Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Taxation Expert

Sue Lin was made redundant from her employment on 15 March 2009. She is a motor car enthusiast and therefore decided to take this opportunity to indulge her hobby.

On 1 July 2008 Sue took out a bank loan of Rs750,000 at an annual  interest rate of10%, rented a workshop for 12- months at a rent of Rs4,000 per month, and purchased high precision equipment at a cost of Rs 235,000.

On 10 July 2008 Sue purchased four dilapidated motor cars for Rs 80,000 each. The restoration of the 4motor cars was completed on 10 June 2009 at a cost Rs 120,000 per motor car. Sue instantaneously sold all of the motor cars for a total of Rs 2,000,000.

Sue was then offered employment elsewhere in the country commencing on 1 July 2009. She therefore sold the equipment for Rs 150,000 on 20 June 2009,  repaid the bank loan on 30 June 2009.

Since she has just been indulging her hobby, Sue believes that the disposal of the motor cars throughout the tax year 2008/9 must be exempt from tax.

Sue has completed some research on the Internet and has discovered that whether or not she is treated as carrying on a trade will be determined according to the 'badges of trade':

Sue had no other income throughout the tax year 2008/9 except as indicated above and was entitled to deductions in respect of three dependents.

Required:

a) List the nine badges of trade and in brief describe the meaning of each of the ‘badges of trade' listed.

You are not expected to quote from decided cases.

b) In brief describe why Sue is likely to be treated as carrying on a trade in respect of her motor car activities.

c) Compute Sue's income tax liability for the tax year 2008/9, if she is treated as carrying on a trade in respect of her motor car activities.

Taxation, Accounting

  • Category:- Taxation
  • Reference No.:- M96293

Have any Question? 


Related Questions in Taxation

Comprehensive tax projectplease review the financial

Comprehensive Tax Project Please review the Financial Statements and Supplemental Information for Exxon Mobil for 2015 provided below. Provide excerpts and related commentary for at least 12 different tax related items f ...

Assignment lasa-tax seminaryou are the instructor of a

Assignment: LASA-Tax Seminar You are the instructor of a one-day tax seminar to inform international students studying business in the United States about the current tax system. You are preparing a background report to ...

Assignmentncc corporation is considering building a new

Assignment NCC Corporation is considering building a new facility in Texas. To raise money for the capital projects, the corporation plans the following capital structure: 30% of money will come from issuing bonds, and 7 ...

Accounting taxa truefalse1 a distribution from a

Accounting Tax A.) True/False 1 A distribution from a corporation will be taxable to the recipient shareholders only to the extent of the corporation's E & P. 2 All distributions that are not dividends are a return of ca ...

Tax projectour tax project has changed slightly due to the

TAX PROJECT: Our tax project has changed slightly due to the Presidential Election Year. Your project is to prepare a document, no longer than five pages, reviewing and addressing the following: - Tax policy of Democrati ...

Discussion questions1 explain congress intent for enacting

DISCUSSION QUESTIONS 1. Explain Congress' intent for enacting the AMT. 2. Define the following terms relating to the AMT: a. Tax preference item b. AMT adjustment item c. Adjusted current earnings d. Alternative minimum ...

Dq1tom an executive for a large corporation enjoys the

DQ1 Tom, an executive for a large corporation, enjoys the challenge of preparing his tax return. He is aggressive in preparing his return and searches through all the available publications to reduce his tax liability. I ...

Tax questionsa1 you are the tax director for a fortune 500

TAX QUESTIONS A 1 You are the tax director for a FORTUNE 500 company and the new CFO comes to you and asks you what ASC 740 is? He also asks you to tell him what a deferred tax asset is and when it can be reflected on th ...

Tax questionproblemgrouse company is a furniture retailer

Tax Question Problem Grouse Company is a furniture retailer whose average annual gross receipts for the three preceding years exceeded $10,000,000. In the current tax year, the company purchased merchandise with an invoi ...

Issue questions1 cable corporation which operates a fleet

ISSUE QUESTIONS 1. Cable Corporation, which operates a fleet of motorized trolley cars in a resort city, is undergoing a complete liquidation. John, who owns 80% of the Cable stock, plans to continue the business in anot ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro