rre as a puBnase of food. The purchase of the live sheep Ms not a purchase of f@d bul Ms inpd tared This mns thal no GST was payab e on either of FEds puEha*s and henc Fred

nnoft4eive

any ifpul

tz; cd

ls

A I of Fred s sales are GST

fe

2OO9

(d) The purchase of ihe sheep ercasses s GST f@ as a plrchase of food Tne purchas of the llve sheep was nol a puehase ol food and hene F@d r@Es an nputlaxcreditol$55x 11110 x 10% = $5 toreach live sheep he purchases. Fds sales a GsT lree and afy ex@ss lipLl lax cEdits rh.t Fed has a lunded io

In each case choose lhe most cotrec1

Indicate rour

an$\tr in pencil on lhe ans$r

Each qustio. is $onh one nark.

Cddidates nay bri.g an un annotated copy of either: CCH Core Td l-caislarion: ATP Fundame.tal 1d LeEislalion: or Lcxh Nexis Concic Td Leglslatio. into the exanimtion
ElecLionic

(e) Fd re@ives an lnput ld @dl of $55l 11/10 x 10% = $5 for each tile sh6p he puEhases Fred also rews an inpur lar credit ot 5110 x 1llro x loEq = $10lo. each shep rcass he purchases. Fd is IabteforGsT ofs22ax 11I1a x1oo = $20 for the tolal 4is of each shep caEss and $220 x 11llo x 105 = $20 for lhe loralcul6ofivesheepthalhe*ls. Fred otrsets his ioia npll ld credits ot$5 per liw sheep and 110 per sheep eMss against his GST tiabitiv ot 520 per tve sheep and $20 per sheep @ss and mits lhe ba ane 10 the ATO.

cored .nswer

rs (d)

cnlcllato( nay be brought inlo rhe dahination r@n Mobilc phones fray be brought into the exmralion roon but mNt be switch.d olt and

mu$ be placed underyourdesk.

A s ae o . s h r d n. .

assum ng thal lh nleresl on the oan used to acqu re lhe lvlan v pmpedv ls a
Ann e and Jrne are both residenls of the newy independent country Euphora Annie had a tarab e n@me in lhe year end nq 30 June Y1 of550,000 ufilch @s who y dedved lbm her

id

deducrionforausteianin@melaxpurposesMacolmslaxablencomelorthevearending
(a) $1c0,000(beinsthesumof dnuc1ns)= $13o.ooo

salary as a teacher of Engllsh as a se@nd langlage Jane hrd a takble in@me in the same year of $100.000 which @s trholy deived lrom nteEsl in Euphoran banks under the Euphor an lax system salary s taxed al f al ru te ol 25% frcm 51 vlhi e inlerest s tded a1 a rate of 100% frcm $1. The Euphodan 1ax sysled is: {a)

alhslnmmeilems)less$r!,000(beinqhs nterest

co$isleft wlth horzontal

MV il laxes $1

equ

ly as I iaies

S1 of

interesl n@he

fieent

y frcm ihe

of salarv income

(b) $170 0oo (be ns the sum ol al hls lncome items olher than tlre n@me qempt under s23AG) ess$1o,ooo (being his n1erest deductons) ess his tax ofisel ol $30 000 ior aiion wil be a the dvidend culaled as $7o,ooo x 30/70. Theend Esult of lhe laxzble income of5130 000.

*c!

(b)

li@is stenl lith vend equly as it laf,es $meone on a lorer nmme at a higher
rale than i

(c)$r7O,OOO(bengthesumolal
s23AG)

lales someone on a h gher n@me

h

l6s

his income lems oiherlhan the ineme $10,000 {belnq h s intered deductions) = $r60.000

dempl under

(c) cons stenl wlh venirequity as ii laes someone on a rate as 1 taxes someone on a orer income

ther incone at lhe same

(d)

$r7oo0!(beinglheslmoralhisin6me

lemsolherlhantheLncomexemptunder

(d) nconsislentwth vertcalequiry as I laes someone on a rorer in@me atlhe same te or a hgher rate as it laxes sofreone on a high$ ndme and inconsstenl wilh honzontal equly as I t4es inlere$ nmme at a o@. te th:n t taxes elary (e) nconsisle.t wlh honzoniai
Ete P@froles savings

