The Operation of The Tax Law to A Commercial Transaction - Happy Solicitors Tax Case Study - Tax Law Assignment Help

Assignment Task

Assessment Task: Letter of advice on the operation of the tax law to a commercial transaction 
You have been tasked by the senior tax partner of Happy Solicitors to provide a letter of advice to two of her clients, Victoria and David Best. Victoria and David are siblings. You are to assume all transactions occur in the 20/21 income year.
The following are the list of facts they seek advice on:

• Victoria and David are single and do not have any children;
• They are both 32 years old and they both have private health insurance;
• They both work for their father, Daddy Best, who owns a real estate business;
• They both are paid $220,000 a year as senior real estate consultants;
• Victoria owns an investment residential property in Malvern East which she bought by borrowing $1.5 million from NAB bank on a 10 year loan at a fixed interest rate of 5%;
• She derived residential rental income of $25,000 for the 2020/21 income year and incurred interest only repayments of $75,000;
• David has an extensive share portfolio which he relies on for a second income stream as he needs cash because he is fond of placing large bets on sporting outcomes. He just lost a $100,000 bet on the outcome of the Goffin v Popyrin Australian Open Match as he assumed Goffin would win in straight sets. To meet his gambling obligations he is planning to sell his 1,000 shares in a large listed public company, BB Co Ltd, for $ 88,000 (ie $ 88 per share). He had purchased the BB Co Ltd shares in 2000 for $10 a share and had planned to hold the shares for many years to benefit from regular dividends.
• On 15 January 2021, BB Co Ltd paid David a dividend of $ 33,000 which had $ 12,000 of franking credits allocated to it. He also received an unfranked dividend of $10,000 from CC Co Ltd and another fully franked dividend from MM Co Ltd of $ 21,000.
• Victoria did better than David on the sports bet and actually predicted Popyrin would win so she now has a windfall of $22,000. She is wanting to know if it’s a good idea to put the money into her complying SuperFund and if there are any tax benefits for doing so.
• Both Victoria and David have a HECS-HELP of $25,000 from their undergraduate property management degree
• Advise Victoria and David of the tax consequences of the above facts. It is unnecessary to calculate tax liability as you will need to seek further instructions from all parties to clarify their position.

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