Subject Code and Title: LAW 6001 Taxation Law
Assessment Assessment 2: Case Study (Individual taxpayer’s tax return)
Individual/Group: Individual
Weighting 20%
Length: For the Report 2000 words +/- 10% excluding References
LAW 6001 Taxation Law Assignment-Laureate International University Australia.
Learning Outcomes:
a) Identify and analyse the tax treatment of various types of income and deductions.
b) Effectively apply taxation law in determining tax outcomes in
various scenarios and sole trader structure
c) Apply the legislation to determine the assessable income and
availability and amount of the tax deduction associated with
employment and business structure on an accrual basis including GST application.
d) Calculate the specific deduction associated with trading stock
balances
e) Calculate depreciation using the prime cost and diminishing value method and calculate an associated balancing adjustment following the disposal of a depreciating asset
f) Preparation and calculation of individual income tax return on
various income and deductions using current tax return form.
Context:
This assessment assesses your research skills, your ability to synthesise an original piece of work to specific content requirements and your ability to produce a comprehensible piece of advice which addressing the client’s needs.
LAW 6001 Taxation Law Assignment-Laureate International University Australia.
It also assesses your written communication skills. The ability to deliver to a brief is an essential skill in the workplace. Clients may well approach advisors seeking a combination of specific information needs and advice on the tax implications of a particular arrangement in the Australian tax jurisdiction. It is therefore important to be able to identify all the issues presented by an arrangement and to think about the potential consequences of different approaches to addressing the client’s needs.
Instructions:
- Your case study needs to identify and discuss the tax implications of the various issues raised.
- A report (word document, approx. 2,000 words) must be submitted for the calculations of the assessable income; allowable deductions and taxable income of the taxpayer including identifying and discussing them. E.g., how the amounts of income & deductions have been derived. If any receipts and payments are not assessable or deductible, the reasoning for non-inclusion of these in assessable income or deductions as per relevant legislation or cases.
- Critically analyse the following case study.
With respect to each task: - Review relevant case law and legislation (ITAA1936, ITAA1997)
- Apply the law to the facts of the case study
- Reach a conclusion/ give practical advice to your client.
- You will be assessed in accordance with the Assessment Rubric.
- This case study must be presented as an individual effort. The case study requires individual research. It is expected the student will survey the relevant literature, including decided cases, and select appropriate additional resources.
- Your case study is not just a list of answers. Your reasons for your conclusions and recommendations must be based on your research into the relevant cases and legislation.
- The format of the report should be a business report and using APA referencing style
Case Study: Comprehensive Individual Tax Return
Jeremy Wild, a resident single taxpayer aged 49. Jeremy runs a mixed business and has not elected to apply any of the small business entity concessions. Jeremy uses an accrual method.
Jeremy’s records disclosed the following for the 2019/20 tax year. All amounts are GST exclusive.
Receipts
Cash receipts from customers (sales) $279,000
Fully franked dividend Received 2,000
Proceeds from loan for shop repairs 25,000
Proceeds from sale of Motor vehicle – see note 1 14,000
COVID19 Cash Boost payment from the ATO 15,000
COVID19 Job keeper payment from the ATO 14,300
Payments
Purchases of trading stock 159,300
PAYG Tax Instalments paid by Jeremy 6,200
Borrowing Costs (incurred on 1 May 2020 on an 8-year loan) 1,800
Drawings 19000
Repairs – see note 2 29,200
Loan Repayments (interest only) 2,000
Net Wages to employee 17,500
PAYG tax withheld from employee’s wages 4,500
Superannuation for employees – see note 3 9,800
Annual/Personal leave paid – see note 4 4,000
Personal Super contributions 6,000
Private health insurance 1,800
Drivers licence renewal 185
Late lodgement fee relating to Business Activity Statement 500
Other Deductible Expenses 29,300
Note 1
The motor vehicle had an adjustable value of $13,000 as at the date of disposal.The original cost was $54,000 in June 2017. The car was used 80% for business.
Note 2
During the year, Jeremy spent the following amounts on repairs:
Landscaping at Front of Shop (30 October 2019) $3,200
Repaint Shop (1 March 2020) 10,000
Installation of Concrete Ramp (completed on 31 January 202016,000
Note 3
Additional annual/personal leave accrued (provided, not paid) on 30 June 2020 was $4,500
LAW 6001 Taxation Law Assignment-Laureate International University Australia.
Note 4
Employees’ superannuation of $1,400 was accrued as at 30 June 2020 (not yet paid)
Other Information
Stock as at 30/6/19 – at cost 8,100
Stock as at 30/6/19 – at market selling value 7,000
Stock as at 30/6/20 – at cost 9,400
Stock as at 30/6/20 – at market selling value 12,200
Debtors (Sales) at 30/6/19 4,500
Debtors (Sales) as at 30/6/20 3,900
Creditors (Purchases) as at 30/6/19 7,800
Creditors (Purchases) as at 30/6/20 9,200
Stock taken by Jeremy – at cost 3,400
Stock taken by Jeremy – at market selling value 5,100
In the 2018/19 tax year Jeremy used market selling value as the basis for valuing his trading stock.
Assets held by Jeremy as at 30 June 2020 included:
Jeremy has an adequate private hospital insurance.
Required
The following Part A and Part B must be submitted as a single file in MS Word format.
LAW 6001 Taxation Law Assignment-Laureate International University Australia.
Part A) Calculate Jeremy’s taxable income for 2019/20 and net tax payable or refundable. Use the template provied below (add more lines if needed). Show all workings of each income & deductions of calculations and any tax offsets available for Jeremy.
Part B) Explain inclusion/exclusion of each income and deductions with reference to relevant available cases and section numbers as per ITAA36/ITAA97.
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