LAWS20060 – TAXATION LAW OF AUSTRALIA INDIVIDUAL ASSIGNMENT TERM 2 2019 Due date: Week 7 - Wednesday 4th September 2019 Weighting: 40% - 80 marks in total available Length: 2500 – 3000 words Submission: Online via Moodle Format: One file in .doc or .docx (MS Word) format Objectives This assessment item relates to learning outcomes 1, 2 and 3 as stated in the course profile. Details This assignment is to be submitted in English in one (1) Word document only. This assignment is to be submitted online via Moodle by the due date stated. It is suggested that where necessary you put your calculations into columns or tables to improve readability in the assignment document The method of referencing to be used in this assignment is the Australian Guide to Legal Citation (AGLC) 4rd Edition referencing method. Additional information regarding this method is available through the library and the Academic Learning Centre. When making a reference, cite the original source or authority in preference to a secondary source such as the textbook, especially when you are discussing various sections of legislation. This means you should make references to legislation, cases and Tax Rulings as a priority to back up any arguments that you make in your assignment. Extensions policy The university policy on extensions of time will be strictly enforced. Extensions will only be considered if made via the online system and based on medical or compassionate grounds. Any extension application should be made before the due date for submission. Medical conditions should be supported by a medical certificate, and, since students are expected to start the assignment early, temporary or last-minute conditions are usually not grounds for an extension. Professionals are expected to manage their time to meet their obligations, so work or personal commitments are insufficient grounds for an extension. Plagiarism The university’s plagiarism policy will also be strictly enforced. If plagiarism is found, a minimum penalty is likely to be zero marks for the assignment. This assignment is the only assignment for this course, and it carries a weighting of 40% of the total assessment for the course. While the assignment is largely based on material covered, you are free to research and seek advice as widely as you find necessary – there are no limitations as to sources. However, you must make sure that sources are appropriately referenced. Students must complete all questions in the assignment. With reference to all questions - support the analysis in your answers where appropriate to the ITAA97, ITAA36, Tax Rulings and/or case law. QUESTION 1 a) What topic does Taxation Ruling TR 2019/1 cover? 1 mark b) Which Division of the Income Tax Assessment Act 1997 outlines the legislation regarding deductibility of gifts or contributions? 1 mark c) What is the top tax rate applicable to a resident taxpayer in the current tax year? 1 mark d) Is a car or motorcycle exempt from capital gains tax? 1 mark e) What does the CGT event C1 s104-20 tax? 1 mark f) What is the current tax-free threshold for a resident individual? 1 mark g) Explain the significance of the High Court case, Hayes v FCT (1956) 96 CLR 47 with reference to assessable income? 4 marks h) Explain in your own words the difference between Ordinary income and Statutory income? 5 marks i) Explain the difference between Medicare levy and Medicare levy surcharge? 5 marks Total 20 marks QUESTION 2 Section 6(1) of the 1936 Act defines Australian resident as it relates to individuals as follows: ‘"resident" or "resident of Australia" means - (a) a person ... who resides in Australia and includes a person – i. whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia; ii. who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia; or iii. who is [a member, spouse or child under 18 of a member of certain Commonwealth public service superannuation funds]’ (underlining added). REQUIRED: Discuss the difference between ‘permanent place of abode’ and ‘usual place of abode’ with reference to the residency requirements stated in s6(1) ITAA36 and reproduced above. Ensure your answer includes a discussion of the context in which it is referred. Total 15 marks QUESTION 3 Briefly explain the extent, if any, to which each of the following payments made by a trainee accountant, during the current tax year would be an allowable deduction: a) HECS-HELP $850 b) Travel – work to university $110 c) Books $200 d) Childcare during her evening classes $80 e) Repair to her fridge at home $250 f) Black trousers and shirt required to be worn at the office $145 g) Legal expenses incurred in writing up a new employment contract with a new employer. $300 State any assumptions you have made and provide legislative reference to support your explanation. Total 10 marks QUESTION 4 a) John owns some land and grants a lease to David for seven years, at a premium of $7,000. 3 marks b) Deepak is an IT specialist and in his spare time tries to make some extra money investing in shares but he is not so successful. On the 1 September 2018 he bought 10,000 shares in IOOF Pty Ltd for 55 cents and sold them on the 30 June 2019 for 67 cents per share. At the same time, Deepak also purchased 12,000 shares in Greencross Pty Ltd for $1.67 and decided to also sell them on the 30th of June 2019 as he could see they were drastically falling in value. He sold his Greencross Pty Ltd shares for $1.18 per share. Outline and calculate the net capital gain or loss that Deepak would record in his 2018/19 tax return. 7 marks c) Li bought a home in March 2010 for $200,000. In March 2013, she converts the separate garage into an office for her physiotherapy business. The garage comprises 20% of the floor space of the dwelling on the property. She sells the property in March 2019 for $700,000. Its market value at the time of first using the converted garage for income producing purposes was $400,000. What are the CGT implications for Li of converting her garage on the sale of her home? 5 marks d) Explain in your own words the difference between cost base and reduced cost base. 5 marks Outline the CGT consequences in each of the above situations for the 2018/19 tax year and state if the 50% discount would be applicable to any of the above transactions? Total 20 marks QUESTION 5 a) Is income earned from illegal means (e.g. drug-dealing, insider trading or theft) assessable income? 