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200869 Principles Of Taxation

tag 0 Download 8 Pages / 1,775 Words tag 15-03-2021
  • Course Code: 200869
  • University: Western Sydney University
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  • Country: Australia

Questions:

1. Anthony Mcloed is a project manager for a home renovation company located in Western Sydney, Unique Homes. Early last year Anthony celebrated his twenty years of service for Unique Homes. After reaching this milestone in his career Anthony decided to reduce his hours of work to twenty hours a week to enable him to pursue a venture he had been contemplating for a long time, property flipping. This required Anthony to apply his twenty years of knowledge, expertise and skills in purchasing property, renovating the property and quickly reselling for a profit.

Between July 2017 and May 2018, Anthony had successfully flipped three units and two stand-alone homes. Anthony spent considerable periods of time on his days off, researching the up and coming suburbs and what types of homes buyers wanted in these areas. Anthony’s renovated homes were quite popular and were selling quickly.

Unfortunately, in June of 2018 two properties Anthony had purchased for resale were found to be infested by termites and needed to be knocked down. This news was devastating for Anthony who ceased flipping houses after June 2018 because of the mental stress he had suffered.

Anthony kept records of all purchases and sales using online accounting software.

Anthony now wishes to know whether the loss of $120,000 he realised from the above activities should be recorded on revenue or capital account for tax purposes and has come to you for advice.

Required: Advise Anthony by reference to relevant legislation, caselaw and rulings (if any) whether the above loss should be recorded as a revenue or capital loss. Your answer must include discussion of relevant principles.

2. Estelle is the advertising manager for Australian Landscaping Supplies Pty Ltd (“ALS”), a retailer of landscaping supplies such as soils, plants, pavers and pots. On 1 October 2017, ALS supplied Estelle with a car valued at $55,000 for work which was garaged at Estelle’s home on the weekends.

Also on 1 December 2017, ALS loaned Estelle $10,000 at 1.5% interest pa. Estelle used the money to pay for repairs to her investment property. ALS also provided her with a pallet load of pavers she needed for her back yard valued at $2,000 and an ornamental pot valued at $250 to decorate her back yard.

By 30 March 2018, Estelle had travelled a total of 21,000 kms in the car, with 4,960 kms being for private use. ALS pays $20,000 a year in lease payments in respect of the car and has to date paid $4,000 for maintenance and repairs and $3,500 for registration and insurance in relation to the car it provided Estelle. Estelle has paid $1,500 in fuel expenses. Estelle keeps all invoices, receipts and odometer readings.

ALS is unsure how the above will be treated for taxation purposes and has come to you for advice.

Required: By reference to legislation and relevant case law (if any), calculate the total FBT liability arising from the above transactions.

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My Assignment Help (2021) Principles Of Taxation [Online]. Available from: https://myassignmenthelp.com/free-samples/200869-principles-of-taxation/principles-and-concepts-of-taxation-law.html
[Accessed 28 September 2022].

My Assignment Help. 'Principles Of Taxation' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/200869-principles-of-taxation/principles-and-concepts-of-taxation-law.html> accessed 28 September 2022.

My Assignment Help. Principles Of Taxation [Internet]. My Assignment Help. 2021 [cited 28 September 2022]. Available from: https://myassignmenthelp.com/free-samples/200869-principles-of-taxation/principles-and-concepts-of-taxation-law.html.


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