TAX FNSACC522: Supervised Online
Assessment - 200 Practice Questions
with Verified Answers & Rationales
(2025-2026 Edition)
Question 1
A client earned $80,000 in salary, $5,000 in bank interest, and
$2,000 in fully franked dividends with franking credits of $857.
What is the assessable income under s 6-5 ITAA97?
A) $80,000
B) $85,000
C) $87,857
D) $82,857
AnswerC
Rationale: Assessable income includes ordinary income (salary,
interest) and statutory income (dividends + franking credits).
$80,000 + $5,000 + $2,000 + $857 = $87,857.
Question 2
Under the Australian tax system, which section of the
Constitution grants the Commonwealth power to levy taxes?
A) Section 61
B) Section 51(ii)
,C) Section 90
D) Section 109
AnswerB
Rationale: Section 51(ii) of the Commonwealth Constitution
empowers Parliament to make laws with respect to taxation,
provided it does not discriminate between states.
Question 3
A taxpayer receives a reimbursement from their employer for a
work-related expense they personally incurred and claimed as a
deduction. How is this treated for tax purposes?
A) Reimbursement is assessable income; deduction is reduced
B) Reimbursement is non-assessable; deduction stands
C) Reimbursement is capital and ignored
D) Reimbursement is exempt under FBTAA
AnswerA
Rationale: Reimbursements for deductible expenses are
assessable income under ordinary income concepts, and the
original deduction must be reduced by the reimbursement
amount.
Question 4
For the 2025-26 income year, the tax-free threshold for
Australian residents is:
,A) $18,000
B) $18,200
C) $20,000
D) $19,500
AnswerB
Rationale: The tax-free threshold remains at $18,200 for the
2025-26 income year.
Question 5
Under ITAA97, which of the following is NOT considered
'ordinary income'?
A) Salary and wages
B) Dividends from shares
C) Gift from a parent
D) Interest from a savings account
AnswerC
Rationale: Gifts are not income from personal exertion or
property; they are capital receipts not assessable as ordinary
income.
Question 6
A taxpayer is an Australian resident for tax purposes. Which
statement best describes their tax liability?
, A) Taxed only on Australian-sourced income
B) Taxed on worldwide income
C) Taxed only on income remitted to Australia
D) Taxed on foreign income only
AnswerB
Rationale: Australian tax residents are taxed on worldwide
income, with foreign income tax offsets available for foreign tax
paid.
Question 7
A sole trader using cash accounting received $10,000 for
services in June 2026 (performed in May 2026) and issued an
invoice for $15,000 for services completed in June 2026
(payment expected in July 2026). What is assessable income for
2025-26?
A) $25,000
B) $15,000
C) $10,000
D) $0
AnswerC
Rationale: For cash accounting, income is assessed when
received. The $10,000 received in June is assessable; the
$15,000 invoice is not yet received.
Assessment - 200 Practice Questions
with Verified Answers & Rationales
(2025-2026 Edition)
Question 1
A client earned $80,000 in salary, $5,000 in bank interest, and
$2,000 in fully franked dividends with franking credits of $857.
What is the assessable income under s 6-5 ITAA97?
A) $80,000
B) $85,000
C) $87,857
D) $82,857
AnswerC
Rationale: Assessable income includes ordinary income (salary,
interest) and statutory income (dividends + franking credits).
$80,000 + $5,000 + $2,000 + $857 = $87,857.
Question 2
Under the Australian tax system, which section of the
Constitution grants the Commonwealth power to levy taxes?
A) Section 61
B) Section 51(ii)
,C) Section 90
D) Section 109
AnswerB
Rationale: Section 51(ii) of the Commonwealth Constitution
empowers Parliament to make laws with respect to taxation,
provided it does not discriminate between states.
Question 3
A taxpayer receives a reimbursement from their employer for a
work-related expense they personally incurred and claimed as a
deduction. How is this treated for tax purposes?
A) Reimbursement is assessable income; deduction is reduced
B) Reimbursement is non-assessable; deduction stands
C) Reimbursement is capital and ignored
D) Reimbursement is exempt under FBTAA
AnswerA
Rationale: Reimbursements for deductible expenses are
assessable income under ordinary income concepts, and the
original deduction must be reduced by the reimbursement
amount.
Question 4
For the 2025-26 income year, the tax-free threshold for
Australian residents is:
,A) $18,000
B) $18,200
C) $20,000
D) $19,500
AnswerB
Rationale: The tax-free threshold remains at $18,200 for the
2025-26 income year.
Question 5
Under ITAA97, which of the following is NOT considered
'ordinary income'?
A) Salary and wages
B) Dividends from shares
C) Gift from a parent
D) Interest from a savings account
AnswerC
Rationale: Gifts are not income from personal exertion or
property; they are capital receipts not assessable as ordinary
income.
Question 6
A taxpayer is an Australian resident for tax purposes. Which
statement best describes their tax liability?
, A) Taxed only on Australian-sourced income
B) Taxed on worldwide income
C) Taxed only on income remitted to Australia
D) Taxed on foreign income only
AnswerB
Rationale: Australian tax residents are taxed on worldwide
income, with foreign income tax offsets available for foreign tax
paid.
Question 7
A sole trader using cash accounting received $10,000 for
services in June 2026 (performed in May 2026) and issued an
invoice for $15,000 for services completed in June 2026
(payment expected in July 2026). What is assessable income for
2025-26?
A) $25,000
B) $15,000
C) $10,000
D) $0
AnswerC
Rationale: For cash accounting, income is assessed when
received. The $10,000 received in June is assessable; the
$15,000 invoice is not yet received.
