f???b??k ??s?
Most producers do not sell their goods directlyto final users. Between producers and final users stands one or more marketing channels, a host of marketing
intermediaries performing a v ariety of functions. Marketing-channel decisions are among the most critical decisions facing management. The company’s chosen channel(s)
profoundly affect all other marketing decisions. Companies use intermediaries when they lackthe financial resourcesto carry out direct marketing,when direct marketing
is notfeasible and when they can earn more by doing so. The most important functions performed by intermediaries are information, promotion, negotiation ordering,
financing, risk taking, physical possession, payment and title. Manufacturers have many alternativesfor reaching a market. They can sell direct or use one-, two-
orthree-level channels. Deciding which type(s) of channel to use calls for analysing customer needs, establishing channel objectives and identifying and evaluating the
major alternatives, including the types and numbers of intermediaries involved in the channel. Effective channel management calls for selecting intermediaries and
training and motivating them. The goal is to build a long-term partnership that will be profitable for all channel members. Marketing channels are characterised by
continuous and sometimes dramatic change. Three ofthe most important trends are the growth ofvertical marketing systems, horizontal marketing systems and multichannel
marketing systems. All marketing channels have the potential for conflict and competition resulting from such sources as goal incompatibility, poorly defined roles and
rights, perceptual differences and interdependent relationships. Companies can manage conflict by striving for superordinate goals, exchanging staff among two or more
channel levels, co-opting the support of leaders in different parts ofthe channel, encouraging joint membership in and between trade associations, employing diplomacy,
mediation or arbitration or pursuing legal recourse. Channel arrangements are up to the company, but there are certain legal and ethical issuesto be considered with
regard to practices such as exclusive dealing or territories, tying agreements and de_alers’ rights. -commerce has grown in importance as companies have adopted
‘brick-and-click’ channel systems. Channel integration must recognise the distinctive strengths of online and offline selling and maximise theirjoint contributions
Case study (Facebook case, answerfollowing questions) 1. Evaluate how Facebook may adapt the communication process in their international market (hint they are an on
line company). 2. How should a company like Facebook promote their offering?
2Mary is a bookkeeper employed by an accounting firm in Perth. She also carries on business, as a sole proprietor in Perth (during the weekends), selling second hand
books.
In the current income tax year, she received the following:
(1) Gross salary from her employer – $60,000;
(2) Interest derived from a bank deposit – $5,000;
(3) A gift received under a will of a deceased relative – $20,000;
(4) Qantas frequent flyer points received in relation to work-related travel paid for by Mary’s employer – 50,000 points (at $1 a point). The points
can only be redeemed for free tickets for her only;
(5) Proceeds from her business – $20,000; and
(6) Compensation from her insurance company for loss by fire of her shop, which she owns in Perth, where she conducts her business – $150,000.
She has incurred allowable deductions totalling $3,000 in earning both her employment and business income.
She is eligible for a tax offset of $1,452.
Her employers withheld $7,966, as PAYG withholding, during the income tax year.
Based on the above facts, calculate Mary’s tax liability (or tax refund), including Medicare levy, for the current income year. Give brief reasons to support your
answers.
Answer
(i) The word “income” is not defined in ITAA36 or ITAA97.
(ii) Under Section 6-1(1) of ITAA97, a taxpayer’s assessable income “consists of ordinary income and statutory income”.
(iii) Under Section 6-5(1) ITAA97, a taxpayer’s income will be “ordinary income” if it is “income according to ordinary concepts”.
(iv) However, the term “income according to ordinary concepts” is not defined within the legislation.
(v) Principles established through case law help determine whether an amount is ordinary income.
(vi) Generally, a receipt falls within the term if it has a source and the courts have identified 3 main sources of income:
(a) from personal exertion; or
(b) from carrying on a business; or
(c) from property.
(vii) The courts have also established other characteristics of income according to ordinary concepts.
(viii) The following will outline the principles or cases which would apply in determining whether each receipt is “ordinary income” under Section 6-5(1).
(1) Gross salary from her employers – $60,000
Answer
(i) Remuneration received by an employee in respect of employment is a classic example of income from personal exertion.
(ii) Her salary would, therefore, be ordinary income under Section 6-5(1).
(2) Interest derived from a bank deposit – $5,000
Answer
(i) Interest is generally considered to be the price of money which is borrowed.
(ii) Interest received is the return or compensation for the use or retention by one person of a sum of money belonging to another person.
(iii) Interest derived from the bank would be considered to be a reward to the depositor for foregoing the use of the money.
(iv) The interest would be ordinary income as a regular or recurrent receipt from property – Section 6-5(1).
(3) A gift received under a will of a deceased relative – $20,000
Answer
(i) A gift received under a will would not be ordinary income as there is no sufficient nexus with an earning activity, so it would be a pure windfall gain.
(ii) However, it should be noted that any income subsequently derived from the gift may be assessable income.
(4) Qantas frequent flyer points received in relation to work-related travel paid for by Mary’s employer – 50,000 points (at $1 a point)
Answer
(i) The answer will depend on whether Qantas allows the points to be converted into money or money’s worth.
(ii) As the frequent flyer points cannot be converted into money or money’s worth then they would not be ordinary income – Payne v FCT.
(5) Proceeds from her retail business – $20,000
Answer
(i) Proceeds from a business is a classic example of income from one of the sources recognised by the courts i.e from carrying on a business.
(ii) The proceeds from business would, therefore, be ordinary income under Section 6-5(1).
(6) Payment by insurance company for loss of shop by fire – $150,000
Answer
(i) Compensation for loss of a capital asset is not assessable under Section 6-5(1).
Therefore, the total amount of ordinary income received by Mary during the income tax year will be $85,000.
Mary’s tax liability for the current income year will be determined as follows:
Answer
(i) A taxpayer’s income tax liability is determined according to the following formula as set out in Section 4-10(3) ITAA97:
Income tax = (taxable income x rate) – Tax offsets
(ii) A taxpayer’s taxable income is determined according to the following formula as set out in Section 4-15(1) ITAA97:
Taxable income = Assessable income – Deductions
(ii) Step 1: Calculate assessable income
Assessable income:
(i) Salary $60,000
(ii) Interest $ 5,000
(iii) Proceeds from business $20,000
Total Assessable income $85,000
(iii) Step 2: Calculate deductions
Deductions $3,000
Total deductions $3,000
(iv) Step 3: Calculate taxable income (Section 4-15(1)
$(85,000 – 3,000) = $ 82,000
(v) Step 4: Multiply taxable income by 2013/2014 tax rates (Section 4-10(3)
$17,547 + 37% ($82,000 – $80,000) = $18,287
(vii) Step 5: Calculate tax offsets
Tax offset = $1,452
(viii) Step 6: Calculate income tax liability (including Medicare levy)
$(18,287 – 1,452) = $16,835
Add: Medicare levy ($82,000 x 1.5%) = $ 1,230
$18,065
Less: PAYG $ 7,966
Total Tax Payable $ 10,099
These suggested answers to the Tutorial Paper are compiled for the Principles of Taxation Law (LAW6300) unit. The material herein is of a selective nature and is
strictly for academic purposes only.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET AN AMAZING DISCOUNT 🙂