76212: Revenue Law - James Cook Case Study - Law Assignment Help

Assignment Task:

Assignment question. 

James Cook is a ship’s officer employed on a cruise boat engaged in passenger cruises of the South Pacific. James owns a house in Australia which was his family home, but his estranged wife and their children now live in Singapore, and James rents the house to his cousin and his cousin’s family. The house is let fully furnished, with the furniture in the house belonging to James. James stays in the house whenever he is in Australia and has his own room in the house in which are stored his personal belongings. In the current income year James spent 80 days at the house in Australia.  

The remainder of the year was spent either on the cruise ship or visiting his children in Singapore, where he spent a total of 40 days.  

The cruise ship on which James serves visits a variety of ports, mainly in the South Pacific. James is employed by a company incorporated in the Cook Islands under an employment contract signed in Hong Kong. The cruise ship is owned by a company incorporated in Bermuda, and sails under a Panamanian flag. The income earned by James from the cruise company was salary and wage income derived by him under the contract of employment.  

In preparation for his retirement from his employment, James has taken up horse breeding. He currently owns six horses which are on agistment in Australia and being used in a breeding program supervised by a leading trainer. James keenly follows the progress of his horses in the breeding program. He spends much of his spare time on the ship reading the latest horse breeding magazines and studying the reports sent by the trainer concerning his horses, so as to keep up to date, his intention being that on retirement he will purchase a small property and breed horses full time. 

For each of the three years that James has been pursuing this activity there has been a tax loss made, although the tax losses have been diminishing in size as the activity becomes more successful.  In the current year, James has made a total loss from horse breeding of A$16,500 (including GST).

James seeks your advice on a range of matters, including: 

• whether he would be a resident of Australia for the current year; 

• the source of his income and its assessability; 

• whether the horse breeding would constitute carrying on a business.  

Students provide written legal advice dealing with real world problems. There are two aspects to this task: Complex written advice for a Senior Lawyer and Letter of advice to the client.

Advise James on these matters, making full reference to relevant legislation, cases, and rulings.  

Part A: Draft a bit of complex advice for Senior Lawyer (20%) (1000 words)

Draft detailed advice to the Senior Lawyer at your firm. The advice is for the purpose of allowing the senior lawyer to consider all aspects of the issue and should provide a number of options for the client to pursue. The issue and solution should be discussed using legal terminology appropriate for consideration by an expert lawyer in Revenue law.

Part B: Draft a letter of advice to the client (10%) (500 words)

Draft a short letter of advice to the client utilizing what the student considers is the best solution set out in the complex advice to the Senior Lawyer. The student will be required to describe the issue and the solution in layperson’s terms which are appropriate for the client.  Some legal terminology is required.

The written advice in Part B, should include

• whether James is a resident of Australia for the current year; 

• What is James assessable income for the current year; 

• What are the tax implications of the whether the horse breeding operations would constitute carrying on a business and whether losses incurred in relation to the horse breeding operations for the current year would be deductible.

• Any other taxation issues that arise 

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