Discuss whether any amounts of expenditure incurred by Gail would be allowable as a deduction during the year ended 30 June 2021 under any section of the Income Tax Assessment Acts. Support your discussion with reference to legislation, case law and taxation rulings.
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Gail is a director in a regional bank. As part of her director’s duties, she has to review financial statements and other reports from the Chief Financial Officer prior to the bank’s board meetings. Gail has a degree in economics and has worked in banking for many years, however, since becoming a director she believes accounting knowledge would assist her carry out her duties. Gail incurred various costs in undertaking a Bachelor of Commerce in professional accountancy with the University of Southern Queensland. During the year ending 30 June 2021 Gail incurred the following costs related to the course:
HELP fees $2,600
Stationery $180
Textbooks $220
Expenses of travelling between her job and USQ where the course was being held $120
Required:
Discuss whether any amounts of expenditure incurred by Gail would be allowable as a deduction during the year ended 30 June 2021 under any section of the Income Tax Assessment Acts. Support your discussion with reference to legislation, case law and
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- Magi Chen is the managing director of Sun Construction Pty Ltd, a family owned business that provides construction services. As Magi is interested in purchasing some new construction equipment’s for her business, she has approached her local bank for finance. The bank has asked that Magi provide an audited financial statement to assist them in considering her loan application. Magi has approached your audit firm for this service and you have been allocated the task of auditing Sun Construction for the year ended 30 June 2019. You have undertaken a preliminary review of the business and determined that a substantive testing approach would be suitable and appropriate. You are currently preparing an audit program for the revenue cycle. The following information has been obtained from your review:• Magi usually works 120 hours a fortnight. Part of this time is spent travelling between different clients and is not charged to the clients. The remaining time is charged at $60 per hour,…Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to submit semiannual financial statements so he can monitor the financial health of her business. He has warned her that if profit margins erode, he might raise the interest rate on the borrowed funds to reflect the increased loan risk from the bank’s point of view. Choi knows profit margin is likely to decline this year. As she prepares year-end adjusting entries, she decides to apply the following depreciation rule: All asset additions are considered to be in use on the first day of the following month. (The previous rule assumed assets are in use on the first day of the month nearest to the purchase date.) Required 1. Identify decisions that managers like Choi must make in applying depreciation methods. 2. Is Choi’s rule an ethical…Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to submit semiannual financial statements so he can monitor the financial health of her business. He has warned her that if profit margins erode, he might raise the interest rate on the borrowed funds to reflect the increased loan risk from the bank’s point of view. Choi knows profit margin is likely to decline this year. As she prepares year-end adjusting entries, she decides to apply the following depreciation rule: All asset additions are considered to be in use on the first day of the following quarter. (The previous rule assumed assets are in use on the first day of the month nearest to the purchase date.) Discuss the following: Identify decisions that managers like Choi must make in applying depreciation methods. Is Choi’s rule an…
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- Mary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates' payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions—payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. Duck Associates' bookkeeper would spend half her time preparing the weekly payroll input form that is given to the…It’s been two years since Ramone finished his undergraduate studies in Business Administration with an emphasis in Accounting. He has been trying to seek employment to help the family, as both his parents spent most of their life’s savings to pay his university tuition. Three weeks later, Ramone was called for an interview with the Ministry of National Integrity (MNI). He had forgotten that he had applied for the position of Junior Auditor within the Ministry. The panel consisted of several top-level managers, including the Chief Audit Executive (CAE) and the Senior Director of the Human Resource & Administrative Division (HRMA). The Senior Director of HRM&A stated that they were impressed with his resume, however, before they can decide on giving him the job, he will have to answer some questions relating to the Audit Report. The following were asked of him by the CAE. Required: a. Explain the term ‘audit report’, and state the four (4) types of audit reports that can be…Joe Rezzo, a college student majoring in accounting, helped finance his education with a part-time job maintaining all accounting records for a small business, White Company, located near the campus. Upon graduation, Rezzo passed the CPA examination and joined the audit staff of a national CPA firm. However, he continued to perform all accounting work for White Company during his “leisure time.” Two years later, Rezzo received his CPA license and decided to give up his part-time work with White Company. He notified White that he would no longer be available after preparing the year-end financial statements. On January 7, Rezzo delivered the annual financial statements as his final act for White Company. The owner then made the following request: “Joe, I am applying for a substantial bank loan, and the bank loan officer insists upon getting audited financial statements to support my loan application. You are now a CPA, and you know everything that’s happened in this company and…
- Mary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates’s payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions—payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. Duck Associates’s bookkeeper would spend half her time preparing the weekly payroll input form that is given to the…All senior officers of ABC Bank are entitled to obtain a housing loan. X is an Executive Vice President for Operations of ABC Bank. She obtained a housing loan with the bank. It is now argued that the loan is a DOSRI loan and must therefore be approved by the Board of Directors of the bank. Is the argument correct?Precilla, vice-president of operations for Sturgis National Bank, has instructed the bank's computer programmer to use a 365-day year to compute interest on depositoryaccounts (payables). Precilla also instructed the programmer to use a 360-day year to compute interest on loans (receivables). Discuss whether Precilla is behavingin a professional manner.