Taxation Law: Individual Assignment 2

Individual Assignment

Course: Bachelor of Accounting

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Unit: Taxation Law

Length / duration: 1500 Words (+- 5%)

Learning outcomes addressed:

  1. a) Australia’s tax bases of residency and source
  2. b) Income and deductions

You may require to widely use following website (or other Australian websites) to prepare your

assignment answer:

  1. www.ato.gov.au
  2. https://www.legislation.gov.au/Details/C2013C00082
  3. http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1936240/
  4. http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/
  5. http://www.charteredaccountants.com.au/

Answer all questions.

Maximum marks available: 20 marks.

Harvard Referencing Style.

Students are advised that any submissions past the due date incur a 5% penalty per day,

calculated from the total mark e.g. a task marked out of 40 will incur a 2 marks penalty per day.

 

 

Question 1 (5 Marks)

Hilary is a well-known mountain climber. The Daily Terror newspaper offers her $10,000

for her life story, if she will write it. Without the assistance of a ghost writer, she writes

a story and assigns all her right, title and interest in the copyright for $10,000 to the

Daily Terror. The story is published and she is paid. She has never written a story before.

She also sells the manuscript to the Mitchell Library for $5,000 and several photographs

that she took while mountain climbing for which she receives $2,000.

 

Requirement:

Discuss whether or not the three payments are income from personal exertion.

Would your answer differ if she wrote the story for her own satisfaction and

only decided to sell it later

 

 

 

 

Question 2 (5 marks)

Your client is a parent who lent $40,000 to her son to provide a short-term housing loan.

The agreement is that the son will repay $50,000 at the end of five years.

 

Reconsider this question in light of the following facts. The loan was made to the son

without any formal agreement and without any security provided for the sum lent. In

addition, the client (the mother) has informed you that she told her son that he need

not pay interest. However, the son repaid the full amount after two years and included

in his payment an additional amount which was equal to 5% pa on the amount

borrowed. Only one cheque was presented for the total amount.

 

Requirement:

Discuss the effect on the assessable income of the parent.

 

 

 

Question 3 (10 Marks)

Scott is an accountant who purchased a vacant block of land in Brisbane on 1 October

  1. On 1 September 1986, Scott built a house on the land. At the time, the land was

valued at $90,000 and the cost of construction was $60,000. The property has been

rented out since construction was completed. On 1 March of the current tax year, Scott

sold the property at auction for $800,000.

 

 

Requirement:

 

  1. a) Based on the information above, determine Scott’s net capital gain or net

capital loss for the year ended 30 June of the current tax year.

 

  1. b) How would your answer to (a) differ if Scott sold the property to his

daughter for $200,000

 

 

 

  1. c) How would your answer to (a) differ if the owner of the property was a

company instead of an individual