BLO2206: Taxation Law and Practice - Dr Cela Case Study - Law Assignment Help

Assignment Task:

Background facts:

Dr Cela immigrated to Australia with her parents in 1985 and has since been a resident for taxation purposes. While she had the privilege of a good education, her parents had a low level of education and worked in factories until they recently retired with a low superannuation balance and their family home.

Dr Cela has taxable income of $300,000 in the 2019 income year, and it will remain $300,000 for the next 11 years. She has been using negatively geared rental properties to reduce her taxable income for many years.

In order to assist her parents, Dr Cela has purchased an apartment near her home in Hawthorn for her parents to retire in. This enabled her parents to sell their home, then travel and live comfortably for the remaining decade on its proceeds and their low superannuation balance.
Instead of paying for the apartment with her own money that she has saved, Dr Cela took out a mortgage and decided to charge her parents 50% of the market rate of rent for the next decade.After a decade she plans to stop charging them rent and allow them to live in the apartment until they pass away.Dr Cela believes that having a mortgage and low rent would ensure that she can negatively gear the property and reduce her taxable income.

Task: 

Dr Cela has asked you to prepare a letter of advice explaining the tax treatment of her rental property in years 1, 10 and 11. In that letter of advice, she would like you to:
Explainwhethersheis entitledtousetherentalpropertylosstoreducehertaxableincome in each of the incomeyears.
Using 2019 tax rates, explain to her what her tax payable will be in each of the income years.Assumethatsheisan Australian resident,withoutwithholdingtax,andhasnoother deductionsor offsets.
Tellherif shecoulddoanythingelsetoimprovehertaxsituation,suchasapplyingfora Private Binding Ruling from theATO. 
The following material will assist you in answering the question:

1. TR 95/25.
2. TR 95/33.
3. Sadiq, 2019, Principles of Taxation Law, 2019, Thomson Reuters (Professional) Australia Pty Limited.
4. Rental Properties Guide - ATO 
This assignment should be written as a professional letter, therefore it should:

• Bedated,
• Have full addressdetails,
• Be marked as private andconfidential,
• Have adisclaimer,
• Be signed off by a partner with contact details,and
• Have an executive summary at thestart.

This form of question requires students to present arguments on the application of the law to agivenpracticalproblem.Inaddressingaquestionwhichrequirestheapplicationofthelaw, it is suggested that you adopt the followingapproach:
I: ISSUES - Identify the essential issues in thequestion

R: RULE - Identify the relevant law, i.e. relevant legislative provisions andcases A: APPLY - Apply the law to theproblem
C: CONCLUSION – form a reasoned conclusion on the application of the law

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