Unit Name\/Code\tTax Law\/BACC3004
\nAssessment Type \tAssignment
\nAssessment Number \t2
\nAssessment Name \tAssignment
\nUnit Learning Outcomes Assessed\tLearning outcomes\tGraduate attributes
\n1. Describe the taxation framework in Australia and identify the concepts and principles that underpin Australian Tax Law.\tCommunication: The ability to communicate effectively, both orally and in writing, with a diverse range of audiences
\nResearch: The ability to conduct thorough, accurate and targeted research
\n2. Explain how the main tax laws and regulations in Australia have been applied and identify the body of case law that informs current interpretations of the taxation regime.\tResearch: The ability to conduct thorough, accurate and targeted research
\nCritical thinking and problem solving: The ability to address and solve problems creatively and in a structured and methodical way
\nFlexibility: The ability to critically assess and evaluate different approaches to issues and problems
\n3. Recognise, describe and analyse taxation issues and concepts with regard to problems encountered in commercial settings.\tResearch: The ability to conduct thorough, accurate and targeted research
\nCritical thinking and problem solving: The ability to address and solve problems creatively and in a structured and methodical way
\nFlexibility: The ability to critically assess and evaluate different approaches to issues and problems
\n4. Demonstrate an understanding of substantive areas of taxation law including income tax, goods and services tax and fringe benefits taxes.\tFlexibility: The ability to critically assess and evaluate different approaches to issues and problems
\n5. Discuss the role and responsibilities of accountants with regard to taxation law and the preparation of taxation documents.\tCommunication: The ability to communicate effectively, both orally and in writing, with a diverse range of audiences
\nEthical behavior: The ability to identify and understand ethical problems and demonstrate ethical behaviour<\/p>\n
Due Date and Time<\/p>\n
Week 8
\nFriday 5pm
\nWeighting \t30%
\nAssessment Description<\/p>\n
This assignment explores practical issues in taxation law. It is important for you to have time to think through how to structure and present arguments.
\nDetailed Submission Requirements<\/p>\n
Individual<\/p>\n
Question 1 (10 marks)<\/p>\n
During the income year ended 30 June 2019\/20 Nicholas, a resident, received salary and wages income of $35,000, interest income of $3,000, an exempt compensation payment of $23,000, commission income of $4,000, a Living Away from Home Allowance (LAFHA) of $20,000, an Overtime Allowance $2,000 and a rental loss of $9,000. Assuming that he has PAYG (W) of $6,000. Ignore tax offsets.<\/p>\n
Required: what is Nicholas tax payable \/ refund (Please show all workings)?<\/p>\n
Question 2 (10 marks)
\nThe Disco Biscuit Company is a resident company that owns and operates a car dealership. During the year, the company has provided the use of a car to a number of people. The details are shown below. For each of the below transactions, explain by referencing to legislation and case laws applicable whether the provision of the vehicle represents a fringe benefit.
\na.\tMary, the wife of Damon who is a salesperson of the company, received a car to use.
\nb.\tGabby operates the business of providing an advertising consulting services to clients. The Disco Biscuit Company gives Gabby the use of a Mercedes for her services provided to it instead of paying a fee for her service upon their mutual agreement.
\nc.\tNigel, a salesperson, receives the use of a Lexus, a luxury car.
\nd.\tTristan, the managing director, is given the use of a Jaguar (car) instead of receiving a director\u2019s fee.<\/p>\n
Question 3 (10 marks)
\nDuring the 2019\/20 income year, Maxwell Johnson, sold various assets that realized capital gains and losses as follows:
\nItems\tAmount ($)
\nLoss on sale of motor vehicle\t5,600
\nGain on sale of yacht (cost base not indexed)\t21,900
\nGain on sale of antique crockery (indexed cost base)\t13,900
\nLoss on sale of jewelry\t1,300
\nGain on sale of land held as an investment (cost base not indexed)\t24,000
\nGain on sale of family home (cost base not indexed)\t38,000
\nLoss on sale of shares\t19,300
\nGain on sale of rental property (indexed cost base)\t21,000
\nGain on sale of rare comic book collection (cost base not indexed)\t7,500
\nCapital loss from a previous year from the sale of shares\t6,400
\nIn each case above, the asset has been held by Maxwell for more than 12 months and the relevant minimum cost thresholds have been exceeded.
\nRequired: calculate the minimum net capital gain that Maxwell is required to include as assessable income for the 2019\/20 income year.<\/p>\n
Assessment
\nSection Requirements\tWeight 10%\tHIGH DISTINCTION
\n100-85%\tDISTINCTION
\n84-75%\tCREDIT
\n74-65%\tPASS
\n64-50%\tFAIL
\n49-0%
\nStructure
\nN\/A\tMark<\/p>\n
Content
\nN\/A\tMark<\/p>\n
Format, Grammar, Presentation and Referencing<\/p>\n
N\/A<\/p>\n
TOTAL MARK\t30\tOverall comments:<\/p>\n
Question 2
\n2a.
\nThe use of the company by Mary amounts to a fringe benefit. In this case, since Mary is the wife to Damon, who is an employee of Disco Biscuits Company, means that Damon has received the company car hence he is subject to fringe benefit tax. The subject matter in this case is the company car and Damon being an employee he was allowed by the company to let his wife use the car. Therefore, in this case, this amounts to a fringe benefit as per the provision of section 7 (1) (a) (i) Division 2 of the Fringe Benefits Tax Assessment Act 1986. The section states that car benefits apply when an employee or an associate of the employee uses an employer\u2019s car for personal use.
\n2b.
\nIn this case, Gabby is a consultant to Disco Biscuit Company and has an agreement with the company to be offered a Mercedes Benz for the services provided. Gabby, in his capacity as a consultant does not make him an employee of Disco Biscuit Company which also exempts him from fringe benefit which is mainly accorded to employees of a particular company.
\n2c.
\nNigel is an employee of Disco Biscuit Company, hence receiving a luxury car amounts to a fringe benefit. The company is allowing Nigel to use the car for personal use as well as the car is a luxury car and not a commercial vehicle. If it were a commercial vehicle to use in his capacity as a sales person this would not have amounted to a fringe benefit to him. The decision in this section is based on the provisions of Section 8 (2) (a) of the Fringe Benefit Assessment Act 1986, where a car may be exempted from fringe benefits is it is a van, or utility truck designed to deliver or carry a load of less than one tonne.
\n2d.
\nTristan, the managing director receiving the use a Jaguar instead of a director fees means his employment benefits are enjoyed in the form of using a company\u2019s car. Therefore, this means he will be using the company\u2019s car for personal use which results into a fringe benefit and this may be assessable as a car benefit and not employment income under the Income Tax Assessment Act 1936 (Fringe Benefit Tax Assessment Bill 1986).
\nQuestion 3
\nMaxwell Johnson
\nNet Capital Gains for 2019\/2020
\nAmount ($)
\nGains subject to Capital Gains Tax
\nGain on sale of antique crockery (indexed cost base)\t 13,900.00
\nGain on sale of land held as an investment (cost base not indexed)\t 24,000.00
\nGain on sale of rental property (indexed cost base)\t 21,000.00
\nGain on sale of rare comic book collection (cost base not indexed)\t 7,500.00
\nTotal capital gains\t 66,400.00<\/p>\n
Less Capital Losses
\nLoss on sale of jewellery\t1300
\nLoss on sale of shares\t19300
\nCapital loss from a previous year from the sale of shares\t6400
\nTotal capital losses\t 27,000.00<\/p>\n
Minimum net capital gain\t 39,400.00<\/p>\n
Notes
\nAll assets are not subjected to capital gains tax. Capital gains tax is applicable on shares, units and similar investments, cryptocurrency, leases, goodwill, licenses, foreign currency, contractual rights, and major capital improvements made to land or pre-CGT assets collectables and personal use assets above a $10,000 Chung 35). Capital gains tax is exempt on depreciating assets, main residence, personal use items less $10,000, and collectables less $500.
\nLoss on motor vehicle has not been considered in the computation of net capital gains since the motor vehicle is a depreciating asset and depreciating assets are exempt from capital gains taxes. Also, gain on the sale of a yacht not been used to compute the net capital gain since it is a personal use item which is exempt from capital gains tax. Moreover, the family home is exempted from capital gains since it represents the main residence of Maxwell Johnson. All other assets have been used in the computation of the Capital gains tax since they are subject to capital gains taxes.<\/p>\n
Works Cited
\nChung, Eddie. “The absolute beginner’s guide to capital gains tax.” REIQ Journal May 2017 (2017): 35.
\nFringe Benefit Tax Assessment Bill 1986.
\nFringe Benefits Assessment Tax Act 1986.
\nIncome Tax Assessment Tax Act 1997.<\/p>\n","protected":false},"excerpt":{"rendered":"
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