200186: Advanced Tax Law - Western Sydney University - Law Assessment Answer

Subject Code: 200186

Law Assessment Answer

Assignment Task: QUESTION 1 – TAXATION TREATMENT OF CRYPTO-CURRENCY  Compare and contrast the taxation of crypto-currency in Australia and the United States, including measures introduced in both countries to ensure compliance by taxpayers. Your answer must include discussion of what is crypto-currency and whether it satisfies the definition of ‘money’. QUESTION 2 – AUSTRALIAN TAXATION OF NON-RESIDENTS & CGT SMALL BUSINESS CONCESSION Part A. Taxation of Non-residents (1) Discuss the factors considered relevant in determining the source of income from (a) the sale of shares, and (b) dividends. (2) How are non-residents taxed in Australia on income from (a) the sale of shares, and (b) dividends? NOTE: Your answers to sub-parts (1) and (2) must be supported by analysis of relevant legislation, case law and tax rulings. Part B – Small Business Concessions Melanie owns a large supermarket in Paddington, Sydney and operates it as a sole trader. Melanie acquired the supermarket on 1 January 2000 for $1.5 million with a loan on which $350,000 remains outstanding. Last year, the supermarket turned over $2,200,000. As of 30 June 2018, the supermarket had the following assets: Melanie also owns outright the house in which she lives, which is situated in Rose Bay and valued at $2.3 million. She also owns a holiday house at Wategos Beach in Byron Bay, currently valued at $1.4 million. Melanie’s husband, who occasionally helps with the running of the supermarket, owns 90% of the shares in a property development company, Goldcorp Pty Ltd (BPL), with Melanie owning the other 10% of the shares in BPL. The shares in BPL are currently valued at $5.4 million. The turnover of BPL for the financial year ended 30 June 2018 was $2.6 million. This was made from the sale and development of residential units in Castle Hill. Melanie is 55 years of age. She wishes to spend more time with her family and is considering selling the supermarket, including the land on which it is situated. In October 2017 a potential buyer made an offer of $7 million for the supermarket and land. This offer included an amount of $100,000 for Melanie signing a contract not to open another business within a 10 Km radius of the supermarket for the next 5 years. Melanie now seeks your advice about whether and, if so, how much capital gains tax she would have to pay if she accepts the offer of $7 million.

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