Question

Base on Australian taxation system

Discuss the assessability of the following amounts (ignoring the capital gains tax):

1. a) Chen is a salesman employed by a large company. The company provides free tickets to various events to salespeople who exceed their monthly sales targets. Chen exceeds his monthly target and his employer awards him a theatre ticket valued at $100. What would be the position had he been a non-employee agent?

2. b) In 2005 Chen bought land in Brisbane Australia in order to establish a large commercial warehouse for storing goods. However, the Council changes the zoning of the land from commercial to residential. Chen decides to sell the land and is considering whether to sub-divide the land to maximise his return. Advise him as to whether and in what circumstances the proceeds from the sale of the property might be treated as assessable income (ignore capital gains tax).

3. c) Chen wins $70,000 in a single year from online gambling. He spends 10 hours per week gambling. Is the $70,000 assessable for income tax?

Answer 1

Here is my Answer for the Above Question

A) Chen is receiving bonus commission in the form of free theater tickets as a non employee agent is taxable in the Australian tax laws

B)

If you sell land that was trading stock, the sales proceeds are assessable income. Land may be treated as trading stock for income tax purposes if you:

• carry on a business activity that involves dealing in land
• hold the land for the purpose of resale.

Business activities that involve dealing in land include acquiring land:

• to develop or subdivide and sell
• for the purpose of building a dwelling or commercial property and selling the developed property.

C)

Here Chen is not a proffessional Gambler, so his earnings from Gambling is not taxable under Australian Tax rules