{e) $rso,ooo (belng lhe sum or all his iicome items) es $10.00c (beins his interest deducions) Les his lax oflset of $300c0 tor the dvdend dlaled as $70.000 x 30/70 Theend resu l ofthislculation wll be a laxable incomeof$160 000

ly as it laxes iiterest in6ne at a lo@r rate than I irxes salary income bul @nsistent wilh venil equ ly as t inq nteresl a1 a o@r
equ

corcct answr is

(c)

conecr answe. is (d)

QUESTIONTHREE Malcolm is a n Auslralian sideft who had lhe lollow
n

g n mme

and ex

ses for lhe yea r

Annie, an AuslEian resldenl purchases a vant block ol land at Leu Nsw on 1 Julv 2OO7 for $TOO,OOO The @nveyancing costs assiated wlh the purchase rere s2000 Ann e borowed $50 ooo rrcm Bi! Bank Ltd {an ausl@ ian sldenl bank) at 5q/" Io ass st ln iunding lhe purchase ln the year ending 30b June 2ooe Annie paid nlerest on the l@n fom Big Bank Lld ot $2 5oo ln lhe sme penodAnnieaso pad ound ralesol$30o0in sre.l of the LelE pbpny The redu@d cost base ollhe LeuE popenvbAnne as at (a) $100,000 (bens lhe purchase pnce) p us $2000 {be na th conveyaicing cosrs) pus $3000 (beino the muncll 6tes) = $105.000

Exempt income under ITAA s23AG for 91 days toreion sewlce

Sa ary irom B g Bank Lld (an Austra ian

(b) $loo,ooo (benq the purcha$ price) plus $2000 (bens the @nleyanonq

osts)

sidenl bank) (c) $1oo,ooo (benolhe puEhase pnce)pus $2000 (beinsthe conveyancing @sts) plus $3000 (beng muncil tes) plls $2,500 {being nleresl paid io Big Bank Ltd) =
(d) $1oooo0 (beins $epurchas pd@) plus$2000 (benslhe @nveyanc nq cosrB)pus 12.500 (be ng inleest pad to B g Bank). (e) $100,000{beinslhepurchasepnce)plus$2s00(bens corccl answe. is {a)

lntercst irom Big Bank Ltd

Rent from nvshenl properry al lvlanly NSW

Uniianked dvidend frcm shares in No News Ltd

nte.est on oan

usd

to acquire Manlv prcperly

n1eslpaidtoasBank)

A s ae o . s h r d n. .

Assume ihal these

we

the

facls d Wifatds Beach

and to the @mpany $100.000

Hlsiori stolthe

A lax

ffeB irom a user chaQe

that: charge

Value of the and when it @s ventured n lhe soaled venture business alter lhe chanqe ol owne6h p otlhe company $200.000
Cosl ol iniemediate

(a) (b)

A person pay ng a

usr

as a whole whe.s funds raisd by ldes seru es pmv ded by the oovemment.

muld be ppaEd to pay tor bnefts to society a noi appljed to pan cu ar g@ds or

@fts

and ol subdiv sion $500,000

Tola sab pnce

The etrecl

of all lors after

subliv sion $5 000 000

in the

A user chaqe s ony ever appied to goods or sefris !!heE particutar use6 nnol be exc uded frcm beneft ng

oflhe High coun decision adopt ng ihe tax a@ounrna aqreed bv@unse

(c) (d) (e)

A user chaae s
app! d systemat

(a)

The nel p@fl from lhe renlu namety $5000.000 (sate pF@ds) ess
$500000 (cosr of intemediate

apF ied arblrE ly ln y a nd a@ording io p

@*s ol ehergency

v/hereas

redetemiied pnncip es

td

is

Mfts)

nrured in ihe busness) = $4300000 was inctuded in wtiriods aeach

assessab e income as ordinary ln@me but $100,000

ess $200 000 (vatue ot tand

*ien itMs

A usr charge s
spices

app

ed to a panicotar qood or seru suppted bV the

Ms

pila

aain and was That such as health and educalion, shoutd be povided by govemment be qc uded fbn benelit ng from them.

