UNIT CODE: CMT301

UNIT NAME: AUSTRALIAN TAXATION LAW

Assignment 2 Information

Semester 2 2015

Assessment 30%

Submission Requirements.

This assignment may be submitted at or before 11.59pm (CST) Monday, 5 October 2015, Study Week 11

Assignments are to be submitted by one of the following means;

DO NOT LODGE BY FAX nor EMAIL nor at LECTURER’S OFFICE

KEEP A COPY

• The assignment must be lodged on or before the due date indicated in the assignment details.

• Submit your Assignment as one document, using PDF format¹ .

• The assignment must conform to the requirements set out in this assignment

• The assignment must be lodged online via the CMT301 Learnline Assignment Lodgement link on the CMT301 Learnline site.

• Ensure your file is named using a file naming convention that allows the lecturer to identify to whom it belongs. Failure to use an acceptable file naming convention may result in your assignment lodgement being rejected.

• DO NOT LODGE VIA EMAILor FAX – assignments lodged by email or fax will not be accepted.

KEEP A COPY – Ensure you have a copy of the assignment lodged.

Assignment lodgements will be acknowledged by the lecturer on the CDU CMT301 Learnline site within 72 hours of receipt. It is the students responsibility to ensure that the lecturer has received (and acknowledged receiving) the assignment.

• Instructions for creating PDF documents and/or combining documents of different formats are provided on the Learnline site.

 

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Faculty of Law, Education, Business and Arts	Higher Education, Internal & External

 

Coversheet

Coversheets are no longer required.

Students will now be required to affirm at the point of submission that the work they are submitting is their original work. This is built into the submission point.

The submission text reads as follows:

By clicking the SUBMIT button I certify that this assignment is my own work, based on my own personal study and research, and that I have acknowledged all material and sources in the preparation of this assignment, whether they be books, articles reports, lecture notes, images, videos, any other kind of document or personal communication.

I also certify that this assignment has not previously been submitted for assessment in any other course or at any other time in the same course (except as a DRAFT submission) and that I have not copied in part or whole or otherwise plagiarised the work of other students and/or persons.

I have read Charles Darwin University’s Academic and Scientific Misconduct Policy (pol-001) and Student Breach of Academic Integrity Procedures https://www.cdu.edu.au/governance/procedures/pro-092.pdf and understand its implications.

Format

The assignment may be completed manually, or with the use of an electronic spreadsheet, word processing software or with the use of accounting software. Marks may be deducted for illegible or partially illegible papers. If completed using multiple file formats or manually, the document must be combined into one document, in PDF format².

Resubmission

As a general rule resubmission of assessment items is NOT possible, however the Lecturer may ask for resubmission if it is deemed appropriate. Details for such resubmission will be made available by the Lecturer if and when the situation occurs.

Oral Test or Viva Voce

Lecturers may, at their discretion, ask students to verbally present their assignment submissions or rewrite some selected part/s of their answer in a controlled setting. Lecturers may exercise this discretion where they feel that the assignment was not the student’s own work.

University Plagiarism policy

Plagiarism is the unacknowledged use of material written or produced by others or a rework of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend. Plagiarism policy is available at: https://www.cdu.edu.au/governance/policies/pol-001.pdf and Student Breach of Academic Integrity Procedures https://www.cdu.edu.au/governance/procedures/pro-092.pdf

 

To get assignment samples chat with our online assignment adviser (Chat with our 24x 7 Online Agents).

 

Extensions and Late Lodgements

LATE ASSIGNMENTS WILL GENERALLY NOT BE ACCEPTED UNLESS AN EXTENSION TO THE DUE DATE HAS BEEN GRANTED BY THE HEAD OF SCHOOL.

Exceptions will only be made where assignments are late due to special circumstances that are supported by documentary evidence, and may be subject to a penalty of 5% of assignment marks per day. Partially completed assignments will be accepted with appropriate loss of marks for the incomplete portion.

Should students foresee potential difficulties with submission of assessment items, they should contact the lecturer immediately the difficulties come to notice, to discuss suitable arrangements etc for the submission of those assessment times. An Application for Assignment Extension or Special Consideration should be completed and provided to the Head of School, School of Law and Business.

This application form, explanation and instructions is available on the CMT301 CDU Learnline course site or direct from https://learnline.cdu.edu.au/units/lb_school_templates/deployed/assignment_extension.docx

Please note that it is now Faculty policy that all extension requests must be approved by the Head of School. The lecturer is no longer able to personally approve extension requests.

Leaving a request for an extension, special assessment or special consideration until the last moment, based on grounds that students could have reasonably been able to foresee, may result in the application being rejected.

Ensure that you maintain suitable backup copies of your assignment during preparation, before completion and after lodgement. Loss of data/assignment due to failure to maintain a suitable backup will not constitute grounds for an extension.

• Instructions for creating PDF documents and/or combining documents of different formats are provided on the Learnline site.

School of Business	Semester 2, 2015 Page 2 of 5
Faculty of Law, Education, Business and Arts	Higher Education, Internal & External

 

Assignment Details

PART A (20 marks)

Note: All amounts are in Australian dollars. Ignore any double tax agreements.

