TPB601TA: Susan - Denko Pty Ltd Case Study - Law Assignment Help

Assignment Task

Activity 1
Susan is a registered tax agent. For each of the following scenarios, identify which principles of the Code of Professional Conduct issued by Tax Practitioners Board (TPB) have been breached and explain how to avoid similar breaches in the future.  Support your answers with tax legislation or case law.
1. Susan has been engaged by ABC Ltd to prepare its income tax return. Later Susan finds that ABC Ltd and her husband had entered into a business venture before she accepted the engagement.  

2. Susan has employed Sam to process data for a client CBD Ltd. Sam has disclosed a list of the customers of CBD Ltd to his uncle, who is a competitor of CBD Ltd.

3. One of Susan’s clients received a favourable private ATO ruling in relation to the deduction of education expenses. Susan shows the private ruling to one of her clients, who tries to claim similar deductions. 
Task outcome: Identify and explain ethical considerations and legislative requirements relevant to the preparation of tax documentation for legal entities, including: responsibilities of tax agents including Code of Professional Conduct obligations under the Tax Agent Services Act (TASA) and Tax Agent Services Regulations (TASR).

Activity 2
Outline and explain key accounting principles and practices when reconciling accounting profits with taxable profits for the different types of legal entities.

Activity 3
Briefly explain the Australian tax law implications of each of the following scenarios, by citing relevant tax legislation and case law where appropriate.
1. James received a lump sum payment from the Daily Newspaper in full settlement of an action for defamation. Is this amount assessable income and provide the explanation?

2. AAB Ltd is a marine and boat manufacturer and has incurred costs of $200,000 on feasibility studies for a new marine engine. Will this expense deductible under s8-1 ITAA97? If not, can it be deductible under specific section and the timeframe for the deduction?

Task outcome: Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: the key aspects of income tax law covering concepts of residence and source, related elements of international tax, assessable income, deductions, tax rebates and offsets, and tax accounting.

Activity 4
Identify the relevant elements of Australian tax law in the following scenario and document the tax payable by James for the tax year 2018/19. Show your workings.

• On 1 July 2018, James sold some jewellery for $5,000 which he bought on 1 April 2016 for $2,780.
• On 1 August 2018, James sold his camera for $22,000 which he bought on 15 June 2016 for $23,000.
• On 5 October 2018, James sold a painting for $950 which he bought on 4 April 2010 for $480.
• On 8 November 2018, James sold CBA shares for $49,500 which he bought on 30 June 2017 for $42,400 (net costs).
• On 30 June 201, James receives interest income of $24,000

Task outcome: Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: the key aspects of taxes that extend the ordinary income tax base, including relevant principles and application of the capital gains tax (CGT) and fringe benefits tax (FBT) rules.

Activity5
Simpsons and Associates is a law firm which has provided the following benefits to its employees for the 2018/19 FBT year. The turnover for the firm is $12M. 
Identify the relevant elements of Australian tax law in the following scenario and document the FBT payable by Simpsons and Associates for the tax year 2018/19. Show your workings by embedding your spreadsheet or table below.

• James was provided with a Toyota which is parked at James’s home. The car was bought by the company on 1 April 2015 for $48,500 (GST inclusive), including $1,900 for registration and compulsory third party insurance. 
• Susan and her family were given a weekend trip to Hunter Valley costing $3,500 (GST inclusive).
• Brad was provided with a loan from the company for $200,000 on 1 August 2018 and paid 2% per annum interest on the loan. The bank interest rate is 7.5%.
• Louis was provided car parking at the office car park. Wilson Parking is located within a one kilometre radius of where Louis’s car is parked and charges a fee of $25 for all day parking.

Task outcome: Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: the key aspects of taxes that extend the ordinary income tax base, including relevant principles and application of the capital gains tax (CGT) and fringe benefits tax (FBT) rules.

Activity 6
Jason and Robert are planning to open a furniture and homewares store with two employees. The projected turnover will be $200,000. 
Jason and Robert seek advice from you in relation to the advantages and disadvantages of conducting their business through a partnership or a company. 
Provide three advantages and three disadvantages from a tax perspective for choosing either a partnership or a company as their organisational entity. Provide organisational policy reasons and support your answers by citing relevant tax legislation, where applicable. 

Task outcome: Describe the key features of organisational policy and procedures relating to the preparation of tax documentation for legal entities.

Activity 7
Explain key elements of Australian tax law as it relates to each of the following scenarios by determining whether it is an example of either tax planning, tax avoidance or tax evasion.Support your answers by citing relevant tax legislation, where applicable. 
a) Janise is an Australian resident and did not report the rental income of HK$144,000 (for tax year 2018/19) earned from an investment property which is located in Hong Kong. 

b) Ken and Judy own Advance Technology Ltd. Advance Technology provides an interest free loan of $250K to Ken on 1 October 2018 which is not repaid on 30 June 2019. 

c) Michael Brown is the sole director of Brown Pty Ltd. Brown Pty Ltd received consultant fees of $155,000 from ABC Ltd and the total fee earned for the tax year 2018/19 was $170,000. The consulting service was performed by Michael. ABC Ltd provided Michael an office and the required equipment. 

d) William and Sandy decide to buy an investment property and set-up a discretionary trust to hold the property, in order to allocate higher tax benefits to William. 

Task outcome: Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: specific and general anti-avoidance tax rules.

Activity 8
Alice travelled to the UK and commenced a job there on March 7. She left that job on June 3 to return to Australia. 
Describe the source of Australian tax law which would determine if the salary earned by Alice in the UK is exempt from tax in Australia. Is Alice exempt?
Task outcome: Describe the key sources of information and taxable transactions data required to calculate taxable income, including: allowable deductions; capital gains; financial adjustments such as write-offs and revaluations; income; payments; purchases; superannuation payments.

Activity 9
Taxpayers are required to be aware of the effect of taxation rulings when they are preparing tax documentation. Identify and explain, in your own words, the relevance of taxation ruling TR92/15 when an organisation is preparing FBT returns.

Task outcome: Identify and explain ethical considerations and legislative requirements relevant to the preparation of tax documentation for legal entities, including: Commissioner of Taxation's interpretive guidance in Rulings and Determinations.

Activity 10
Denko Pty Ltd manufactures performance motor cycles. During the year, it determined that it could not collect payment in respect of a motor bike it sold to a dealer three years ago. Since then, the company no longer manufactures performance motor cycles and instead makes motorised scooters.
Describe the source of Australian tax law which would determine if the company can claim a deduction for the bad debt write off.

Task outcome: Describe the key sources of information and taxable transactions data required to calculate taxable income, including: allowable deductions; capital gains; financial adjustments such as write-offs and revaluations; income; payments; purchases; superannuation payments.

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