Assessment 3 Information
Subject Code: ACC304
Subject Name: Taxation Law
Assessment Title: Case Studies
Assessment Type: Statement of Advice
Weighting: 30 %
Total Marks: 40 marks
Submission: Via Turnitin on MyKBS
Due Date: Monday of Week 13 at 19:55 (AEST)
Your Task
Your task is to analyse client information outlined in the three different case studies below and present the findings in three Statement of Advice (approximately 1,500 words).
1) You are required to prepare Lucy’s individual taxation return.
2) You are required to provide recommendations and tax calculations to Susan regarding the taxation implications and tax payable by the trustee for Megan and Isabel, the beneficiaries.
3) You are required to calculate the franking account and tax payable by Otago Pty Ltd.
For each question you are expected to:
1) identify the facts and issues for each case 2) apply the relevant legislation and/or case law.
Learning Objectives
After completing this Individual Assignment, you will be able to:
1) Research information about each question using tax cases and tax legislation.
2) Identify the main issues and make recommendations for each case.
3) Calculate taxes for an individual, a trust and a company.
Assessment Instructions
Statement of Advice 1 – Prepare a tax return for an individual taxpayer (10 marks for technical and calculation accuracy and relevance and 10 marks for writing style; refer to marking rubric for more guidance)
Your client Lucy has attended your office to have her 2021-year tax return prepared. Lucy is 52 years old, single resident taxpayer employed by Burwood Council as a clerk. Lucy is also a friend of yours.
She has the following documentation and admits that she is not good at keeping her receipts and invoices:
Payment Summary for the period 1 July 2020 to 30 June 2021 from Burwood Council.
Gross Wages $56,000
Allowances – Clothing $400
Tax withholding Deducted $12,000
Various receipts
Date Paid to Details Amount ($)
30 July 2020 Eastern Clothing Non-compulsory uniform
(registered design of Council) $380
1 September 2020 Foodbank Australia Donation $50
1 October 2020 Tax agent 2019 tax return fees $100
1 December 2020 Lim’s Computer Computer (est. 50% work use with 3 years effective life) $1,200
1 February 2021 Corp Bookshop Textbooks for clerical course $500
Other Information
1) Lucy estimated total $490 annual train ticket used to travel to and from work.
2) Lucy advises you she spent $600 on personal grooming which was essential for her job and insists that she claims this amount.
3) Lucy held $2,000 for the whole year in an interest-bearing account but insists that she did not receive any interest during the year. Lucy has not supplied any bank statements.
4) Lucy sold various shares on 20 June 2021 as follows.
• Apricot Shares (Australian company): purchased in January 1998 for $20,000 and sold for $55,000.
• Pear shares (Italian company): purchased in March 2019 for $7,000 and sold for $5,000.
• Cherry shares (Australian company): purchased in May 2021 for $9,000 and sold for $14,000.
Required
1) Calculate taxable income for Lucy. As the Tax Agent, what advice would you provide for the best outcomes in relation to depreciation, CGT method and general deductions for Lucy within Australian income tax law? You are required to explain all income & deduction details with section numbers and/or cases in your explanations.
2) Advise Lucy on the CGT consequences of the share sales. You must provide all methods available for her and choose the best method to minimise Lucy’s net capital gains.
3) As the Tax Agent, how would you handle the stance your client has taken in points 2 and 3,
Point 2: Lucy advises you she spent $600 on personal grooming which was essential for her job and insists that she claims this amount.
Point 3: Lucy held $2,000 for the whole year in an interest-bearing account but insists that she did not receive any interest during the year. Lucy has not supplied any bank statements.
You should refer to the Code of Conduct from Tax Practitioners Board. What is the principle involved? What do you recommend in each point?
Statement of Advice 2 – Advice on Trust income and distributions (10 marks for technical and calculation accuracy and relevance)
Your client Susan has attended your office to have her 2021-year tax return prepared. Susan is the trustee of an Australian resident trust estate created by a Trust Deed. She created the trust for the benefit of her daughters, Megan aged 19 years and Isabel aged 15 years. They are both residents of Australia.
The following information indicates the trading activities of the trust for the 2020/21 income tax year.
Receipts
Net income from trading activities $80,000
Fully franked dividend received $25,000
Proceeds from shares in Hub Ltd on 12 June 2021 $60,000 (the shares were purchased in 2005 at a cost of $20,000) Rental income $65,000
Expenses
Expenses incurred in generating rental income $55,000
Other information
Megan derived a salary of $17,000 while working casually at McDonalds.
Isabel received interest income of $2,000 from her savings account (savings account was established two years ago from $40,000 deposited from her grandfather as a gift). Isabel also received a salary of $9,000 working at Hungry Jacks during school holidays.
Required
Advise Susan the taxation implications (tax payable by the trustee and/or each beneficiary) under each of the alternatives (1) and (2) below.
1) Susan does not exercise any discretion as to the distribution of income during the year.