You are an Australian-resident individual. During the income year ended 30 June 2015 you earned the following amounts:

• $90,000 (gross) salary from working in Australia. Australian tax withheld was $40,000.

• $10,000 (gross) salary from working in France for two months, on which $4,000 French income tax was paid.

• $30,000 capital gain net of any applicable discount from the sale of shares in a United States company. United States tax of $12,000 was paid on this.

• $35,000 as a fully franked dividend from an Australian resident company. This amount received is net of $15,000 franking credit.

• For foreign income tax paid, you wanted to know how much you can claim as foreign income tax paid in accordance with the Foreign Income Tax Offset (FITO) limit. You would do a further research on this matter.
• You have a private health insurance cover for the whole year under Medibank Private.

 

In addition to the above:

You and Maxine are equal partners in a partnership. The partnership operates a car dealership selling brand new and second-hand cars. The partnership is registered for GST purposes.

Note: All amounts are GST-exclusive unless otherwise stated.

During the year ended 30 June 2015, the partnership had the following transactions:

1. Cash received from sales of $2,500,000. Accounts receivable balances as at year end were as follows:

• 30 June 2014: $260,000.
• 30 June 2015: $180,000.

2. Trading stock purchases of $1,200,000. All purchases satisfy the requirement of being on hand. Opening stock value for tax purposes is $1,300,000. Closing stock value for tax purposes are as follows:

• Market selling price: $1,600,000.
• Replacement price: $1,400,000.
• Cost: $1,100,000.

3. Interest expense of $400,000 in relation to a $2 million bank loan. The money was used as follows:

• Working capital: $1,200,000.

• Return of capital to partners: $800,000.

• The partners used the money returned to them to carry out extensive renovations to their private home.

 

School of Business	Semester 2, 2015 Page 3 of 5
Faculty of Law, Education, Business and Arts	Higher Education, Internal & External

 

4. Parking fines incurred by employees of $2,100.

5. Salary costs of $500,000. Of this amount, $80,000 was paid to Maxine as salary.

6. Restaurant meal expenses of $5,000. Records indicate that these expenses were incurred taking highly valued corporate clients to dinner in order to maintain good business relationships. You and Maxine were the only persons from the business to attend. The partnership has not made a meal entertainment election for FBT purposes. You wanted to know how much you can include in your allowable deductions and might do additional research on this matter.

7. Clothing allowance of $3,000 was paid to sales employees on 30 June 2015 to purchase more professional attire as required.

8. Professional fees of $6,000 paid to Raul David Chartered Accountants on 28 February 2015. The fees relate to investment advice to assist the partnership to set up a small share portfolio of $1,400 and the preparation of the BAS and compliance with GST obligations of $4,600.

 

REQUIRED:

• Calculate the minimum net income of the partnership for the income year ended 30 June 2015. For all items (excluding items 1 and 3) provide a relevant section reference or case law to support your answer. For items 1 and 3 provide relevant case law to support your answer. Explain all exclusions.

You may want to use the following format:

 

		References (Legislative
		references are to ITAA
		1997 unless otherwise	Amount
Item	Description/calculation	stated) and/or Case law	($)
			<insert amount>
			(+) for
			assessable
		<insert case law or relevant	income, (-) for
	Sales: <insert computation, if	section reference, see	allowable
1	any>	requirement letter (a)>	deductions
2.. etc.
NET INCOME			$XXX,XXX

 

• Calculate your minimum tax payable by, or maximum refundable, for the income year ended 30 June 2015. Show all workings, references are not required.

• After completing your calculations in (b), download the electronic copy of the Individual tax return 2015 (NAT 1371-6.2015) from the ATO website and fill out the required information to complete your income tax return accordingly.

 

School of Business	Semester 2, 2015 Page 4 of 5
Faculty of Law, Education, Business and Arts	Higher Education, Internal & External

 

PART B (10 Marks)

 

Manny is an Australian resident who presents the following information relating to the 2015 income year:

1. Sold BHP shares for $20,000. The contract for sale was signed on 29 June 2015 and settlement occurred on 2 July 2015. The shares were acquired in 2007 for $25,000.

2. Sold his stamp collection (which was not held for a profit making intention) for $5,000. He bought it for $2,000 on February 2015.

3. Sold a house in Manly for $1 million. Manny’s grandmother bought the house for investment in 2000 for $300,000 and Manny inherited it in 2010. Manny continued to rent it out until it was sold. At the time of his grandmother’s death, the house was worth $800,000. The total deduction claimed under Division 43 of the INCOME TAX ASSESSMENT ACT 1997 was $60,000.

4. Received a trust distribution of $5,000. He was advised this was all the discount capital gains derived by the trust. Manny wanted to do a further research on this matter as he is not sure on its capital gain tax implications.

5. Received compensation of $50,000 for pain and suffering from a work-related accident.

6. Carried forward capital losses $2,000.

REQUIRED:

Calculate Manny’s net capital gain for the year ended 30 June 2015. Show your calculations in good form. If a capital gain is exempt, provide the relevant section reference.

 

School of Business	Semester 2, 2015 Page 5 of 5
Faculty of Law, Education, Business and Arts	Higher Education, Internal & External

 

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