(b)The nel prort om the venue namely $5,00c,000 (sate pb@eds) tess $5a0,000 (@st of nlemeniate M ) ess 5200,000 (vatue ot and when it Ms reniurd in the busness): $4 300 0oo was ncluded in r'!fi fords Bech assessab e n@me asordlnary jnmmebut$100,000waslaxedasapiia qatn.
(c) The nel prolir trcm the wnture namely $5 000,000 (sate prcceeds)tess $500 000

as parl cular

usrc nnor

corEct.nswer is (d)
QUESTIONSEVEN
ln

(cost

of inlemediate

w*s)

less $100000 = $4,400,000

Ms

incuded

arerl

v FC7 the

payheit to Mrs Bent Ms n@me beuse:

in

!4,hillords Beach assessab e ii@me as ordinary income. (d) The grcss prc@eds ot lhe sale, nahe y $5,000 000

@re

nc

uded n

ltfi lfods

(a) (b) (c) {d) (e)

She @nsttuctively
h

BeiEd

shen she

eid

Don t pay me'

in

Ms

rwad

for

seNts lhal she pbvided

leling her story

Be.ch asessble in@me as ordinary iicofre. lthinords Beach Ms ate a owed a deduclion i' ihe $500,000 @t ol niemediate mfts blt was not al ored a ny dductions for tte @st ot the and
() The tEding stock prousions included the deduction unders3"1 tor the
h

I was a

qair trom rie properly that she had in her story.

qrc$ peeeds of

$5.000,000 tn

Whtibrds Beach's.ssessabe n@me and t hlfo.ds Aeach was alto@d a

srori@ @sl

Ms

a prcducr of her employment by the

neftpaper and Tv station

oflie taid.
decbio. Aust6[a did nol

correctanswer is (.). Nore rhat at lne time ofihe have a gene6l capltal gains td.

ltMs again rbm nyins

on herbusiness

-A s ae o . s h r d n. .

AUESTION EIGHT

QUESTIONTEN red b/

h rqe/an waroLnol fe aa. {s e4

L'elt'"' @ P
lAAq ol
sb-5

Under lhe second strand of reason

1n

^9

Mvet

Enpdiun
@se o!

_come
Lnlo th

lFe
'n

tansaci on
a

quesrcn

td$ve 'ao a '_

orol aa\

nq

nfn t 'nleed
a

a,
(b)

Ta^aoe uroe' lhe rnan eq. valF-rcf

rs a p'-@c ?cau bea-sa nol.eoq'osslur waspaydbe orF ilre_-_oq lqeconmc 4th h'sons
Nor taiable undr the lhen equivalenl
sa e

to

inE

oo4 I o-

D_sadon ul oriv be'rcTe I FA rr\oave hao on arlhe I ne ra Eleran asserqaspu-ra!e!

D!4 nrli's

TM97 s6_5 as lhev represenied the

prie

for a

1al assel.

lnle@stpayabeovermoreth.noneincomev@r sonyddudlble nthev*rio

whch I is proper y referable

(c) (d) (e)

Taxable

u nd

er the then equivalenl of

lTM97

s6 _5

as a

ain lro m pmpe'ry'

,-.
TaEble underthelhen elurvalenl of
LTAA7 s6-5 as a business gain

"'no

l"r'ter@fe roroloen who$asroo.o"r '".'se-'Eles a non 4abeGoD 9d-

ng Lle

Notlaxabe underlhe then equientofs6-5 becausethev psented the purchas pnce of an ainuitv

"

irp:-ty
as
15

-x4

"r-,i,'"*'e ompen*ron lor lhe

(s)
lt is

r'

an as< gnnF-r of

-noe'vni coo'nv

c rchr t

*"'w Ib'

oro''aa

icor'

tulure income

'seond strand ofie.soning ln Myet Enpo

OUESTIONNINE
n Fedenl Cok lhe Fede Coun he d thal the

corect.ns{er

ihpoft.ntto

@cognise thatthe qoestion asrc aboutthe

un'

OUESTIONELEVEN

pl bv

Fede Coke was

"" ".,,i.u o*n" *uFa""'0"" ro u .ong.se rn"r

1""t" i""

(a) to (c) (d) .F.

heme beuse (

would havebeen n@me fBellambihad

even t

,dt a e."1"

A-e'eono 'nda Fede Co[e and L Nickel

9r - oeau* ln6t w$

no

o'\ $ o (onr5Rbd^a'n

"""" -*"**,

itc L"

",, iooi i*
ld

ln@me to Bel aFbi beeuse I was onstruct velv ree ved bv Bellambi Deducl be to Le Nicke

' lhe oaal"g point home under a moitgasee's po@r or sae Paul sells "erB;n!e" for $aoo ooo and the teme hou* at Rdtern ror $400 000 and the ;;me un 1 at ;;;r;s F rhal Ba* ror $2oo ooo. All s es l?ke p a@ on 27s Deember 2003' For pita J,"r irct
ns L
gains

