TAX305: Taxation - Sam and Rachel Case Study - Accounting and Finance Assignment Help

Assignment Task

QUESTION ONE

Sam and Rachel operate a legal practice in partnership. The Partnerships receipts and payments (not including  GST) for the year ended 30 June 2019

REQUIRED  

Calculate the Partnership’s taxable income for the year ended 30 June 2019. Provide justification for your  calculations using legislation and case law. Assuming the partners only income was partners salary (note 3) and  partner distribution calculate each partner’s tax liability.  

QUESTION TWO

Max is your client and has come to you to prepare his tax return. During the 2018-19 financial year, Max disposed  of the following assets: 

(a) A two-storey residence at Stuart Park in which he acquired in May 1991. In 1995 Max vacated the premises to  work in Japan for three years, during this period the property was rented. Other than the 3 year period, Max  has lived in the property as his residence. He paid $370,000 to purchase the property and received $840,000  on 27 June 2019, after the real estate agent deducted commissions of $10,000. 

(b) Max sold vacant residential land originally purchased on 16 June 1984 for $300,000. He initially intended to  build a house on the land and rent the property. The land was sold for $500,000. The contract of sale was  entered into on 28 January 2019 and settlement is to take place on 30 August 2019. 

(c) A painting was purchased by Max for $5,500 on 1 June 2009 and sold for $30,000 on 30 March 2019. 

(d) Max purchased a luxury motor cruiser that he has moored at the Manly Yacht club in late 2004 for $90,000.  He sold it on 2 April 2019 to a local boat broker for $25,000. 

(e) Max bought BHP shares on 15 July 2018 for $25,000. He sold those shares on 2 May 2019 for $40,000. Max has capital losses he is carrying forward from previous years of $25,000. 

Max also received a salary of $90,001 from his position as the manager of an accounting practice. In addition,  Max’s employer awarded him a bonus of $2,500 for exceeding his employment targets.  

REQUIRED:  

Calculate Max’s tax payable for the year ending 30 June 2019. Provide justification for your calculations using  legislation and case law. 

QUESTION THREE

Michael established the “Jordan Family Trust” in 1990 with Jordan Pty Ltd as the corporate trustee. Michael is the  sole director of the trustee company. The trust holds a variety of investments in property and cash. The trust was  established to protect the investments as Michael is always concerned that he could be sued for negligence. 

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