Comprehensive Individual Tax Return Case Study - Taxation Assignment Help

Assignment Task :

a) Effectively apply taxation law in determining the tax outcome in various client’s scenarios 
b) Critically assess differences between the tax treatment of individuals, partnerships, companies, and trusts and evaluate the effectiveness of each structure in meeting various client needs. 
c) Analyze, evaluate and recommend taxation strategies to develop comprehensive solutions in order to maximize client financial outcomes. 
d) Research, interpret and effectively communicate complex taxation concepts and recommended taxation strategies to clients in an industry compliant format. 

Context: 
This assessment assesses your research skills, your ability to synthesize an original piece of work to specific content requirements and your ability to produce a comprehensible piece of advice while addressing the client’s needs.  It also assesses your written communication skills. The ability to deliver to a brief is an essential skill in the workplace. Clients often approach advisors seeking solutions to a combination of scenarios, including advice on the tax implications of a particular arrangement within the Australian tax jurisdiction. It is therefore important to be able to identify all the issues presented by an arrangement and to think about the potential consequences of different approaches to addressing the client’s needs. 
 

Instructions:

• You will be expected to identify and discuss tax implications of the various issues raised.  
• In the case study, the taxpayer’s assessable income, allowable deductions must be identified and recorded in the Excel Workbook (2019 Individual Tax Return) where applicable (only blue colored cells are required to be filled) as per the information provided in the case study.  
• In addition, a report (Word document, approx. 2,000 words) must be submitted, summarizing all the calculations of the assessable income; allowable deductions and taxable income of the taxpayer including identifying and discussing them. E.g., how the amounts of income & deductions have been derived. If any receipts and payments are not assessable or deductible, the reasoning for non-inclusion of these in assessable income or deductions as per relevant legislation or cases should be provided.
• Critically analyze the following case study.  With respect to each task:
• Review relevant case law and legislation (ITAA1936, ITAA1997)
• Apply the law to the facts of the case study
• Reach a conclusion/ give practical advice to your client.
• You will be assessed in accordance with the Assessment Rubric.
• This case study must be presented as an individual effort. The case study requires individual research. It is expected the student will research relevant literature, including decided cases, and select appropriate additional resources.  
• Your case study is not just a list of answers. The reasons for your conclusions and recommendations must be based on your research into the relevant cases and legislation.
• The format of the report should be a business report, using the APA referencing style.  
• You are expected to submit both files: Individual Tax Return Excel file, Business report in  the Word format 

Case Study: Comprehensive Individual Tax Return 
 
Eric Zhang, a resident taxpayer aged 59, runs a sole trading business selling imported food items. His business is registered for GST. He also works on a casual basis as an import/export agent for Blue Marlin Pty Ltd (ABN: 89 125 678 968). He has a rental property in Lakemba, Sydney. Eric is taking care of his wife Linda Wang, who has lost the eyesight in her left eye 9 months ago, on the 1st of October 2018 as a result of a car accident. Eric is solely taking care of Linda.  
 
Personal Information  
Name Eric Zhang TFN: 300 001 000 Date of Birth: 15 July 1974 Address: 23 Market Street, Newtown NSW 2200 Contact: 0456 587 987 (Work: 02 9578 3648) Bank account: BSB 225887 Account 378458 Eric is not covered by a private hospital cover.  
 
Spouse: Linda Wang Date of Birth: 30 July 1989 Currently receives a disability pension from Centrelink $9,200 for the 2019 tax year. She has no deductions to claim for the 2019 tax year.  
 
Income/Expense Information 
Eric and Linda have a joint term deposit account at ANZ. The total interest received from the joint account was $500 for the 2019 financial year.  
 
Eric has paid $400 to a registered tax agent for preparing his tax return for the 2018 tax year.  
 
In addition to the above, the following information relates to his employment (Part A), business income/expenses (Part B) and rental receipts/payments (Part C). All expenses have been substantiated unless it states otherwise.  
 
Part A: Regarding his employment 
Employer: Blue Marlin Pty Ltd (ABN: 11 235 365 874) Gross wages for the 1st of July 2018 to the 30th of June 2019: $7,800 (PAYG withheld: $200) He also received $2,000 shift allowance and $800 reimbursement for work-related software fees from his employer.  Eric received a car from employer as a fringe benefit (showing as reportable in his PAYG summary, valued $60,000 not exempt from FBT)  Work-related allowable deductions to claim (telephone & stationery) $300 
 
Part B: Regarding his Business 
During the year, Eric has had the following transactions in relation to sales, purchases, and inventory (trading stock. Eric did not choose the Small Business Entity option.

The closing stock values include $5,000 worth stock in transit from overseas paid for and owned but not received until the 15th of July 2019. 
Eric has taken home some food items from the stock purchased for consumption by his family at a total value of $2,500. 
 
Ledger balances were as follows (GST inclusive) 

Additional cash receipts included:

•  Volume rebates from overseas suppliers  $3,500
• Insurance recovery from the insurance company due to extensive damage  caused by a hailstorm and included  
• Compensation for loss of income $7,900
• Repairs carried out on shop caused by storm damage $2,700
• Medical costs incurred by Eric form injuries $900  
• Capital contributed by Eric to expand the business  $10,000 

Cash payments included: 

• Cash Drawings by Eric  $3,000
• Fines for breach of Australian Customers regulations $900
• Net wages to employees $12,000
• PAYG withheld from employees and paid to the ATO $2,900
• Superannuation for employees $1,230
• Superannuation guarantee charge $190
• Fringe benefit tax  $850
• Lease payments on shop fittings and plant equipment $940
• PAYG installments for Eric’s personal tax commitments $2,500
• Fee for maintenance of computer systems
• Covering the period 1/4/2019 to 30/9/2019 $1,680
• Other tax-deductible operating expenses $9,200
• Decline in value (see note 1) $ 

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