LAW6001 - Jeremy Wild Tax Case Study & Report Writing With Australian Tax Jurisdiction & Income Tax Return - Taxation Law Assignment Help

Assignment Task

 

Learning Outcomes

a) Identify and analyse the tax treatment of various types of income  and deductions.  

b) Effectively apply taxation law in determining tax outcomes in  various scenarios and sole trader structure 

c) Apply the legislation to determine the assessable income and  availability and amount of the tax deduction associated with  employment and business structure on an accrual basis including GST application.  

d) Calculate the specific deduction associated with trading stock balances  

e) Calculate depreciation using the prime cost and diminishing value  method and calculate an associated balancing adjustment following  the disposal of a depreciating asset  

f) Preparation and calculation of individual income tax return on  various income and deductions using current tax return form.

 

Context: 

This assessment assesses your research skills, your ability to synthesise an original piece of work to  specific content requirements and your ability to produce a comprehensible piece of advice which  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 may well approach advisors seeking a combination of specific information  needs and advice on the tax implications of a particular arrangement in 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: 

• Your case study needs to identify and discuss the tax implications of the various issues raised. 

• A report (word document, approx. 2,000 words) must be submitted for 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.  

• Critically analyse 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 survey the relevant literature, including decided cases, and  select appropriate additional resources.  

• Your case study is not just a list of answers. Your 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 and using APA referencing style 

 

Case Study: Comprehensive Individual Tax Return 

Jeremy Wild, a resident single taxpayer aged 49. Jeremy runs a mixed business and has not elected  to apply any of the small business entity concessions. Jeremy uses an accrual method.  

Jeremy’s records disclosed the following for the 2019/20 tax year. All amounts are GST exclusive.  

Receipts 

Cash receipts from customers (sales) $ 279,000 Fully franked dividend Received 2,000 

Proceeds from loan for shop repairs  

Proceeds from sale of Motor vehicle – see note 1 COVID19 Cash Boost payment from the ATO  COVID19 Job keeper payment from the ATO 

Payments 

25,000 14,000 15,000 14,300 

Purchases of trading stock 159,300 PAYG Tax Instalments paid by Jeremy 6,200 Borrowing Costs (incurred on 1 May 2020 on an 8-year loan) 1,800 

Drawings 

Repairs – see note 2 

19,000 29,200 

Loan Repayments (interest only) 2,000 Net Wages to employee 17,500 

PAYG tax withheld from employee’s wages 

Superannuation for employees – see note 3 

Annual/Personal leave paid – see note 4 

Personal Super contributions 

Private health insurance  

Drivers licence renewal  

Late lodgement fee relating to Business Activity Statement 

4,500 9,800 4,000 6,000 1,800 185 

500 

Other Deductible Expenses 29,300 

Note 1 

The motor vehicle had an adjustable value of $13,000 as at the date of disposal. The original cost  was $54,000 in June 2017. The car was used 80% for business.  

Note 2 

During the year, Jeremy spent the following amounts on repairs: 

Landscaping at Front of Shop (30 October 2019) $ 3,200 Repaint Shop (1 March 2020) 10,000 Installation of Concrete Ramp (completed on 31 January 2020) 16,000 

Note 3 

Additional annual/personal leave accrued (provided, not paid) on 30 June 2020 was $4,500 

Note 4 

Employees’ superannuation of $1,400 was accrued as at 30 June 2020 (not yet paid)

Other Information 

• Stock as at 30/6/19 – at cost 8,100 Stock as at 30/6/19 – at market selling value 7,000 
• Stock as at 30/6/20 – at cost 9,400 Stock as at 30/6/20 – at market selling value 12,200 
• Debtors (Sales) at 30/6/19 4,500 Debtors (Sales) as at 30/6/20 3,900 
• Creditors (Purchases) as at 30/6/19 7,800 Creditors (Purchases) as at 30/6/20 9,200 
• Stock taken by Jeremy – at cost 3,400 Stock taken by Jeremy – at market selling value 5,100 
• In the 2018/19 tax year Jeremy used market selling value as the basis for valuing his trading stock. 

 

Assets held by Jeremy as at 30 June 2020 included: 

Asset	Cost ($)	Year   Acquired	Adj. Value at  30/6/19 ($)	Effective   Life	Depreciation  Method
Shop Fittings	80,400	2016/17	30,200	10 years	Diminishing Value
Computer	4,100	2016/17	2,200	4 years	Prime Cost
Equipment	21,000	28/2/2020	n/a	7 years	?

 

 

The following Part A and Part B must be submitted as a single file in MS Word format. 

Part A) Calculate Jeremy’s taxable income for 2019/20 and net tax payable or refundable. Use the  template provied below (add more lines if needed). Show all workings of each income & deductions  of calculations and any tax offsets available for Jeremy.  

Part B) Explain inclusion/exclusion of each income and deductions with reference to relevant  available cases and section numbers as per ITAA36/ITAA97.  

 

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