taxation law

HA3042 Taxation Law Individual Assignment T2.2020

HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION

Assessment Details and Submission Guidelines

Trimester T2 2020

Unit Code HA3042

Unit Title Taxation Law

Assessment Type Assignment

Assessment Title Individual Assignment

Purpose of the assessment (with ULO Mapping)

Students are required to follow the instructions by your lecturer to confirm any

relevant information. You also need to follow any relevant announcement on

Blackboard to confirm the due date and time of the assignment.

The individual assignment will assess students on the following three learning

outcomes, as listed below:

1. Practical skills and knowledge of tax law concepts (e.g. Income and Deductions and CGT) (ULO 1). 2. Ability to analyse tax law issues (ULO 2). 3. Ability to apply legal tax principles (ULO 3).

Weight This assignment assessment accounts for 25% of the total marks in this unit.

Total Marks This assignment assessment accounts for 25 marks of total marks in this unit.

Word limit Maximum 2,000 words (acceptable to be 10% above or below this word limit)

Due Date Friday 25th September, 23:59 pm

HA3042 Taxation Law Individual Assignment T2.2020

Submission Guidelines

Instructions: Please read the following information carefully to avoid mistakes.

• Answer all questions.

• This assignment along with a completed Assignment Cover Page is to be

submitted on Blackboard by the due date in soft-copy only.

• The self-check links are no longer available as a separate link in each unit’s

assessment. Students are now limited to attempt any given assignment

submission a maximum of three times. After every attempt you will receive a

SafeAssign originality report with Blackboard Learning Management System.

This will provide detailed information about the matches found between your

submitted works and existing sources.

• The assignment is to be submitted in accordance with assessment policy stated

in the Unit Outline and Student Handbook.

• It is the responsibility of the student submitting the work to ensure that the work

is in fact his/her own work. Incorporating another’s work or ideas into one’s own

work without appropriate acknowledgement is an academic offence.

• The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers

* Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style. You also must refer to relevant legislation and/or case law in your answer.

* Note: Assessment task is set around the work that you have done in class. You are not expected to go outside the content of the unit but you are expected to explore it.

HA3042 Taxation Law Individual Assignment T2.2020

Individual Assignment Specifications

Purpose:

This individual assignment aims to assess students on learning outcomes 1 to 3 as mentioned above. This assignment covers the following key topics: Specific Deductions, Individual Income Tax and Fringe Benefits Tax (FBT). Students need to research these three topics, as stated above, and apply their knowledge from the relevant weeks 1 – 8, before attempting these questions.

The Assignment Structure should be as follows:

QUESTION 1 DEDUCTIBILITY / NON-DEDUCTIBILITY IMPLICATIONS Weighting

General Deductibility Rules for Repairs 1 Mark

Identification of the case assisting in the decision making of this question. 1 Mark

Thorough yet succinct discussion of the considerations required for repairs 1 Mark

Thorough yet succinct discussion on cases where expenses are not considered as repairs and therefore, no deduction is available.

1 Mark

Apply the rules and cases above and provide a conclusion on the deductibility of expenses.

1 Mark

QUESTION 1 TOTAL MARKS

5 MARKS

QUESTION 2 CALCULATION OF TAXABLE INCOME AND NET TAX PAYABLE Weighting

QUESTION 2 TOTAL MARKS (Marks as per the table provided in the question)

10 Marks

QUESTION 3 FBT IDENTIFICATION 10 MARKS

FBT identification and reasoning for each option (5 cases)

5 x 2 Marks

QUESTION 3 TOTAL MARKS 10 MARKS

HA3042 Taxation Law Individual Assignment T2.2020

HA3042 Assignments Instructions and Requirements

QUESTION 1 (5 MARKS)

Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premises

was unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided that

it was not feasible to stop operations to repair the chimney, so they gained permission to build an

alternative chimney adjacent to the old chimney, thereby allowing production to continue. They found

that although the new chimney was substantially the same size and make as the old one, it was

cheaper to build than it would have been to repair the old one. Also, the new chimney can better

ventilate the weather, which was not available in the previous one. After the new chimney was

erected, the old chimney was demolished.

Is any amount allowable as a deduction for the cost of the new chimney?

QUESTION 2 (10 MARKS)

Anushka (an Australian Tax resident) works as an employee for a child care centre, Brilliant Kids

Pty Ltd, on a permanent part-time basis while she runs her business as a day carer for her own

customers. Meanwhile, she invested some of her extra cash in some shares on the ASX and in an

Australian private company. Listed below is the summary of her earnings for the year ended 30

June 2020.

Particulars $

Net Salary Received from Brilliant Kids for the year (Tax paid by company to ATO during the year is $29,000)

81,000

Net Business Profit as a sole trader (Day Carer) 30,000

Allowable Deductions on Employment (Uniforms, Laundry, Shoes) 5,000

Fully Franked Dividend 7,000

Unfranked Dividend from a private company 1,200

HA3042 Taxation Law Individual Assignment T2.2020

Required:

Calculate Anushka’s taxable income and net tax payable (Ignore Medicare Levy and Medicare

Levy Surcharge if any).