*.* - R{rem'o $l0oooo Folio -d re h'a-dd oc\ n * ;","'-"' ""* --"Fp o eo c-o I de'pe?E nem or cah -o ' ve't har .*
r

"'" o,*"r""

tr,'

i"""stment banker who.esdes na manslon al Darins Port of $2 mil'on to Thal Bank Ltd Paul purchases a home J"*",! ioo6 icr $3OO OOo and puah6es 10,000 shaes in That *" o"'it tank) ror $30 pe' share on the same dav oi 1 JuLv 2003

puqEses PalL will obtain $e most lax adva'lageus sult f:

L1d

(a) H ollsels the pila oss on the That Bank the Brcnte hom un I ri6l.

shares againsl the

caplalqan

on

No'

-@. a o feda6 mbursemnL pnnqp e

co

a^ ooe<'o' hrr'eaae-eral
(b) It he appodions the capltal toss on the on bolh p@peftles equallv

ihat Bank

Ltd shacs againsl the capital ga n

(c) lf he @des th piial loss foNad as a net

epila

oss and ofisels ii agalnst fuiure

piial gains on other assels

(d) rf he ot'sels the
the Redleri

p lal l6s Teme frsl

on the That Bank Lld shares ag6insl the

pita

gain on

(e) Noneottheabove

A s ae o . s h r d n. .

corEt

arcwer is (d)

!e,

Lc

io losp- o ' rt otu gar'c dBeda ded cGT e?en' e\enl p uprd_c o:rr"or"pp-.srortsep- tr. r.ecrDla or,n soqFgr-dedbad-sd rhe E_dMs

her emplove' uider Eiza G ensldedno enleing into a salary sacrilice aftangemenl fith prdided with a new B[4W wth a lease vahF or $90 000 She esiimales which she nill be 30 000 kns per ihaishe wl only us the mr for pnvaG purposes and lhat she wil l6reL

and ru-1_9 co<rc o- t'" t d are'sr aieo o oe $3 500 r^" '.-' ** p,;ec "', n\- a.e ieicr-a.e u--i-s cossr r- "sd-ars o be $2000 oe' "".t=' - r* i'; nonth Elz ; drenlly on an annua sa ary of $2oo 0oo per annum lfElzaenlereinlothe ovq Fd-ces -e sa arv ov rhe a'e ra *s. nro rar re, .,i";" _";.^""",--""'"",-O ,rv rBl pa{abe'ro ne ororcio on ."" .l .-.* -,

OIJESTION FOURTEEN Hamld and VM Lian are

rro
r""o

. ."r,ta

-*-" oi.ntrr g."ros

ro

Re@nllv they had a maiorargumenl v!'illiam enle6 ch wlliam prcmises lhat he aill not enter lhe "ith ".D rt"t. i. ouilt lor a period ol 1o vea6 Haold pavs Wliam $10 000

neighbolF

lnder *h

adnlageols amngementlo

E iza

@uld be

to,

tl," o"ul,uu"

"gr""ing

"ovenant

The cGT 6nsequen@3

olths

tBnsacuon lor

(a) For the slatutory fom ula mth od to be used (b) For the opGling costs melhod to be used

b valle

ih

ft nge benefl'

(a) cGT evenl A1 wllhappen as vMliam has disposed of hls ngft to nler

Habd's

and

value the

if nge benelt
he_

_ocr orovoi-o -o F fr q:hru 7a o @'trio-16 b I e o method

q'A-oeoe_e'lo Io
o-'1 or

alie

laY

'b.

LCr eve Dl
CGr

I'appe^ ior W

!r

ard

re

$'Oooo ltss _caenrr co<F c'

3nd lo use lhe opeGlmq @sts

caan dr beaLaplaloar

lowlar

o -o. -tzd o co-l.bu. lo h. @sr o' prcv'drg -e' -d" oe."r

lalarv and
to

re'1er l:^

{(

ure rhestarubrv fomua method

e!"r' D ur' -4pe_ lo Wlrn r_o rne $'ooOO esq nc oe_ral e1a'lqrlo hF es_dw,Fna'rw b'o'dr.ryi'o"'bw iaf

