LEGL602 TAXATION LAW
THOMAS MORE LAW SCHOOL
NORTH SYDNEY – SEMESTER 1, 2017
All assignments must be typed in Arial, size 11, 1½ spacing, justified (align to both left and right), have the standard cover sheet and be signed by the student stating that the work is original. While referencing sources used for this assignment, you must follow the Australian Guide to Legal Citation (AGLC) (the footnote system).
The maximum length for this assignment is 1,500 words. You need all answer all THREE parts.
Students are advised that any materials submitted for assessment is subject to electronic checking for originality. Students must submit an electronic copy via turnitin at LEO no later than 11:59pm of Thursday, 25/04/2017 (week 8). Penalties will be imposed for late submission without prior permission.
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Jim carries on income producing activities in two different locations. During the week he works as a barrister in Sydney in the central business district (CBD). Sometimes during the week he also has to go to courts located in various suburbs in Sydney to represent a client. On the weekends he works on his farm at Cooma. The farm is a commercial enterprise.
Advise Jim on the deductibility of travel costs in respect of the following travel:
1) driving from his office in the CBD to another court located in a suburb in Sydney and then driving home;
2) driving from his office in the CBD directly to the farm in Cooma, with 4 big folders of file he intend to review there;
3) driving from office in the CBD to home and then to the farm in Cooma.
John, an accountant and a tax resident, has provided you with the following information relating to himself for the 2013 income year:
1. He sold a laptop for $500 on 30 June 2013. The laptop was purchased for $2,500 on 1 July 20011. He has self assessed the laptop to have an effective life of 3 years and he has used the straight line method of depreciation for tax purposes. He used the laptop 100% for work purposes.
2. On 12 November 2012, he sold his golf clubs for $15,000. He originally acquired them for $1,000 in 2007. The clubs had dramatically increased in value after Tiger Woods autographed them in 2007 during his practice hit out in Australia at the golf course where Mark regularly plays.
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3. He signed a contract to sell his rental property on 25 June 2013 for $400,000. The title to the property was transferred on 31 July 2013. The property originally purchased in 2007 for $300,000.
Advise Ian of the income tax consequences of each of the above items. Show your calculation process where appropriate and provide relevant case law, ATO rulings and section references to support your answer.
Tom Ltd is incorporated in Australia. It is a retailer who sells clothes to the public. The following transactions occurred in the year ended 30 June 2013.
1. The company purchased $180,000 stock during the income year. The opening balance of its stock was $120,000 and the closing balance was $160,000.
2. The company paid $10,000 bonus to its Chief Executive Officer.
3. The company also sells goods to customers on credit. During the year, a number of customers owing a total of $15,000 defaulted on their accounts.
4. A competitor has recently applied to the council for permission to operate as a clothes retailer in the commercial building next to Tom Ltd. Tom Ltd incurred $30,000 in legal fees opposing the application. The action was successful.
5. During this year, Tom Ltd received $35,000 fully franked dividend; and paid $15,000 income tax. It also declared and paid $280,000 fully franked dividend to its shareholder (you can assume the open balance of franking credit account is zero).
Advise Tom Ltd of the Australian income tax implications of the above transactions. Provide relevant case law, ATO rulings and section references to support your answer.
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APPENDIX A: MARKING RUBRIC ASSIGNMENTS: INDIVIDUAL ASSIGNMENT
ILOs Below Expectations Meets Expectations Exceeds Expectations
Level 1 (Fail) Level 2 (Pass) Level 3 (Credit) Level 4 (Distinction) Level 5 (High Distinction)
1. Understand the key Inadequate or insufficient Demonstrates sufficient but Demonstrates Demonstrates a well- Demonstrates a sophisticated
principles of taxation understanding. Superficial limited understanding. accurate and clear developed understanding under-standing of the topic.
law in respect to income and general. Does not Does not include adequate understanding in of the topic. Identifies key Provides a logical and
tax, Capital Gains Tax, identify relevant issues and detail. adequate detail. issues and explains their comprehensive view of the
GST and FBT; instead provides a historical Satisfactory identification of Identifies key issues. relevance to the issues raised by the question.
or chronological account issues. question.
2. Understand how the Inadequate or insufficient Sufficient but limited Clear analysis. Well developed and Sophisticated and insightful
law is applied to analysis. Provides few or no assessment. Attempts to Evidences a objective critical analysis. critical analysis. Coherent flow
different problems; identifiable arguments. develop argument but may reasonable flow of Follows a coherent flow of argument (integrates counter
be poorly expressed and argument. of argument (including arguments in a sophisticated
structured, which hampers addressing of counter way) following structure set out
its clear articulation. arguments) in introduction and proving
3. Use Taxation law Limited or insufficient Satisfactory skills in finding Competent skills in Highly accomplished Exceptional skills in in finding
databases, textbooks reference to the relevant tax and making reference to finding and making skills in finding and and making reference to the
and the internet to law the relevant tax law reference to the making reference to the relevant tax law
obtain answers to relevant tax law relevant tax law
4. Understand the Referencing either not Referencing according to Referencing is Referencing is Referencing is appropriate and
taxation treatment of attempted or contains the AGLC3 has been appropriate and in appropriate and in the in the style set out in the
different taxation numerous errors. Evidences attempted but requires the style set out in style set out in the AGLC3. Evidences an excellent
entities and learn to little or no grasp of where a significantly more work. the AGLC3 with only AGLC3 with only minor grasp of where a citation is
develop appropriate tax citation is required. Evidences a basic grasp of minor errors. errors. Evidences a very required.
management strategies where a citation is Evidences a good good grasp of where a
for business and other required. grasp of where a citation is required.
entities. citation is required.