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Taxation Law Australia

In: Business and Management

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Taxation Assessment

Mary Brown, 52, is an advertising executive who had worked with Johnson& Brown Ltd for 10 years. On 1 October 2011 she was made redundant as part of a company re organisation.
Listed below are facts that will be considered for tax purposes, each will be examined to determine what her taxable income is.
• She received her annual leave payout of $ 14 500
Mary’s annual leave payout of $14,500 is assessable income under s83-A and 83-B. However, as her payout is due to redundancy, under subdivision 83-15 it will be taxed at her marginal rate, but no more than 30%.

• Termination payment of $ 100 000.
Mary Brown was dismissed from her job because her position has been made redundant in a company restructure. She is under 65, was not given a new title within the organisation and her redundancy was made in good faith. These factors satisfy the conditions of redundancy subdivision s83-175 in Taxation Law. Therefore, as part of her redundancy, of the $100,000 termination payment there is a tax free amount of $50,615 (base amount of $8,435 and a service amount of $4,218 for every consecutive full year of employment). This results in a taxable component of $49,385 (figures based on 2011-12 tax rates).
• Her superannuation entitlement was $ 250 000 of which $ 25 000 represented her non-deducted contributions.
The superannuation specified has been contributed by the employer and is not deductible or tax purposes.
After taking 3 months off work Mary decided to set up her own advertising agency “Brown Marketing” in Northcote. On January 21 2012 she signed a lease on an office premise for 2 years at $8000 per month. To encourage her to sign the lease the property manager of the building offered her the following benefits:
• A rent free period of 2 months, free office fit out valued at $ 25 000 and a gold watch valued at $2000
As these benefits...

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