@qls ol

p,
corEt

e< rc

mrl

oorob" used rovaue so ru(" o the l''nge oenerl rs ?aredravJa'o lo' lhpooe6r-o esis Ferqoo obeu*d ovaLe

,.r cGIerenLO

fl

l^.!pe-'o W

ess nooenlr' @$s ot e-rer

lhe rema nder ol lhe tEve

lhen be duced bv soyq as Wll am has held ihe

izr' ! .

t-etuoLa aa"qlb"lcJEr'da'S10000
@

t"e up tal oai- w I evant asset lor mo than one

be'educ"d lo zeb

amwer is (.).

s4

detailed explan.tion below

re CGtev.nlD

OUESTION IHIRTEEN Joseo- D-<Fases,acan. ard

oedu*

I wii be or na_v _o1e ro ila od a< a_

qappe-

oulr'pE oa-"31o0O0w
o

o''ary ncdp{ o oto"rv

i"", .*

arKaioo+bco- seorenba los5'o

rdn_a_'o
52oo

$20

000

o4'

moq r."

*ro rr'"

Joseph or the eLe on 1 February

-"'o 2OO9 are:

ooo

_"

cG 6_*o"eEe' 'o'

corecl answer is (b)

QUESTION FIFTEEN
Ll

a ccf everx p, -aDp._" b-l t ' pral gar 'c o !eg!{ed @ se lne and sas ot .'" .cr . loseDh AsCG e'dA' -aope_s CGT e!er'D ooec

the fads in Payre

lo recur lodav the most likely lax onseqlences @u d be as

^*t

in@me lo Pavne under s15 2 {a) The lrequent ilyer benelits MU d be assssable

rbl cGT event A1 does nol happen beuse the land @s a pre ccT assetlo Josph ' ' acT eventDt happens beuse Josph has crealed contcrual rights n Ha'nah

6)

The arm s length value ol the freqlent iver benefls @uld be ncluded a$essable n@me undor ITAA 1936s21A

Payne s

,-, c.T e\p.lA'

happens a-a loseon F l+ed on lhF !lalda- ol $ 30000 b_r n orco ad,s(o-n o,500 .-,(. .-ouc"<"isora,9an.oS90000

c
s

o@o a d.@un

Joseph

^-(D1 s lzxed under CGT event A1 he is nol taxed u^der CGT evenl

o {io

o'cph

rFoler

'<

La^ed o_ ihe

-!

a'rrl9a-

Drai

9!'

o $90000 Bea !e

ol

$ 30000b'l

kPMC rc-d have oee- c-bjec lo linge @n'.F la? onrhP ldbla!rl-e ol 'he rrouenl flver @nelle on lhe bass fal lT oe^er'@s ltr'ded o/ a_ ae'cia(a r sFc o' l'e entovl'n B' se lt.ovc u" o n*

""oro"." Mld ".prov*to to FBT on the benents be subjecl

exempl ln@ne 10 Payne

thev

wuld be non a$essab e

non

underllAA 1936 s23L

A s ae o . s h r d n. .

E o- -e edbevoueo! woulo -olha?"oee- rube' oi-q'be''r' ^PMC kaqes lne -aaLen '/e oanFlls o'a-e' Prvn' mr'"ce'oror*aryo
oer' 5' a'revFend

,d, "

IlMr6 !s?'a_a 21a - o_onaro" C""\ d"o Sne{e- '2" le" a'r' -*0"*.""" " ." r'o ou" *-

e_glh

/'

e or

rA tl'dare
<o

;'il;:; ':;:";i; ;;;;**"b"'-*

The
Uie

''F. Tnekeduedlc oenc'rsM . eto(es -IJ' e36 s? A wo-rd aor apph o l.e . *."Jiia ".,*'* *'e oi b-'iaess be_e|s tDMc @_Ldrolb' n,", t-""''t,. b' errs as he\ re'e 01 ""t "..,.ir * '.;'"';'." in ,""p*t""-"". " ot n", ptoulo"o ".povt"nt
corrcct .ns{er is (e)
OUESTIONSIXTEEN
v Jotrey and tiose in Mananv v Evans The key disl'nct on beNveen the lads in Folls Rdvce

e,

aft drnh na-.raa.e'w.ld oa!

q@s*d up tatabe
va ue or tne

" "usne*eaholdavs

dr'?t'or'65'to' ' -qeBe'e!lsl&o

"oF

'"o*o'oee5-5 'rAAe7

and rqe anou-r

QUESfION EIGHTEEN under the I rst strand ol asoning n ltlyet

Enpaiun

t or 'a o"r'_s ro !" re ed roMch

a
'

.rhe-n4i*

Ln

bus'nss

sl

beordlnary n@de

b,

lnr.

eslpavaDreo\e-ToF
pu'oo* o
Lt'e

'r -

rherd^oarer'.PoJ3Po,(F / JetFJ @<gtrno odn'rJ''grarlF -or'

w!644>

s PrcPerY reledb e

'.

