Jim Page - Chartered Accountant - Taxation - Case Study Assignment Help

Internal Code : 1IEEG

Taxation Case Study Assignment Help

Case : Jim Page, aged 58, is a chartered accountant who owns and runs “Page Accounting Services”, which operates through a trust and has multiple unrelated clients. Jim primarily works from his home office in Bundoora, however occasionally he works at the premises of his client ABC Pty Ltd. He employs an administrative assistant on a part time basis to take phone calls and manage appointments, and he is also assisted by an intern – an Accounting student who is undertaking a work placement subject. The intern provides basic data entry services but does not prepare or finalise any returns, accounting work or advices which are all prepared and finalised by Jim. Neither the administrative assistant or accounting intern are associates of Jim. In 2018/19 Page Accounting Services earned a total of $350,000 in client fees, 70% of which it received from its main client ABC Pty Ltd, to whom Jim has provided on-going general accounting services for many years including the preparation and lodgement of monthly business activity statements, management accounts and other accounting services required from time to time. ABC Pty Ltd regards Jim as almost being one of its staff as he is regarded as being its in-house accounting resource. The remaining 30% of fees comes from several minor clients for whom Page Accounting Services is contracted to provide specific advices on particular engagements. The growth in the business of Page Accounting Services has been fully due to word of mouth referrals and the firm has not ever advertised its services, participated in tender arrangements or maintained a website. At as 30 June 2019 Jim has invoiced fees of $350,000 but only received payment of $300,000. The following running expenses were incurred by the firm in relation to its business during the current income year: Jim also paid PAYG quarterly installments totalling $82,784 in the current year. In February 2019 Jim had a heart attack and was in hospital for three weeks. As he was covered by a private health insurance policy during the year, his medical expenses were covered by his insurer. He also received a $5,000 insurance premium due to his illness. This amount was paid on 2 March 2019. After his heart attack Jim reassessed his life and decided to reduce his workload by 50%. On 1 April 2019 he moved permanently to his beach house in Frankston and decided to dedicate part of his free time to his favourite activity: photography. He purchased a professional camera and shared his photos on his Instagram profile. Within weeks his profile became highly popular and he observed an exponential growth in the number of his followers. On 1 June 2019 Jim entered into an informal agreement with a manufacturer of photography equipment whereby Jim would be provided with free equipment which he would test and review on his Instagram profile. By the 30 June 2019 Jim had received and tested photography equipment worth $2,500. Task: 1. Advise Jim Page on the income tax consequences of the above activities for the year ending 30 June 2019, applying legislation and case law to support your answer. 2. Calculate Jim Page’s tax liability for the year ending 30 June 2019, applying legislation and case law to support your answer.