Subject: Taxation Law (BBAL501) Title: Group Assignment

Number of group members: 3 to 4

Submission type: Soft copy (Moodle submission) & Hard copy

Due Date: Week 5.2

Weighting/Value: 20%

Details of task: Students are required to answer all the four questions as per the given requirement.

Marking Criteria

Students are evaluated on their skills to explain and apply their knowledge of the relevant Australian Tax Laws using the three step process. Briefly that process is:

1. Identification of correct legal issues; 2. Articulation of arguments and application of law to facts; and 3. Depth of analytical thinking shown in logical reasoning and calculations.

Marking Rubric: This group assignment is made up of Four (4) scenario/problem based questions. Each question will be worth 10 marks. Total 40 marks available for 4 questions. Each question will be assessed as follows:

Requirement Marking Criteria

1) Proper analysis of the scenario by identifying the correct legal issues. Articulation of arguments and application of law to facts.

2) Evidence of analytical thinking shown in logical reasoning, calculations and recommendations.

9.0-10.0: Detail analysis of the scenario using relevant Tax Law and sections. Proper application of Law matching the scenario. All data used correctly. Correct calculations with proper recommendations.

7.0-8.0: Partial analysis of the scenario using appropriate Law. Application of Law matching the scenario. All data used correctly. Correct calculations with proper recommendations.

5.0-6.0: Short description of the scenario using appropriate Act only. Application of Law partially matching the scenario. Correct use of

partial data. Correct calculations with short recommendations.

3.0-4.0: Short description of the scenario with no analysis but using appropriate Act only. No application of Law. Partial correct calculations. No conclusion given.

1.0-2.0 No description of the scenario. No Analysis. Identification of correct law matching the scenario. Shows little ability to collect, organize and present information.

0.0 No attempt was made to present the report. No analysis. No identification of laws. No Calculations.

Scenario 1: Assessable Income (Marks-10)

(Word limit: 500)

Jim Cox, a software designer, and resident of Australia earned the following income for the year ended 30 June 2014:

a) $55000 from sources in Australia b) The equivalent of Aus$30,000 as salary while working overseas for three months (foreign

income tax amounting to Aus$5000 had been deducted from his income) c) Fully franked dividend of $10000, and d) Dividend income of $850 from WYS Ltd, a London based company (15% withholding tax has

been paid).

Required:

1) Analyze Jims situation with relevant Tax Law and calculate the assessable income for the year ended 30 June 2014. Show proper reasoning to support your decision.

2) Assuming Jim does not have any deductions, what is the tax payable on the income? Show the calculations in detail.

Scenario 2: Income from personal services and employment (Marks-10)

(Word limit: 500)

Jane and Sally are employed school teachers who have a very wide general knowledge. Both decide to enter a television quiz program called Lease of the Decade. Under the rules, contestants receive $100 for each appearance, but if questions are answered correctly, they receive substantial cash prizes and other prizes, such as household items and holiday packages. The holiday packages cannot be transferred or redeemed, but the organizers of the program allow them to be converted into alternative venues and accommodation. Jane and Sally go on the show but Jane is eliminated in the first contest and receives her $100. Sally, however, makes 10 appearances. She wins cash prizes of $50,000, household appliances worth $20,000 and a trip to Europe with her family valued at $30,000.

Required:

Analyze the scenario given above for Jane and sally by identifying and applying the relevant law. Discuss and recommend on the assessability of these prizes. Present a conclusion.

Scenario 3: Fringe Benefit Tax (Marks-10)

(Word limit: 500) Evaluate and show proper reasoning whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of fringe benefit. Support your answer with relevant sections of law:

(a) Payment to employee for the estimated cost of the employees home phone bill as the employee sometimes has to use the home phone for work purposes.

(b) Provision of accommodation at the family home to a child who is over 21 and works in the family business.

(c) Payment of employees superannuation contribution by the employer to a complying superannuation fund.

(d) Loan by Company X to one of its directors, Ron, who is also a shareholder in the company. The companys rules do not permit loans to directors.

(e) Payment of taxi fare by employer for employee to travel home after working late. (f) Flowers sent to a sick employee who is hospitalized. The flowers cost $75. (g) Provision of a car for an employees private use, including payment of all fuel costs by the

employer. (h) Provision of sandwiches at a lunchtime seminar held at the employers premises. (i) Provision of an all-expenses-paid holiday to an employee who has had to work every weekend

for the last six months. (j) Provision of two laptop computers to an employee who regularly attends clients premises.

Scenario 4: Capital Gain Tax (Marks-10)

(Word limit: 500)

Nadin is a client of your tax firm. To fund her career as an artist Nadin sold some of her art collection by other artists. It consisted of:

(a) An antique ceramic bowl purchased in February 1985 for $4,000. She sold the bowl on 1 December of the current tax year for $12,000.

(b) A sculpture purchased in December 1993 for $5,500. She sold the sculpture on 1 January of the current tax year for $6,000.

(c) A bronze gure purchased in October 1987 for $13,000. She sold the bronze gure on 20 March of the current tax year for $13,000.

(d) A painting purchased in March 1987 for $480. She sold the painting on 1 July of the current tax year for $5,000.

Required Consider the CGT consequences of the above transactions by determining whether the assets are CGT assets, collectables or personal use assets. Identify the relevant laws and apply them with appropriate details required to support your recommendation.

Source: K Sadiq, et al (2014) Principles of Taxation Law, Thomson and Reuters, Sydney. Nethercott, et al, (2013), Australian Taxation Study Manual, CCH, Sydney.