- Mod4y r E a's Meoldt '!DD e' :' -,-p"," d Ro* pa/', Jetrev ra\ e\oo'I-e -d'ie* ree I ;;;":i; was unable 10 lrodu rce f o'hveen EL'r! MedlcJ Suolres r'o tFe
Tne G,Da'e_

: ri,i*:.' ut".t ' ' r'd, s v'o( ^

ar

s,pprs war

' (e)

c'rG

eeo'nt

af

i"jJ.n';io .-';ql';ri"

'o'o" '

'uoc'u"eea

;;"';
Al

";; va;sad on iiom lhe in@pron

or the abov

i-;;,a(pave

ours dF lne

ol lhe insacton

odrary co- >e of lh ndo 'e aenr'o- or p@

( ld{-s ov he

o ' (e)

;".';,,
Jefrrev

r'1"' r'- rarpdre n Vo'dat E\sns Meca S'DoFs wa' e^oo'mg aearce Pa
rnaoa ro P'ooLe ^" Ms s vin! up an exlslmo mailet

'

'
OUESIION NINETEEN

None olthe above

(a)
OUESTIO SEVENTEEN
lt the lacts in

meanln! Amounis lhal are rovalties under the orclnary odlnaryincome

of rcvaltv thal ae nearng

nol

jbj ., '-'

A-oun6
am.-^rs

C.ok v Shrde. were lo @c!r again iodav:

Lr^Ao7 thrt ar nol od narv n@me

rlt ae ova\'es o-/

0' 'oldN i-

ITAA -936 s'21 rnd ? A

6-b''rlo_ @'a oelen-e rdr lhe 'aue o rhe '' s eo -ehoda\s ."*.n.."." *o. c-" rqe -on ".0 /< re? -or r,ans e,abre eo-ced ov an! ai"!i:",i,:,1#.i" d. .- -1oa ( Frr ' @- d De r&ed r a

.;;;;

;;m" m*-';e
'n

Lhat are

_o' ovaltes__de'__eord_da 1ean-go'o'!tv outihataF qan -or ooperv o ncpre delq

;;i;;;;i;;"--*

p.-*s'

d^o

va-ou

(b) r,

business ga n urder ITAA 1997 s6_s' ln @mbnation' The pnze would be1arcd under llAA36 s2l and s21a

'rs

'

-r.

a'e

'rcYaq

TM97

'o\E

I'e(
o_

wihr he edeno'o

'e21 9ol

fAAso s>2. a-o

d

Ililj".i"' ""'i'" c,i"l a"d s-erd"- ^ar i',il!.ii,l ,:i,,"".., '. ned MU ta^ th amount ro detem

o't"' - A " Lonb aro_ M.'d oerF-n'lhar re val-e ,'{e;oF "'d r-Aro s 5'2

Arou s pao

M5_ he od-a1 -ea nd o'

rovallv bui rhai are nor ordinary rncohe

A s ae o . s h r d n. .

Thi3 is a type one benelt so the gbss up is

A benelt wil be a frlnge benefl

$9 900 x 2.0647 = $20440 53

(a) o) (c) (d) (e)

lf lis pmvded lo

an emplovee

vfieheror

nol

it

s salaryorwages

FBT payabie is $20,440 53 The sa ary educlion Aner

x 465=519250
be

ony

lit

sprovidedbvlheempoveescurcnlempover
as an enplovee

wuld

dlaled as
beneit

fo

lM: Gsr lnFul lax credit $2750

=

Whelher or nol it ls provided in lhe reqpient s pacilv

x 6st of prcvlding

Al

or the

abole

52; ooo (ease

esc);
x

lrLnge

$500

(runnins cosrs)

None or the above $9504.35 (FBT)

70 = $6.653 39

TIVELVE DETAILED EXPLANATION OF ANSWER TO OUESIION

Thereio.e lhe bral salary redlclion

@ul!

