ACCT3002 - Taxation Law - Hektor Aroma Case Study - Law Assignment Help

Assignment Task

Question 1
Assignment Part 2 is the continuation of Assignment Part 1, involving the tax affairs of Hektor Aroma. In Assignment Part 1, you were required to calculate assessable income based on the information provided. For this second part, you should assume that his assessable income is $136,400 and take that as the starting point to deal with the following additional information (which is relevant for the year ending 30 June 2021, the ‘current income year’, unless otherwise stated) to determine Hektor’s taxable
income and tax payable including Medicare levy for the year ending 30 June 2021.
1. In the current income year, Hektor purchased the following items for the amounts specified for making coffee for sale in his business:
Coffee beans $20,000
Water $15,000
Milk $9,500
He also purchased $3,000 in cakes and biscuits from his mum to sell either with the coffee or separately. In addition to these, Hektor was invoiced $500 for coffee beans
on 20 June 2021. He did not pay that until 10 July 2021. Milk is a perishable item, even when refrigerated, so Hektor does not store significant quantities of it. Similarly, with the cakes and biscuits which are baked in small quantities every weekend and are generally sold out during the week. While water has a longer shelf-life, it simply is not practical to store large quantities of it. It is much easier to purchase a week’s worth of milk and water at a time, store it in a refrigerator at his home and bring in the quantities he needs each day in an esky. While Hektor may not get the best price for milk and water, he believes that purchasing it this way saves him money in the long run due to less wastage. Hektor estimates that the amounts of these items that he had in storage at the end of the current and previous financial year would have cost him $75. 
 

Required

In your own words and on the basis of the provided information, calculate Hektor’s taxable income and tax payable (including the Medicare levy) for the income year ending 30 June 2021. Justify your answers with reasonably arguable positions citing all relevant law. Please note the following:

- Do NOT treat this as an accounting exercise. This is a law exercise and marks are awarded for the use of the ‘cite, describe, apply’ approach.

- Issues are NOT weighted equally in marks. Issues that require more law to be applied have more marks allocated to them.

- The numbered points above may contain more than one tax issue. Information provided in one point may be relevant to other points.

- Use information provided in assignment part 1 where relevant and appropriate.

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