(Please use the following table to complete your response to this question in the spaces provided)

Particulars Answer Marks

Net Salary Received 0.5 mark

Add Back Tax Paid 0.5 mark

Net Business Profit 0.5 mark

Fully Franked Dividend 0.5 mark

Add Back Franking Credit 1 mark

Unfranked Dividend 0.5 mark

Assessable Income 1 mark

(Allowable Deductions) 0.5 mark

Taxable Income 1 mark

Tax Payable 2 marks

Less Refundable Tax Offsets

PAYG Withholding 0.5 mark

Franking Credits 0.5 mark

Net Tax Payable 1 mark

Total Marks 10 marks

QUESTION 3 (10 MARKS)

Discuss the Fringe Benefits Tax (FBT) implications of the following cases (a) – (e):

(Note - No calculations are needed. Only answer whether the employer is liable for FBT or not and

why or why not)

(a) An employer provides a Christmas lunch at a local restaurant, costing $1,000, for 10 of its key

employees. (2 marks)

(b) A sporting club, which pays its honorary treasurer an honorarium of $5,000 per year, providing

a car to him. The car is used 90% for club business. The treasurer has a full-time job at the local

hospital. (2 marks)

(c) An employer gives each of its 15 staff a leg ham each valued at $60 for Christmas. (2 marks)

(d) An employer allows its staff to take home their laptop computers. It is estimated that only half

the work done at home is business related. (2 marks)

(e) A company director, not in receipt of any remuneration from the company, uses the company’s

two-tonne truck while undertaking renovations to his own home. (2 marks)

HA3042 Taxation Law Individual Assignment T2.2020

HA3042 - Individual Assignment - Marking Rubric

Criteria Excellent Very Good Good Satisfactory Unsatisfactory

For Question 1, students need to answer the following elements correctly

General Deductibility Rules for Repairs

Student knows how to use the ITAA 1997, know how to apply the law to the Furnaces’ deductibility of the commercial kitchen expenditure.

Very good identification of the Furnaces’ deductibility of the commercial kitchen expenditures and discussion of the issues.

Majority of relevant issues identified and discussed in relation to the given scenario.

The area of deduction law is correctly identified but the statement does not clearly describe the legal problem/s and conclusions that need to be addressed in relation to the given scenario.

The relevant area of law in relation to the given scenario is not identified.

Identification of the case assisting in decision making in this question.

The relevant legal case in relation to the Furnaces’ deductibility of the chimney expenditures is clearly explained and their correct source of authority is given.

Similar yet relevant legal case in relation to the Furnaces’ deductibility of the chimney expenditures is clearly explained and their correct source of authority is given.

Close enough yet relevant legal case in relation to the Furnaces’ deductibility of the chimney expenditures is clearly explained and their correct source of authority is given.

Some identification of legal case in relation to the Furnaces’ deductibility of the chimney expenditures is explained but their correct source of authority is not given.

No relevant legal cases in relation to the deductibility of the given scenario have been identified and no correct source of authority is given.

Thorough yet succinct discussion on considerations required for repairs

The discussion is a clear and comprehensive analysis of the relevant legal principles in relation to the Furnaces’ deductibility of the furnace expenditures.

Very good discussion and analysis of the relevant legal principles in relation to the Furnaces’ deductibility of the furnace expenditures.

Good discussion and analysis of the relevant legal principles in relation to the Furnaces’ deductibility of the furnace expenditures.

The discussion considers some of the relevant legal principles but does not apply those principles to the key facts to support logical arguments in relation to the given scenario.

The discussion of the facts does not refer to any relevant capital gain legal principles in relation to the given scenario.

Thorough yet succinct discussion on occasions where expenses are not considered as repairs and therefore, no deduction is available.

All relevant legal principles in relation to the Furnaces’ non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given.

Most of the relevant legal principles in relation to the Furnaces’ non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given.

Some of the legal principles in relation to the Furnaces’ non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given.

Few identifications of the legal principles in relation to the Furnaces’ non-deductibility of the chimney expenses is clearly explained but the correct source of authority (section of Act or relevant case) has not been cited.

No relevant legal principles in relation to the given scenario have been identified.

Apply the rules and cases above and provide conclusion on deductibility of expenses.

Student knows how to use the ITAA 1997 in relation to the Furnaces’ deductibility of the chimney expenditures, and know how to apply the law in a real scenario.

Very good identification of the consequences in relation to the Furnaces’ deductibility of the chimney expenditures and discussion of the issues.

Majority of relevant issues identified and discussed in relation to the given scenario.

The area of law in relation to the Furnaces’ deductibility of the chimney expenditures is correctly identified but the statement does not clearly describe the legal problem/s and conclusions that need to be addressed.

The relevant area of law in relation to the given scenario is not identified.

HA3042 Taxation Law Individual Assignment T2.2020

For Question 3, students need to answer the following parts correctly for each part

FBT implications and reasons

The response is correct and accurate discussion to support the response is provided with reference to at least one case.

The response is correct and accurate discussion to support the response is provided but no reference to at least one case is provided.

The response is correct and some discussion to support the response is provided but no reference to at least one case is provided.

The response is correct but no reasoning and case referral is provided.

The response is incorrect and no reasoning and case referral is provided.