be 524 153 39

i.""*r*lr" ro,..p t",gt"L te raxpaver unless lhe 6 a larivev hilh blsnss * G. statdory Fomula merhod b@m6 mo prrabre as the i",i""eo" * l.
kilomets
Per Year

ln oeneBllems. as

Ms

pointed out in ledures the Stalulory Form! a melhod wllusualv

Hei@ the salary

slld

be $200

000 $=

$175.34'61

"dift incrca*

T*

on $175.34561rcu|d be $56,333.30

;;";J;r;. i""L!,a a,o" "

the stalL{ory Fomu a fie1hod is likelv Hence here yourinilia th nking al least should be that absence or sarary Note rhat h;e lhe bus ness pecnraqe is zerc in rhe

ln addilion the grcssed up

fdnge benelit in

ue of the frlnge benelit

@! d

be

as rcpodable

ldlaling

E iza s

lvedie @nlribulion
linge

'dded

" "o

.*n.a

6re tatpaver and rhe kilomehs dnven per vear wll! be

16 tdYDrr'' tren

Hen@

Ellz s elary

plus her podable

benefLls would be $196'237 14

sebe ili"'-iil i* r-.'-.4-oo ov'u"'q-n'ou'o-''p'owharmuoohefr Fdue * *-4. --oe'-" sra.t"ry'o- u -Fnod r"sw 1s ;;;;;..;;*'.". *'c (loz'!a-o_enwile'__areFBTont''r' * . i"" "* "-. " *i J." .."i in"r"lrn" "*" *l nor ha@ 2 reportable rhnse beneft li specr or the r
and

,3 nr

b"efq

Medlca lew rculd be $r 9,237 14 x 1 5% = $2944 31

Sum of

Td

and Mdire Lev] = $5e

r1

sa ary after

Td

2nd iredi@@ lery $116,563.50

henewllliol

have her Med @rc

",plv*

lew ncased

(b)lvhetevalueF .g.Benfitlslng operatingcostsand m'*'nocontributlons

miqhl meai lhd E ia s whai makes lhis queslion a bit lhckier is that the saary sacnr@ He-ere r 'ed to chec' 'r a*' ** i,,1*' ""i o',i" E aner larco 'ouron br iTa t l oldce h' na b"le ooc'ion

$24.ooo

(eae

@sts) + $3 500 (runn ns costs)= $27'500

'the delai ed calculat ons arc

as

follM:
$27

make no (a)M/here value frlnge benefit Ging staiutory Formul' method and
30 Oo0 kmvannum lEve led slalulory f'acilon wLl

slo x2.0647

= S56 779 25

FBT payable $56.779 25

465 = $26 402 3s

CalculaUon of taxabie

lue. Wlh

s90 000 x0.1r = $9 00.

Aller 1ax @sl of prousion ol

nge beneft

A s ae o . s h r d n. .

S27 5OO essGST nplt lax

red t $2750

$25 000 70= $r7 500

Td

and

Med

LeW $66,547 33

Elza's salary

afle.Tdand Trredicarc$1

.o27 62

$26,402.35

70 =$13481.65

Less Elzas

co

nbdon
T4
and Medire

$ l*e

99oo

Therelore the tolalsaLary reduclion

Hence the

wu

d be $35,931 65

Eliza s

ary after

aid @n1rib!t on $1 l6 127 62 P.vtuen's bdt not opfriihg cos6

slarywuld

be $2oo ooo

' $35,931 s = $164 013 35

(ii)

cohtttbution equal to

Taxon$164.013 35 @!ld be $516c7 20

ln add

ton the gossd up valle

of the tnnge benetit

Muld be added as

a rcponab e

tnnge benefl1 in

cu

alin!
pLus

E iza s

Medi ew
e fringe

Hen@ ELiza s salary

Medicare lew

podab

benells @uld be$220,79760

$3 soo

le$

$350 (GST inpu lax cedit) = $3150x 70 =

$2OO.O0O _ $2205 =

i220s

mud

be $3,311 96

The.efoe saary beomes

1

$r97 795

th.

sum

olEliasTdand I
T4
and

ed]mre eWrculd be$5491s

Tdon$19779s=$66.00775

E Lza s salary after

N4ed are

Lew MU d be !109 09 19

(c) lvhere statutory Fomula is Ged to valuethe benefit bul conklbutions ate mad bY th enploye

