Week 2 – Income Questions

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Week 2 – Income Questions
Question 1
a) What are the two main types of income illustrated by the 2 circles diagram?
b) What is an example of ordinary income?
c) What is an example of statutory income?
d) What is an example of exempt income?
e) What is an example of non-assessable non-exempt income?
Question 2
Explain the meaning of the following terms and, if possible, identify them in the 1997 Act:
a) gross income;
b) exempt income;
c) assessable income;
d) deductions;
e) taxable income;
f) basic income tax liability / gross tax payable;
g) tax offsets and rebates;
h) credits;
i) net tax payable.
Required:
Explain the meaning of the above terms and, if possible, identify them in the 1997 Act.
Question 3
Edward Smith, an Australian resident individual, received the following cash dividends:
• $246,720 (franked to 50%) from XYZ Ltd on 1 February 2019;
• $14,000 (unfranked) from ABC Ltd on 1 March 2019;
• $4,900 (fully franked) from DEF Ltd on 1 May 2019
Required:
What is his assessable income (rounded to the nearest dollar)?