BTC3150: Taxation Law Assignment - Law Assignment Help

BTC 3150 Taxation Law - Assignment: Semester Two, 2022

NOTES:

If you need to make assumptions when responding to any questions, the assumption and the reason for the assumption must be clearly specified in your response.

In Part One (Q. 1), you may need to do some research beyond the textbook and lecture slides to answer the question asked. Where you do this, acknowledge your source in your footnotes/bibliography.

Unless specifically required to determine residency (as in Q. 4, Part One), assume all tax payers are Australian tax residents and all events take place in Australia.

Unless you are specifically asked (e.g., as in Q. 2 and Part Three), you do not need to do calculations.

You are not permitted to get any assistance with this assignment from your Tutors. If you are unsure about how to structure your answers, you should take samples of your tutorial work to your Tutor for guidance. Your Tutor will not read any drafts of your work for this assignment.

The Assignment has Three Parts. All Parts must be attempted.

Part One: Short Answer Questions

Part Two: Problem Style Question

Part Three: Problem Style Question (that includes some calculations)

PART ONE

1. Please name (i) one proposed or legislated measure of the Commonwealth or State government related to taxation of electric vehicles, and (ii) discuss briefly, in a few sentences, the possible rationale behind that measure? (ATO/Treasury/State government or other authentic sources can be accessed subject to appropriate citation) (2 marks)

2. Fang has rented out two properties in Richmond. In 2021-22, he received a rent of $44,000 from the residential property and $88,000 from the commercial property. In the same period, Fang hired Mitch (who is GST-registered) to do repair works at both peripeties ($2,200) and install air conditioners ($4,400) in them.

Required: Advise Fang of his GST consequences. Show calculations for any taxable supplies and input tax credits by Fang. Support your answer with relevant legislation. (Note: where relevant, the amounts are GST-inclusive) (4 marks)

3. Alicia works as a procurement officer at “Supplies n Provisions” (S&P), a big retail business with Australia-wide operations. S&P purchases most of its supplies from big wholesale firms. When S&P runs short of supplies, it also procures goods from another retailer “The Provider” at short notices. At the time of making purchases from “The Provider”, Alicia uses the loyalty program card of the seller and accumulates free points. The membership fee ($200) for the loyalty program was paid by Alicia when she purchased it in 2018. However, the annual renewal fee ($50) of the program is paid by S&P, her employer. In the year 2021-22, Alicia converts the accumulated free points of the loyalty card to book a holiday resort for one week for herself and family (equal to $14,000).

Required: Using relevant legislation and case law, advise Alicia whether the

benefit equal to $14,000 constitutes her assessable income. (Note: Please disregard any FBT consequences since we have not covered FBT yet)

4. HMP Group (“HMP”), a multinational company engaged in the manufacture of gambling machines, is incorporated in Vanuatu. HMP has business operations in several countries including Australia. Fifty percent of HMP shareholders are also from Australia. Annual meetings of board of directors of the company take place in Vanuatu. Minutes of meetings show that key decisions on HMP’s trading and operations are taken in those meetings.

Using relevant legislation and case law, (a) discuss whether HMP is Australian tax resident; (b) will it impact the answer if proven that decisions at the directors’ meetings in Vanuatu are dictated by an individual sitting in Perth, Australia?

PART TWO

Tom Robison owns ten-acre land in the regional Queensland. Tom purchased that property in 2015 with the aim set up a farm machinery business and develop a horse breeding farm. The project got delayed, and Tom used it for agricultural purposes for a few years.

In 2019, due to zoning change in the area where Tom’s property was located, the local council allowed construction of residential buildings. Tom realized that he could seize the opportunity and can receive a good return by selling the ten-acre land. He sought the advice of a real estate agent who advised him that the land might give him a higher return if subdivided into smaller lots and each lot sold individually.

Following that advice, Tom applied for a planning permit from the city council. The council approved Tom’s application subject to the conditions that Tom will build road, footpaths, and a bus stop on the land, and provide sewerage alongside installing utilities for each individual lot measuring 800 square yards. Tom hired services of an agent and personally supervised subdivision of the ten-acre land, including utilities connections and sewerage installation. Tom also organised a builder to build access roads, bus stop and fencing to each block. Tom actively arranged publicity of sale. By June 2022, Tom successfully sold out all blocks of land for $4.5 million.

Citing relevant legislation and case law, advise Tom whether $4.5 million from the sale of land would constitute his ordinary income under s. 6-5 ITAA97?

PART THREE

Peter Morgan and his wife, Liz Morgan, live in Queensland. In 2011, Peter purchases vineyard equipment and sets up a small business winery business “Morgan Winery”.

The couple has been long dreaming to go on a world tour. In December 2019, they start thinking about actualizing their dream tour. Peter plans a two-year trip to UK, Europe, America and Canada. While the couple was in the mid of their planning, Covid pandemic breaks out. International borders tighten up and travel restrictions are imposed worldwide. The couple has to postpone their trip and wait for the end of international travel restrictions.

During 2021, heavy rainfalls and flooding cause major damage to their winery and the equipment worth $210,000 gets destroyed. In the meantime, the Covid pandemic slows down. Peter plans to rebuild the winery once they would return from the trip. Peter pays $2,000 to an advisor to file his insurance claim for the destroyed equipment and loss of business income. On 31 March 2022, Peter receives a lumpsum amount of $272,000 from the insurance company. Before leaving for the world tour on 20 May 2022, Peter sells his following assets:

Peter has a carried forward capital loss of $10,000 (including $2,000 from collectibles) from the previous year.

Required: Citing relevant legislation and explaining tax consequences of each transaction, calculate Peter’s net capital gain (or loss) for the tax year 2021-22.

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