FNS60217 - Advanced Diploma of Accounting - Prepare And Administer Tax Documentation For Legal Entities - Accounting Assignment Help

Assignment Task:

Steve formed a Discretionary Family Trust some years ago in favour of his children. The children are:

• Gillian, aged 25, and married;

• Jeff, aged 23, certified insane and is confined to institution;

• Simon, aged 19, a university student;

• Louis, aged 16, s secondary student;

• Boris, aged 4.

The trust deed states that Gillian and Jeff are each entitled to 20% of the trust income.

Simon and Louie each have an entitlement to 25% of the trust income which is to be accumulated until they reach 21 years of age. Simon has a vested and indefeasible interest in his share, but Louise’s entitlement is contingent upon her surviving until age 21.

Bories does not have a fixed percentage entitlement, but the Trustee has discretionary power to make payments out of trust income for the benefits of Boris. The remaining of the income is retained to accumulate in the trust.

During the year the trustee exercise their discretionary authority and paid $7,000 medical expenses on Boris’s behalf.

The gross income of the trust was $123,000, and deductible expenditure relating to that income was $3,000.

Also, Simon derived $5,700 gross wages (PAYG withheld $800) during university vacations.

Required:

For the current year of income calculate the following:

1. s. 95 net trust income

2. The share applicable to each beneficiary

3. Tax Payable by each beneficiary and/or the trustee.

In Australia, our financial year runs from 01 July to 30 June. At the end of the financial year we are required to lodge the income tax return. It is a mandatory requirement for every individual and non-individual as long as they have hold a Tax File Number (TFN). Depending on the size and type of entity, we are required to compile certain information before we can prepare and submit our tax returns. 

Assume you are an individual and have employment income for full financial year. By profession you are an external auditor and have adequate knowledge of income tax for individuals. Your friend Martin has asked you to do his tax return and requested you to provide him with a checklist. Martin is a civil engineer and he commutes all the times for work. 

Question  1 - same example as in case 1, except in this case, the client has no receipts to substantiate the claim. You inform your client likewise that the claim is not allowable and in any case, because there are no receipts to substantiate the claim, it should not be claimed. Your client swears that the expenses were incurred but it was simply "cash in the hand". Your client instructs you to make the claim.

Question  2 - Same scenario as in (2) and (3), your client states quite openly that no expenses for child care were incurred. Nevertheless, your client instructs you to make the claim. What is the agent's responsibility?

Question 3 - A client for whom you have prepared the current tax return approaches you for as advice and support for an audit covering the last five returns. You were not involved in the preparation of the previous tax return. But you know that client is registered for GST as well as require to lodge PAYG annual summary report for employees. You also are aware of that client had capital gain in last financial year. What advice will you provide and what support will you give?

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