Purpose
The Case Study will focus on your ability to analyze a factual scenario involving a real
client, state the relevant law and apply the law to draw a conclusion about the client’s
taxation liability.
Task
Melissa is a mechanic. She runs her own business specialising in repairing electric
cars. During the year, Melissa incurred the following expenses:
a) salary costs to her two regular employees of $100,00 (paid electronically
through the business’s payroll system which automatically applies the relevant
tax withholding and pays the amount to the ATO);
b) salary costs to casual employees of $10,000 (these employees are only
required during busy periods and are paid in cash ‘of the books’);
c) salary costs of $2,000 to her brother who is a university student (paid
electronically through the business’s payroll system; Melissa knows the amount
is excessive, but she wants to support him in his studies);
d) travel costs of $3,000 for travel from her home to her repair shop.
Your manager has asked you to prepare a memorandum of advice that sets out
the relevant legal principles, case law and likely liability to taxation for Melissa.