Taxation Law

TAX 305 TAXATION LAW

ASSIGNMENT 1 – WRITTEN ASSIGNMENT VALUE: 30% OR 30 MARKS

WORD COUNT: 2,000. 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

19 September 2019

 

 

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

1. Additional research IS required for this assignment.

 

 

Case Study 1 – Residency

Part A

Rachel is a medical practitioner and has always lived and worked in her hometown of London. Rachel is a citizen of the United Kingdom. Rachel was offered a full-time position as a doctor for a hospital in Perth, Australia for a period of 12 months. Rachel signed the contract of employment before she left

London. Rachel is married and with two young children. Rachel’s spouse and children will join her in Perth. Rachel’s spouse will not be working while in Perth. Rachel moved out of the family’s apartment in London and placed all their belongings in storage.

As part of the employment contract the Perth hospital offered Rachel the use of a fully furnished apartment at no expense during her stay. Rachel arrived in Perth on 1 December 2018 and her employment contract will expire on 1 December 2019. Rachel lived in the provided apartment for the whole length. The family always had the intention of returning home to London.

During the income tax year ended 30 June 2019, Rachel earned interest on a bank account held in

London of $2,500 (EUR); salary and wages from her work in London prior to 1 December 2018 $45,000 (EUR); and salary and wage income from her Perth job of $120,000 (AUD)(including PAYG withheld). Rachel had PAYG withheld of $34,500 (AUD) from the Australian salary. Rachel had deductions of $3,200 (AUD) directly connected to her employment with the hospital.

Required:

• Discuss with reference to legislation, case law and/or rulings (where relevant) whether Rachel would be considered a resident of Australia for tax purposes for the income year ended 30 June 2019. Further to this discuss the source of income principles, state which amounts would be included in her assessable income for the year.

 

Part B

John was born in Melbourne Australia and study engineering at a University in Victoria. On completion of his degree, John was offered a fulltime job in Brunei. John did not renew his lease in Melbourne and organized for all his personal belonging to be sent to Brunei. On arrival in Brunei (July 2016) John leased an apartment for 12 months. John had no family ties to Australia. He had also closed his bank accounts in Australia and opened a new bank account with a Brunei bank. After 12 months John renewed his lease for a further 12 months (lease ending 30 June 2019). During the entire period John remained in Brunei.

Required

• Discuss whether John is an Australian resident for tax purposes during the financial years

2017/18 and 2018/19. In addition to referring to the four relevant tests ensure you refer to Harding v Commissioner of Taxation [2019] FCAFC 29

 

 

(Part A 10 marks)

(Part B 5 marks) Word Count: 1000 words

 

 

Case Study 2

Part A

Nadine paints landscape art to relax as her work as an accountant is often stressful. A friend see’s Nadine’s art and suggest she should sell them at the markets. Nadine enquires with the market to obtain a stall and displays three pieces of Art. Nadine does not label a price on the artwork and places a sign saying all offers will be considered. Nadine only attends the market stall when she has paintings to sell and makes no efforts to advertising her stall. She states her purpose has not changed from the artwork merely being a method to reduce her stress.

In the 2019 income year, Nadine receives $4,500 in total from artwork sales. Not including her time, the total material cost for the artwork sold is $800.

Required:

Discuss with reference to appropriate legislation, case law and/or rulings whether Nadine is carrying on a business for taxation law purposes in the 2019 income year. Note any circumstances which may alter your view

(5 marks)

Word Count: 500 words

 

Case Study 3

Sam is an accountant with her own practice. Sam is registered for GST and her receipts and payments (not including GST) for the year ended 30 June 2019 are as follows:

Receipts

$

1. 450,000 Professional fees

1. 10,000 A wedding gift received from a client

1. 10,000 An advertising incentive received from a publishing company to include their name at the bottom of her letterhead

1. 34,000 Salary received from part-time lecturing at the University ($6,000 in PAYG W)

1. 5,000 Interest on Bank Deposits

1. 15,000 Lottery win

Payments

$

1. 14,000 Office rent

1. 10,000 Payment to the cleaning contractor

1. 50,000 Salary paid to employee secretary

1. 18,000 Purchase of new photocopier

1. 1,400 Cost of meals and entertainment for herself and clients

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

1. 2,200 Rates on family home

1. 900 Electricity for family home

1. 25,000 Advertising packaging for her business

Notes

Sam had a carry forward past year tax loss of $12,000. Sam has no spouse or children and also does not have private hospital insurance.

 

REQUIRED

Calculate Sam’s tax liability for the year ended 30 June 2019.

(10 marks)

Word Count: 1000 words

 

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