LAW 6001 - Taxation Law Case Study Assessment Answer

LAW 6001 - Taxation Law Case Study Assessment Answer

Task:

Learning Outcomes
This case study must be presented as an individual effort. The case study requires individual research. The course manual and set texts are intended to be the starting point of the research. It is expected the student will survey the relevant literature, including decided cases, and select appropriate additional resources.
The case study is designed to incorporate uncertainty. The  student is expected to develop a piece of work which is written advice for their client. It must therefore identify the facts and issues presented by each aspect of the case study, identify and apply the relevant legislation and/or case law, come to a conclusion and make a recommendation to the client.
Specific learning outcomes
a) Interpret and apply selected sections of the Income Tax Assessment Act ITAA36 and ITAA 97.
b) Identify and analyse the tax treatment of various types of income and deductions.
c) Explain and apply the basic features of the capital gains tax provisions and calculate net capital gains/losses
d) Effectively apply taxation law in determining tax outcomes in various scenarios and structures.

Question 1 - LAW 6001
Adam Collins was born in Australia and works as an international airline pilot. He is married to Narelle and they have two school aged children. Adam and Narelle own a house in Sydney and receive interest on savings from their joint Australian bank account. Adam pays for Australian private health insurance for the family and has share investments in the airline on which he receives dividends. From 1 November 2017 until 1 April 2018, Adam was based at the airline’s hub in Dubai and lived in an apartment leased by the airline. The airline paid five months of Adam’s $500,000 annual salary directly into a bank account that he established in Dubai. Adam took annual leave in December and returned to Australia to spend Christmas with the family.

Question 2 - LAW 6001
In June 2018 Orpheus Parker purchased a ground floor two-bedroom townhouse in Neutral Bay, Sydney. He decided to rent out part of his townhouse on Airbnb while still living in the property. The total floor area of the townhouse is 850 sq feet (79 m2). The floor space of Orpheus’ bedroom and his private area is 250 sq feet (23.2 m2). The rented second bedroom area is 200 sq feet (18.6 m2). The shared area comprising lounge, kitchen and laundry cupboard is 400 sq feet (37.2 m2).

Question 3 - LAW 6001
In 1975, Joe Messina purchased five hectares of land 40 km from Sydney’s CBD. The land was used for agricultural pursuits, with produce sold through Sydney markets. In the year 2000 the government proposed construction of an airport adjacent to Joe’s land. Subsequently, in 2005 Joe sold the land for $700,000 and used this entire amount to acquire a large block of land closer to Sydney with the intention of keeping the land as a retirement nest-egg. In 2016, Joe was approached by a real estate developer to construct eight townhouses on the land. Joe accepted the proposal and employed architects, builders and obtained development approval from the local council. Joe oversaw the development and engaged real estate agents to market the townhouses for sale upon completion. During the course of the 2018/19 income year seven townhouses were sold for $650,000 each. Joe retired to the remaining townhouse.

Question 4 - LAW 6001
Harrison Carter, an Australian resident, seeks advice on the CGT consequences of the following events.
1. He exchanged contracts for the acquisition of an investment property, at market value, on 24 January 1999, paying a 10?posit of $80,000. Property settlement was deferred until 5 December 2001, when the balance of $720,000 was paid, title transferred, and his name was recorded as the registered proprietor. At the time of settlement the market value of the property was $1m. He sold the property on 14 June 2018 for $1.3m.
2. He acquired 10,000 shares in Star Entertainment Ltd in October 1985, paying $4 per share. He decided to sell his entire shareholding, for $12 per share, and signed a share transfer document and handed the transfer and share script to the Stock Exchange on 20 June 2018. The transfer was not registered with Star Entertainment Ltd until 10 July 2018.
3. He incurred a capital loss in 2018/19 amounting to $65,000.

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