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(a) John, is an academic who provides consulting services to universities. He operates through a company called, Uniconsult Ltd. He earns $250,000 during the tax year and pays himself a salary of $50,000.

Required:

Under the tax avoidance rules, would the Personal Service income regime apply and if so what are the effects of these rules.

(b) Clare is a shareholder, but not an employee, of Bay Trading Pty Ltd. The company makes a direct payment of $25,000 to Pioneer Anglican School for her daughters school fees at the school. Bay Trading Pty Ltd.s distributable surplus for the year of income is $35,000.

Required: Will this amount be a deemed dividend to Clare under Div. 7A. If so, how much of the payment will constitute a deemed dividend and why? What will be the tax consequences for Clare?

(c) Jerry is a director and shareholder of Bay Trading Pty Ltd, which is a private company. On the 30th July 2014, Bay Trading Pty Ltd paid Jerry $5,000 as an interest free loan which is repayable but with no specified repayment date. On the 30 th of June 2015, Jerry had only repaid $1,000 of the loan to Bay Trading Pty Ltd. The companys distributable surplus for the year is $15,000.

Required:

What are the tax consequences of the above loan by Bay Trading Pty Ltd to Jerry? Is the treatment different because Jerry is also an employee? show woring note while calculating.

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