Method of Submission: Electronic –
Length: See below-
Word Limit in PART A only.
completion of this course you should have acquired:
A basic understanding of the Australian
1. A sound
knowledge of the main concepts and principles of Australian taxation law.
2. A reasonable
degree of competence in applying the taxation laws and in preparing income tax
returns of moderate complexity for individual taxpayers, companies,
partnerships and trusts.
understanding of the principles of Fringe Benefits tax and Goods and Services
acquaintance with the compliance requirements under the Australian taxation
understanding of the concept of tax avoidance including a familiarity with some
specific anti-avoidance provisions in the Australian tax legislation.
assessment relates to the above listed Course objectives.
assessment item may be submitted as an individual
or as a group assignment and MUST
be submitted electronically through the educational interface – Moodle.
If you are
opting to submit an individual assignment, the work must be the result of your personal
effort. If material in the assignment
was found to be similar to material in another assignment this will be treated
as a case of plagiarism.
If you are
opting to complete this assignment as a group assignment, you may work in a
group of up to but no more than three
students. Only one assignment will
be submitted by a group, with the names and student numbers of all group
members shown and all members of the group will receive the same mark.
As it is up
to students to choose if they wish to work in a group and if so who the other
members of the group will be, there will be no opportunity for the case to be
made later than one or some members of the group did not contribute as much as
others. If you choose to work in a group
then choose the members of your group
â€˜WORD COUNTâ€™ at the end of PART A
assignment is assessed on the basis of the content presented and not the
teamwork skills that may or may not be demonstrated.
assignment is based on material covered, you may find it necessary to access
additional information to address some of the issues raised in the Assignment.
TO FOLLOW ANY OF THE ABOVE INSTRUCTIONS WILL RESULT IN A LOSS OF MARKS
PART A (1,500 WORDS) 10
The following section 8-1 as listed below is described as the
cornerstone if the Income Tax Assessment Act (1997).
â€œS8-1(1) you can deduct from your assessable income any loss
or outgoing to
The extent that:
(a) it is incurred in gaining or producing your assessable
(b) it is necessarily incurred in carrying on a business
for the purpose of
gaining or producing your assessable income.
S8-1(2) However, you cannot deduct a loss or outgoing under this
the extent that:
(a) it is a loss or outgoing of capital or of a capital nature;
(b) it is a loss or outgoing of a private or domestic nature;
(c) it is incurred in relation to gaining or producing your
exempt income; or
(d) a provision of this Act prevents you from deducting it.
S8-1(3) A loss or outgoing that you can deduct under this
section is called a
EXPLAIN and VALIDATESection 8-1 of ITAA97 by
reference to Case Law, Taxation Office Rulingsand other sections
of the ITAA97 and ITAA36. You are required to address under separate
headings the underlined words in the course of your explanation.
PART B 10
OF ASSETS INFORMATION
Donald sold the following assets during the year ended 30th June 2014.
Details Date Purchased Cost Date
NBA Ltd 1 May 2014 35,000 1
June 2014 20,000
shares* 1 Sept 1965 65,000 30
May 2014 160,000
XRO Ltd 1 May 1998 15,000 1
March 2014 35,000
CBD Ltd 1 Jun 2014 $25000 28 June 2014 $50,000
FBU Ltd 15 Nov 1998 30,000 1
July 2013 33,000
Diamond Ring 18 July 1993 501 1 Feb
Houseboat 21 Sep 1985 20,000 1
March 2014 25,000
Residence** 16 June 1986 300,000 12
March 2014 600,000
Gold Charms 31 March 1986 300*** 13
March 2014 2,500
Caravan 1 January 2010 12,000 15
June 2014 5,000
Motor Cycle 1 July 2012 5,500 15 June 2014 6,300
Sports Car 1 July 2011 6,500 30 June 2014 22,000
were purchased by the taxpayerâ€™s father on 1st September 1965. They were
bequeathed to the taxpayer on 1 January 2009 (date of death of Jamesâ€™
father). The market value of the shares
at date of the fatherâ€™s death was $150,000.
**The private residence was rented for the period from 1
February1988 to 1 July 2008 while he lived overseas.
***Purchased as a set which cost $600
CALCULATEthe minimum amount of net capital gainwhich
is to be included in his assessable income for the year ended 30 June 2014. You
must indicate how every item mentionedabove is treated for tax
purposes. You must refer to the relevant sections of the Income Tax Assessment
PART C 10
John Smith is a resident of Australia and a full-time employee for
Paladin Ltd. He provides you with the
following information for the year ended 30 June 2014.
received (PAYGW $18,000) 80,000
Fringe benefits â€“ low interest loan 15,000
Fully franked dividend paid by Exmouth Ltd â€“ reinvested 7,000
Share of income â€“ The Estate of Harry
Loss on sale of shares 3,600
Gross Profit on sale of Jet ski â€“ purchased 01/01/2001 5,000
expenses â€“ see Note 1
contribution for John Smith â€“ made by
Paladin Ltd 6,000
Superannuation contribution â€“ made by John Smith 3,000
Donation – Royal Childrenâ€™s Hospital 150
Net rental loss on investment property- No 1 3,500
Loss on capital investment- investment property â€“ No 2 35,000
Expenses- see Note 2 3,500
Membership fees – Master Chefs Association 250
John uses his
car for work purposes for 9 months
of the financial year. He maintained a log book for the whole of the financial
year. His private kilometres were 20,000 and his total kilometres were 40,000
for the year. The Motor Vehicle (4200ccs) cost $125,000 on 1/03/2014. It has an effective life of 8 years. Expenses
for the year ended 30 June 2014 are as follows:
Cost of repairs â€“accident 9,500
Parking fees 22
Registration and 3rd Party 438
Road Tolls 54
Car washes 45
New Motor â€“purchased 1 March 2014 â€“ not separate asset 10,500
employed as an IT manager and is a member of the IT Association of Australia, a
professional accrediting body providing among other services continuing
professional education (CPE) to members.
Members must complete
a minimum 20 hours per year of CPE. John attended a four day conference in
Hawaii in October 2013 of the International IT Association. John arranged a
package that included:
Air fares 1,600
Accommodation and meals â€“ 8 days 1,100
John spent an extra 4 days holidaying.
the TAXABLE INCOME and TAX PAYABLE of John for the year ended 30 June 2014.