Ta
E

ann Medl@r ary less

lew 663 974.63

(i) a For iLluslralve puaoses ih.ee levels of @ntbution w I b analvsed herc: (ii) a contnbuton coitr but on up lo the p grcssed up laxable value ol the benelit eqlaL to equal ro the ;as 6sls bul nol the operins 61s and (lit a mnt bution

ia s s

Td

and

Medle lew

$123 32C 32

iz

s sa ary less Tax and Medica and her

@nlibution 5104 320 32

(i)

Utbdjo"

equat

tolhe prc gro$ed up nlue

'rthe

henellt'

(t11) Confibulion .q@t

to

tutn'nq cosls but

'of

/65e coslt

$24.OOO + $3 5OO = $27,500less $2,750 = $24.7s0

x.7 = $rT,325lesscontibulioi
Grossed uP value of benont $6 400x 1 0647 = $13,214 03

Salary becomes $2OO,0oo

$7 42s = $192.575

Tax on $192.575= $63 653 75

[4ed

ere lew $2833.63

FBTpayable$13214.03r 465

= $6144 55

A s ae o . s h r d n. .

$24000 ess$2,400(GSTinputtarcEdil)=$21.600x.7+$61t4.55x.7=

$23,!42.05x.70=S16 129.44
Salary ducl on 5200,000 - $1s.120 - $16129 d4 = $163.7s0 56

Hene saary beomes $20c.000 - $19.421.19 = $130,573

Taxon Sr30 s73 31= S53.260.46

31

Td
in

on 5163 750.56 = 953.90040

The qrcssed up

lue

The q@ssed up value of ihe fdnqe benetit wil beaddedasaporlabletrngebenefl in cu ating Eliza s i,ledi le!y.

lcu atn!

E iza s

of lhe ftnge benefl w Ibe added as a ponab e flnge bnef1 Medica ew

Hen Eliz

s salary and reporlab e ninqe benelits wlll ber 9214,303.36 e on salary and reponab e ftinge benelits $3274.55

Hene

ia

s sa ary p us reporiable ftinqe benefls will be 11 93 792.39

Medire levl payab

Eliza s lvledire rew The sum of E

w I be $2 !06 9
sum ofTaxand Med @re e!rypayable$57.174.95
and lvledirc levy

iz s Td

si lb $61 17.35
Eliza s

elary ailer Ta and [4ed]E $11r 575.61

s

Elza s salary aner

T*

and Medica 6vy

oll

be $119 41146 Less

Elu

s
Eliza s

@dnbutui

3s00

3500
E

zassaary essTaxandlrediereandcontribution$103,075.61
Contibution equal to IeBe c6rs

*lary

afler Tax and Med

le!,y and @nldbul on $115,911 46

(iD

(d) Where Operating CGts are

usd.nd

contributions ae nade lo the povision

if Eliza @nl bured the value ol lhe finge benell she @uld be beanaq the vlhoe @st hetself and no saary packaglng @ud be involved Hen@ in this slualion the filo ilustlive @ntribut ons thai haw b@n made ae: (i) a contdbdion equalio nre running @sls only: and (il) a onnitudion equa to lhe ea* osls but nol
Here

Grcsed up vaue$3 500x 2.0647 = $7.226 45

(i)

Contibdlon eq@l 6

?he

tunnlng cosF.

FBT payable $7 226.4s

465 = $3,360.30

After tdx

sst

ol P@v s on of benefl

varue of beneli s24.000

Grossed

53,500 ess $350 (GST input iaf, credLl)= $3150x.70 = $2,205

2 047 = $49,552.30

upwlue $24,000 x

FBT payable 549 s52 30 x .465 = $23 042 05

$3360 30 x .70

$2352 21

Afier tax

61

of pblision of benefit

Hene salary eduction is $200,0oa ' 52,2a5 - 52352 21 = 5195,442 79

$24.000less $2,400 (GsT npll lax cEdit) = $21 600

70 = $15.120

A s ae o . s h r d n. .

The gossed up value of the fdnge beneft will be added as a repodab e ninge benerl in lculat ng El z.'5 iredi le!y.

Hen@ E

iassa

ary and @polble fringe beneiits

wllbe: $202 669.24

Medi*re lew on Elia s saaryand eFodabb tn.ge benells $3040 04

SumofTaxand sahry aner

Medie
and Med

eW $67.939.30
levy $127,453.49

ld

sa ary ess

Ta Med

lew and corndbL{ion $103,453 4