LAW601 - Tax Law And Practice Assignment

Assignment Task

Learning Outcomes

The Subject Learning Outcomes demonstrated by the successful completion of the task below include:

a) Critically review types of taxation in Australia including income tax, goods and services tax, capital gains tax and fringe benefit/benefits tax and compute tax liability.

b) Investigate the tax treatment of individuals, partnerships, trusts, companies and superannuation funds and recommend taxation strategies to a range of stakeholders.

c) Critically evaluate the roles of key stakeholders in the administration of the tax system and clarify the difference between tax planning, tax avoidance and tax evasion.

Task

Based on the two scenarios outlined in this assessment task, you will draft business letters for two different clients. In the business letters, you will outline tax strategies and provide advice relating to Capital Gains Tax (CGT), Goods and Services Tax (GST), Fringe Benefits Tax (FBT), and Small Business Entity (SBE) concessions based on tax planning and strategies. This assessment task is designed to develop your skills in developing a comprehensible piece of advice addressing clients’ needs and communicating to clients across a range of scenarios.

Case A – Christine Murphy

Christine Murphy is an Australian resident for tax purposes. The following information relates to Christine’s investments.

Private Residence

• Private residence purchased in March 1998 for $300,000.
• Christine currently lives in the house and its market value as at 30 June 2023 is $900,000.

Information in relation to the Rental Property in Cairns

• Purchased on 7/8/89 for $150,000 (the property was built in 1971).
• Exchanged contracts for the sale of this property on 30 June 2023 for $850,000.
• Settlement of the sale was finalised on 12 October 2023.
• Legal expenses on purchase $4,000 paid August 1989.
• Stamp duty on purchase $2,500 paid August 1989.
• Additional room added to property paid for on 1 July 2020 for $20,000.
• Landscaping to the property paid for on 1 July 2022 for $2,000.
• Legal expenses on sale $5,000 paid June 2023.
• Real estate agents commission on sale $4,500 paid June 2023.
• Total claimed capital works in her previous tax returns totalled $4,700 for the building.
• Christine claimed all capital works for the additional room built since 1 July 2020 till the disposal of the property.

Shares

• Dragon Ltd shares sold on 11 February 2023 for $20,000, purchased on 1 May 1985 for $8,000.
• Raider Ltd shares sold on 20 April 2023 for $11,000, purchased on 1 July 2006 for $10,000.
• Eel Ltd shares sold on 2 August 2022 for $120,000, purchased 1 May 2006 for $30,000.
• Tiger Ltd shares sold on 30 June 2023 for $40,000, purchased on 1 April 2023 for $16,000. Other information
• Christine has capital losses from disposal of shares carried forward from the previous year of $8,000.
• Rental income from her Cairns property from 1 July 2022 to date of sale $12,000.
• Total allowable deductions in respect of this rental income for the year ended 30 June 2023 was $15,800

Required

Advise the net capital gain for Christine for the year ended 30 June 2023 by using the CGT method that provides the best outcome for her. Also calculate the taxable income of Christine for the year ended 30 June 2023.

Case B – Jackson Pty Ltd

Jackson Pty Ltd is a wholesale business which distributes to retailers and also sells some of its gourmet line overseas. Jackson is a managing director of the company. Jackson Pty Ltd emailed you regarding the following issues related to his company.

Required

With reference to the relevant legal principles, advise Jackson Pty Ltd on the following issues in your draft business letter of advice:

Calculate the net GST payable by or refundable to Jackson Pty Ltd. Provide all workings and advise the above income items are taxable; GST free; input taxed supplies and whether the expenses are creditable acquisitions or not.

2) FBT related

Jackson Pty Ltd provided some ‘benefits’ to various stakeholders. As this is the first time Jackson Pty Ltd has done this, the director needs some guidance to determine fringe benefits and calculate the FBT. The following information was extracted from Jackson Pty Ltd’s email; all the information relates to the FBT year ending 31 March 2024.

• A briefcase ($370 including GST) for a potential employee as an enticement to join the organisation.
• Gym membership to the wife of the director costing $2,700 (including GST)
• A weekend trip to Indonesia provided to the former employee $4,000 (GST free).
• Overseas holiday package to an employee’s wife costing $19,000 (GST free)
• A holiday package costing $26,500 (including GST) to a customer as part of a competition.
• On 1 April 2023, Jackson Pty Ltd purchased a new company car at a cost of $52,000 including GST. The car was registered and insured on that date and was to be used exclusively by the director. The total distance travelled by the car in 12 months was 31,000 km, 8,000 km of which was for business purposes. The car was garaged at the director’s residence at all times except for 15 days – the car was at mechanic’s garage for services. Total running costs (GST inclusive) related to the car’s use were $9,200 and the director contributed $1,100 towards the cost of the petrol and oil for the car.

Required

With reference to the relevant legal principles, advise Jackson Pty Ltd on the following issues in your draft business letter of advice:

a) Which of the items listed above do not fall within the meaning of ‘fringe benefit’?

b) For any items above that constitute a fringe benefit, calculate the taxable value and the minimum FBT payable.

3) Small business concession related

Jackson Pty Ltd wishes to opt for the Small Business Entity (SBE) option, but he is unsure whether this is a good choice for the company and what benefits will become available when choosing the SBE.

Jackson Pty Ltd’s account details are as follows. Jackson Pty Ltd uses an accrual method to account for his income andexpenses. The business turnover for the financial year ending 30 June 2023 was $1,335,000, including GST.

Item 1) Purchased machinery costing $780,000 on 21 December 2022.

Item 2) The company paid an annual insurance premium of $18,000 on 1 June 2023 starting from 1 August 2023.

Item 3) The opening stock value was $189,000 on 1 July 2022 and the closing stock valuewas $192,000 on 30 June 2023.

Required

With reference to the relevant legal principles, advise Jackson Pty Ltd on the following issues in your draft business letter of advice:

a) Is Jackson’s business eligible to be the SBE?

b) What small business concessions are available for Jackson Pty Ltd based on the item (1) - (3) details listed above?

c) What ‘tax’ concessions are available regarding (i) income tax and (ii) capital gains tax for Jackson Pty Ltd? Explain these in details for him.

This Accounting and Finance has been solved by our PhD Experts at My Uni Paper. Our Assignment Writing Experts are efficient in providing a fresh solution to this question. We are serving more than 10000+ Students in Australia, the UK, and the US by helping them to score HD in their academics. Our Experts are well-trained to follow all marking rubrics and referencing styles.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.