BLB3134: Taxation Law - Anna Case Study - Law Assignment Help

Assignment Task:

The Question:

Anna is known as one of the best tax accountants in Melbourne. XYZ an accountancy firm in the city is keen to recruit her in order to increase their customer base. They offer Anna a lump sum of $300,000 to encourage her to join them. She accepts this offer and is then paid an annual salary of $200,000 in addition to the lump sum payment. Her employment contract commenced on 01st July 2018. 

On 01st October 2018 Anna registered for CPA Australia’s newly introduced Elite Tax Professionals Examination. In December 2018 she received the news that she had passed the exam with flying colours. She paid a registration fee of $1000 and an examination fee of $5000 to CPA in October at the time of registration. She was happy to see her salary slip in January 2019 which had a special note that said “Congratulations” and an extra payment of $10,000 which was annotated as ($1000 + $5000 + $4000). 

Anna uses the $10,000 to go on safari to South Africa in February 2019 for a much needed rest. Whilst in South Africa she notices that many Australian tourists are travelling to South Africa without the services of a good travel agent. Noticing the hardships these tourists face, she inquires from some South African travel agents whether they would like to start working with an Australian company. She reports back to XYZ that there is a potential opportunity for XYZ to enter into a contract with SA Safari the premier travel company in South Africa to help Australians to travel to South Africa with the services of a good travel agent. 

XYZ enters into a contract with SA Safari in February 2019 and the contract stipulates the following. 

• 300 Australians to tour South Africa between March 2019 – August 2019.

• This would consist of 50 tourists travelling each month starting from March 2019 and ending in August 2019.

• Each tourist package to be charged $10,000 of which XYZ keeps 50% and SA Safari keeps 50%.

XYZ was losing most of their High Net worth clientele in the last few years and they introduce this travel scheme to their HNW customers in February 2019 as a reward for their loyalty over the years. 500 of their current clients enrol for the scheme and the first 300 are chosen on a first come-first served basis. The remaining 200 are now on a waiting list to travel to South Africa after August 2019. Anna advises XYZ to await the results and feedback of the first 300 clients before committing to offer the scheme to anymore clients. The total cost to XYZ on this travel scheme is $1000 per customer. 

Required:  

Consider all these transactions and how they affect taxable income for both Anna and XYZ. (Disregard Fringe Benefit Tax issues). 

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