Australian Tax Law Assignments

Activity 1

Susan is a registered tax agent. For each of the following scenarios, identify which principles of the Code of Professional Conduct under the Tax Agent Services Act 2009 have been breached, and explain how the breaches could have been avoided.  

Activity 2

Outline and explain key accounting principles and practices when reconciling accounting profits with taxable profits for the different types of legal entities.

Activity 3

Briefly explain the Australian tax law implications of each of the following scenarios, by citing relevant tax legislation and case law where appropriate.

1. James received a lump sum payment from the Daily Newspaper in full settlement of an action for defamation. Is this amount assessable income and provide the explanation?

2. AAB Ltd is a marine and boat manufacturer and has incurred costs of $200,000 on feasibility studies for a new marine engine. Will this expense deductible under s8-1 ITAA97? If not, can it be deductible under specific section and the timeframe for the deduction?

Activity 4

Identify the relevant elements of Australian tax law in the following scenarios and calculate the total tax payable (including Medicare Levy and any other tax offsets) by James for the tax year 2018/19. Show your workings.

On 1 July 2018, James sold some jewellery for $5,000 which he bought on 1 April 2016 for $2,780.

On 1 August 2018, James sold his camera for $22,000 which he bought on 15 June 2016 for $23,000.

On 5 October 2018, James sold a painting for $950 which he bought on 4 April 2010 for $480.

On 8 November 2018, James sold CBA shares for $49,500 which he bought on 30 January 2018 for $42,400 (net costs).

On 30 June 2019, James receives interest income of $24,000

Activity 5

Simpsons and Associates is a law firm which has provided the following benefits to its employees for the 2018/19 FBT year. The turnover for the firm is $12M.

Identify the relevant elements of Australian tax law in the following scenarios and calculate the FBT payable by Simpsons and Associates for the tax year 2018/19. Show your workings by embedding your spreadsheet or table below.

James was provided with a Toyota which is parked at James’s home. The car was bought by the company on 1 April 2015 for $48,500 (GST inclusive), including $1,900 for registration and compulsory third party insurance.

Susan and her family were given a weekend trip to Hunter Valley costing $3,500 (GST inclusive).

Activity 2

Brad was provided with a loan from the company for $200,000 on 1 August 2018 and paid 2% per annum interest on the loan. The FBT benchmark interest rate is 5.20% for 2018/19.

Louis was provided car parking at the office car park. Wilson Parking is located within a one kilometre radius of where Louis’s car is parked and charges a fee of $25 for all day parking.

Activity 6

Jason and Robert are planning to open a furniture and homewares store with two employees. The projected turnover will be $200,000.

Jason and Robert seek advice from you in relation to the advantages and disadvantages of conducting their business through a partnership or a company.

Provide three advantages and three disadvantages from a tax perspective for choosing either a partnership or a company as their organisational entity. Provide organisational policy reasons and support your answers by citing relevant tax legislation, where applicable.

Activity 7

Explain for each of the following scenarios whether they are an example of either:

Tax planning

Tax avoidance, or

Tax evasion.

Support your answers by citing relevant tax legislation, where applicable.

Janise is an Australian resident and did not report the rental income of HK$144,000 (for tax year 2018/19) earned from an investment property which is located in Hong Kong.

Ken and Judy own Advance Technology Ltd. Advance Technology provides an interest free loan of $250K to Ken on 1 October 2018 which is not repaid on 30 June 2019.

Michael Brown is the sole director of Brown Pty Ltd. Brown Pty Ltd received consultant fees of $155,000 from ABC Ltd and the total fee earned for the tax year 2018/19 was $170,000. The consulting service was performed by Michael. ABC Ltd provided Michael an office and the required equipment.

William and Sandy decide to buy an investment property and set-up a discretionary trust to hold the property, in order to allocate higher tax benefits to William.

Activity 8

Bronwyn, an Australian resident, receives a job offer to work overseas for three years, with an option to extend for another three years.

Bronwyn, her husband and their three children decide to make the move. They rent out their house in Australia as they intend to return one day. While overseas they rent a house with an accommodation allowance provided under Bronwyn's contract. Bronwyn is unsure if she will extend her contract to stay for another three years. She will decide later depending on how the family like life.

Is Bronwyn considered to be an Australian resident for tax purposes?

Activity 9

Taxpayers are required to be aware of the effect of taxation rulings when they are preparing tax documentation. Identify and explain, in your own words, the relevance of taxation ruling TR92/15 when an organisation is preparing FBT returns.

Activity 10

Denko Pty Ltd manufactures performance motor cycles. During the year, it determined that it could not collect payment in respect of a motor bike it sold to a dealer three years ago. Since then, the company no longer manufactures performance motor cycles and instead makes motorised scooters.

Describe the source of Australian tax law which would determine if the company can claim a deduction for the bad debt write off.