3 marks b) Calculate the assessable income of a resident taxpayer in the current year if they were to be in receipt of $500 bank interest from their savings account, $10,000 won at the Crown Casino, $2,000 rent earned from a boarder sharing a house. Give reasons, considerations and quote reference to sections of the ITAA in your answer. 3 marks c) Would a $500 allowance paid to an employee by an employer be assessable income to the employee. Explain your answer. 3 marks d) Calculate the Medicare payable for a resident individual with a taxable income of $20,000, $24,900 and $100,000 3 marks e) Calculate the gross tax payable for the taxable income of $25,000, $40,000 and $95,000. (Note Gross tax payable is the amount of tax due before Medicare levy and tax offsets) 3 marks REQUIRED: Answer each question above giving consideration to the allocated marked. Total 15 marks Assessment criteria Evaluation Criteria These criteria are a general guide as to the standard expected at the various levels. Characteristics indicative of the respective levels of achievement in the assignment are as follows. It is not necessarily the case that all these criteria will be met at a particular standard as there may be a superior performance on one of the criteria and not so satisfactory performance on another. High distinction standard • The answer is very well written and clearly expressed • There is a demonstrated appreciation and understanding of the issues involved • The answer is well structured and logically organised • Demonstrated mastery of referencing system • There is evidence of a comprehensive analysis of the issues • Conclusions are backed by well-reasoned arguments demonstrating a detailed insight and analysis of issues • Comprehensive coverage of all relevant issues • References are made to the appropriated legislation for particular issues • Statutory provisions are analysed and interpreted correctly • The legislation is applied to the particular fact situation in a competent manner • Consideration is given to the operation of the common law • There may be consideration of issues not raised in the tutorials and answer guides Distinction standard • The answer is well written and expressed • The answer is structured and logical • The issues have been reasonably well identified and appreciated • There is correct use of referencing • Issues have been analysed • Reference is made to all appropriate legislation, although the analysis and interpretation is not as detailed and reasoned as for the high distinction standard • The effect of the common law is considered • There is a comprehensive coverage of the issues • Occasional errors of law and legal reasoning may still be present Credit standard • The answer is generally well written and expressed • The answer is structured and sequential • Referencing is satisfactory • Issues are identified and addressed • There has been an attempt to analyse some of the issues • The coverage of issues is reasonably comprehensive often with a good treatment and analysis of particular points • Errors of law and incorrect reasoning may sometimes be present • Statutory interpretation may require improvement • Depth of treatment is often lacking in some of the issues Pass standard • The answer is able to be followed and understood • The answer could perhaps be better organised and structured • The referencing may need improvement • Issues may need to be identified and addressed in more depth • Analysis when present may be incorrect • Some familiarity with the legislation and its application is demonstrated • Sometimes the conclusions reached are simple • There may be several errors of law • There may be quantities of material of marginal relevance included in the answer Fail standard • The answer may be significantly short of the required length • The written expression is poor and difficult to understand • The answer is poorly organised • There has been a failure to identify and address the issues in the question • Referencing is generally inadequate • There is a lack of familiarity with the legislation and its appropriate application • The reasoning and application demonstrated is poor • Frequently there is much irrelevant material MARKING All parts of the assignment will be marked in accordance with the university’s Grades procedure (which can be accessed via the Course Profile). The following marking rubric incorporates that procedure. MARKING RUBRIC GRADE MARK GRADE - HD MARK - 85%+ CRITERION Demonstrates proficiency in all the learning outcomes of the unit; work is well read or scholarly. COMMENT: Here, the student will have done everything well and formulated their answer in a tight, efficient, thoroughly professional manner. Their explanations and arguments will have a strong logical flow and be convincing. Their research will be thorough. GRADE - D MARK - 75-84% CRITERION Demonstrates awareness and understanding of deeper and less obvious aspects of the unit, such as ability to identify and debate critical issues or problems, ability to solve non?routine problems, ability to adapt and apply ideas to new situations. COMMENT: The student will demonstrate this by achieving all the outcomes for a Credit, but also some of the higher level standards for a High Distinction. GRADE - C MARK - 65-74% CRITERION Demonstrates ability to use and apply fundamental concepts and skills of the unit, going beyond mere replication of content knowledge or skill to show understanding of key ideas, awareness of their relevance and some use of analytical skills. COMMENT: Learning involves not only knowing principles or concepts but also the ability to apply them to a real-life situation. GRADE - P MARK - 50-64% CRITERION Demonstrates the learning outcomes of the unit, such as knowledge of fundamental concepts and performance of basic skills; demonstrates sufficient quality of performance to be considered satisfactory or adequate or competent or capable in relation to the learning outcomes of the unit. COMMENT: Students who get a mark in this range usually demonstrate some knowledge of principles and concepts, but do not explain or apply them accurately. Answers often look like little more than a summary of what someone else has written. GRADE - F MARK - 40-49% CRITERION Fails to demonstrate the learning outcomes of the unit. COMMENT: Students in this range usually make some effort to perform the assignment task but fail to achieve what is prescribed for a Pass. GRADE – Low F MARK - <40% CRITERION COMMENT: Students in this range usually fail to properly carry out the instructions or fully perform the tasks specified in the assessment.