2) Susan distributes the trust net income to each beneficiary at 50% each.
Statement of Advice 3 – Calculate the franking account and tax payable by Otago Pty Ltd. (10 marks for technical and calculation accuracy; refer to marking rubric for more guidance)
Frank is a director of Otago Pty Ltd (Otago), an Australian resident private company, with a corporate tax rate for imputation purposes for the 2020/21 income year of 30%.
Frank provided you with the following information regarding the company’s franking account:
1 July 2020: Opening balance $500 credit.
29 July 2020: Paid 2020 tax year fully franked final dividend $7,000
28 February 2021: Paid 2021 tax year 60% franked interim dividend $9,000
30 April 2021: Received fully franked dividend from Australian company $4,500
28 June 2021: PAYG instalment paid relating 2020/21 tax year totalled $1,200
30 June 2021: Declared a fully franked dividend of $10,000 Otago had a taxable income of $16,000 for 2020/21.
Required
1) Prepare Otago Pty Ltd’s franking account for the 2020/21 tax year and explain any consequences arising from the franking account balance at 30 June 2021.
2) Calculate net tax payable (refundable) for the company.
Important Study Information
Academic Integrity Policy
KBS values academic integrity. All students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Academic Integrity and Conduct Policy.
• What is academic integrity and misconduct?
• What are the penalties for academic misconduct?
• What are the late penalties?
• How can I appeal my grade?
Click here for answers to these questions:
http://www.kbs.edu.au/current-students/student-policies/.
Study Helpance
Students may seek study Helpance from their local Academic Learning Advisor or refer to the resources on the MyKBS Academic Success Centre page. Click here for this information.
ACC304 Taxation Law
Assessment 3 Marking Rubric
/40 marks
Statement of Advice 1 (10 marks)
0 – 5 6 – 10 Achieved marks ( /10)
Has demonstrated limited achievement:
Correctly calculated some taxable income and allowable deductions items.
Stated some outcomes in relation to depreciation, capital gains tax methods and general deductions.
Struggled to articulate the correct capital gains tax consequences of the sale of shares.
Failed to address the tax practitioners code of conduct and principles involved. Has achieved all or most of:
Correctly calculated the taxable income and allowable deductions.
Stated the best outcomes in relation to depreciation, capital gains tax methods and general deductions.
Articulated the correct capital gains tax consequences of the share sales. Addressed the tax practitioners code of conduct and principles involved.
Statement of Advice 2 (10 marks)
0 – 5 6 – 10 Achieved marks ( /10)
Has demonstrated limited achievement:
Failed to correctly address the taxation implications of Susan not distributing trustee income for 2020/21.
Failed to correctly address the taxation implications of Susan distributing trust net income to each beneficiary at 50% each during 2020/21. Has achieved all or most of:
Correctly addressed the taxation implications of Susan not distributing trustee income for 2020/21.
Correctly addressed the taxation implications of Susan distributing trust net income to each beneficiary at 50% each during 2020/21.
Statement of Advice 3 (10 marks)
0 – 5 6 – 10 Achieved marks ( /10)
Has demonstrated limited achievement:
Either did not prepare or only partially prepared Otago Pty Ltd franking account for 2020/21.
Failed to identify any consequences arising from Otago Pty Ltd franking account balance as at 30th June 2021.
Either did not correctly calculate or only partially calculated correctly Otago Pty Ltd net tax payable for 2020/21. Has achieved all or most of:
Correctly prepared Otago Pty Ltd franking account for 2020/21.
Correctly identified consequences arising from Otago Pty Ltd franking account balance as at 30th June 2021.
Correctly calculated Otago Pty Ltd net tax payable for 2020/21.
All Statements of Advice Writing Style (10 marks overall)
0 – 5 6 – 10 Achieved marks ( /10)
Has demonstrated limited achievement:
Some sentences contain grammatical errors and typos, there are noticeable inconsistencies in the formatting, and the syntax makes some of the answers difficult to follow.
Has achieved all or most of:
The document does not contain any grammatical errors or typos, the formatting is consistent, and the syntax is articulate and legible.
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ACC304 ACC304 ACC304 ACC304 ACC304 ACC304 ACC304 ACC304
Taxation Law is the subject of this paper.
Case Studies is the title of the assessment.
Statement of Advice is a type of assessment.
30 percent weighting
Marks allotted: 40
Turnitin on MyKBS is used for submission.
Due Date: Monday of Week 13 at 19:55 (AEST)
Your Mission
Your task is to analyse client information outlined in the three different case studies below and present the findings in three Statement of Advice (approximately 1,500 words).
1) You are required to prepare Lucy’s individual taxation return.
2) You are required to provide recommendations and tax calculations to Susan regarding the taxation implications and tax payable by the trustee for Megan and Isabel, the beneficiaries.
3) You are required to calculate the franking account and tax payable by Otago Pty Ltd.
For each question
