Zacky Johnson, aged 59, is a certified forensic accountant who works at home and earns fees for
Question:
Zacky Johnson, aged 59, is a certified forensic accountant who works at home and earns fees for his personal services.On 1 July 2020, Zacky decides to operate his business through a discretionary trust"Johnson Forensic Accounting* (JFA). Under this arrangement, Zacky continues to work from his home in an office studyFor all of the 2021 income year, JFA employs his son Jeremy as an administrative assistant a part-lime basis. Jeremy is responsible for managing Johnsons calendar and making bookings with clients.For the 2021 income year JFA earned a total of $350,000 in client fees, 75% was received from one main client Harrison Pty Lid, with whom JFA continued to engage on an ongoing basis and which Zacky had done in the past. The rest of the fees were generated from several minor jobs from unrelated clients.By 15 June 2021, JFA had invoiced all its clients. however by 30 June 2021, JFA had only received $300,000, with the remaining $50,000 only being received on the 15 July 2021. JFA never advertised any of Zacky Johnson's services and does not have a business website.
REQUIRED
Part 1Considering the facts described above, advise Johnson Forensic accounting on the accessibility of the values above for the year ending 30 July 2021, applying PSI legislation and any related rulings (13 marks)
(Hint: Outline the fire different tests under S 87-15(1) ITA497 to determine whether the PSE is carrying on a PSB)
Use the following structure - state the test requirements and whether the tests have been met) 2 mains
(a) Introduction
discussion
b) results test
c) 80% test
d) unrelated client test
e) employment test
f) seperate business premises test
g) conclusion
h) based on your conclusion how will the income be treated for tax purposes?
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman