Taxation Law

College of Business and Law

LAW 511 TAXATION LAW

ASSIGNMENT 1 - WRITTEN ASSIGNMENT

VALUE: 30% OR 30 MARKS

WORD COUNT: 1,500 - 2,500. THIS INCLUDES ALL FOOTNOTES AND

REFERENCES. (10% margin under or over)

This assignment may be submitted on or before 11.59pm (ACST), Study

Week 8

03 May 2020

 Submit your Assignment using Word or PDF file format

 The assignment must be lodged online via Learnline Assignment Lodgement link.

 Assignment lodgements will be acknowledged automatically on the Learnline site, on submission.

 Citations: The CDU Harvard or AGLC referencing styles may be used, as long as you choose one style and use it consistently.

 Additional research IS required for this assignment.  Further questions: Post your questions on the discussion board.

College of Business and Law

UNIVERSITY PLAGIARISM POLICY

Plagiarism is the unacknowledged use of material written or produced by others or a rework

of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend.

Plagiarism policy is available at:http://www.cdu.edu.au/governance/doclibrary/pol-001.pdf and

Student Breach of Academic Integrity Procedures http://www.cdu.edu.au/governance/doclibrary/pro-092.pdf.

EXTENSIONS AND LATE LODGEMENTS

Extensions

An Application for Assignment Extension or Special Consideration should be completed and provided to the Dean, College of Business and Law.

This application form, explanation and instructions is available on the Learnline course site or direct from

http://learnline.cdu.edu.au/units/lb_school_templates/deployed/assignment_extension.docx

Please note that it is now College policy that all extension requests must be approved by the Dean. The lecturer is not able to personally approve extension requests.

Leaving a request for an extension, special assessment or special consideration until the last moment, based on grounds that students could have reasonably been able to foresee, may result in the application being rejected.

Late lodgement

Late lodgements are subject to a penalty of 5% of assignment marks per day. Partially

completed assignments will be accepted with appropriate loss of marks for the incomplete portion.

College of Business and Law

Case Study One -

Part A

You are currently working as a graduate accountant and are provided with the following information

from a client. The client, Harry, has the following income and expenses for the financial year ended

30 June 2019. Harry Operates a market stall selling paintings on the weekend and works as an

employee for an Art Gallery during the week.

Income

$

• 50,000 Sales of Paintings

• 10,000 A wedding gift received from his employer

• 10,000 Bonus received from his employer for finalising a sale with a large client

• 150,000 Salary received from his employer (including PAYG Withholding of $25,000)

• 5,000 Interest on Bank Deposits

• 15,000 Lottery win from a weekly lottery

• 45,000 Sale of his personal motor vehicle (he brought the vehicle for $35,000)

• 15,000 Sale of shares (he brought the shares 13 months ago for $5,000)

• 1,000 Received Manager of the year award from the Institute of Managers

Expenses

$

• 4,000 Rent on market stall

• 10,000 Purchase of paintings for market stall

• 2,000 New suit and shoes for work at the Gallery

• 5,000 Bookkeeping fees

• 18,000 Purchase of new photocopier

• 1,400 Cost of meals and entertainment

• 1,200 Train fares for travel to and from work

• 2,200 Rates on family home

• 900 Electricity for family home

• 2,000 Advertising packaging for market stall business

 85 Taxi Fare – from work to home one way after working back and missing his

Train.

• 10,000 Purchase new table and counter for market stall

Harry does not have a spouse or children. Harry does have private health insurance. Harry also

advises you that he had carried forward tax losses from last year of $5,000 relating to his market stall.

In addition to the above Harry advises he does store some of the paintings for the market stall at

home and also works from home.

College of Business and Law

Required:

• Determine which Income and Expenses are assessable income or allowable deductions.

Note you will need to cite legislative references, case law and tax rulings as applicable.

Emphasis is on providing substantiation for you reasoning to include as assessable income or

allowable deduction. Also refer to the relevant item number on the 2019 tax return where the

amount would be disclosed, i.e. (interest income is item 10). An Example format is provided

below.

• Assume Harry is a resident for Australian taxation purposes, calculate his tax liability including

any tax offsets and levies.

EXAMPLE FORMAT

Income Assessable Particulars Legislation, Case law, Rulings,

Reasoning Item – 2019 Tax Return

Y/N Expenses Deductible Particulars Legislation, Case law, Rulings,

Reasoning Item – 2019 Tax Return

Y/N

Part B

During your meeting with Harry, he advised that he is considering working outside of Australia for an

extended period. Advise Harry on residence issues for Australian taxations purposes. In addition to

referring to the four relevant tests (including reference to relevant cases for each test) ensure you

refer to Harding v Commissioner of Taxation [2019] FCAFC 29. This part of the case study should take

the format of a formal advice to Harry (“IRAC”).

(Part A 15 marks)

(Part B 10 marks)

Word Count: 1,000 - 2000 words

College of Business and Law

Case Study 2

Diamond Co Pty Ltd is a private company which currently operates a Diamond mine on a number of

mineral leases in Western Australia. A new geologist with the company has advised management that

during his university studies he identified the area of land covered by the mineral leases as being a

valuable site to explore for Uranium. Management decides to budget $1 million to prepare a feasibility

study into exploring for Uranium. Management does note that Australia currently has a no new Uranium

mine policy which will need to be lifted before any Uranium mining could commence.

Required:

Discuss with reference to appropriate legislation, case law and/or rulings whether the feasibility expense

will be an immediate deduction for Diamond Co Pty Ltd. Focus should be on whether the Uranium

proposal is a new business or part of Diamond Co Pty Ltd’s current business. Note reference should

be made to Softwood Pulp and Paper Ltd v FCT (1976) 7 ATR 101, ensure to reference other relevant

cases as well. IRAC format should be used to answer this question.

(5 marks)

Word Count: 500 words