TABL 5551/ TABL 5559 TAXATION LAW
TAXATION LAW
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TABL 5551/ TABL 5559
TAXATION LAW
ASSIGNMENT
DUE DATE AND TIME Friday, 5 April 2024 by 6.00 pm.
LATE LODGMENT As stipulated in the Course Outline
PLACE OF LODGMENT Electronic lodgment at link on course Moodle site
under Short Assignment link
VALUE OF ASSIGNMENT 30%
MAXIMUM WORD LENGTH 2,000 words
Please note: The assignment question is followed by detailed instructions and also a reference
guide. You should read all instructions prior to completing and submitting your assignment.
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Part A
Brett is an engineer who practises as a consultant in a sole practice in Sydney, Australia. He has
also built up quite a portfolio of shares for investment purposes over the years and owns an
investment property.
He is registered for the Goods and Services Tax (GST). You are not required and should not
discuss GST in this assignment. Ignore GST as part of the assignment.
During the financial year ended 30 June 2024 Brett was paid $375,000 in fees for his engineering
consultancy services. He has one full-time employee, Amanda who acts as his office assistant and
occasionally assists with drafting engineering plans as she has the appropriate TAFE certificate.
Brett pays Amanda a salary of $45,000 per year.
Brett’s 20-year-old son, Micha is finishing off his commerce degree at UNSW. Micha occasionally
comes to work in Brett’s business during holidays to help with the administration work. He gets
paid a wage of $600 per week. The normal wage for this position is $500 per week. On Micha’s
birthday Brett decided to give him $300 cash.
Brett pays an annual rent on his office premises of $36,000.
One of his photocopier machines broke down on 1 December 2023 and he incurred repair costs of
$1,050 to put it back into working order. He paid this on 23 December 2023. He could have
purchased a new photocopier but there wasn’t enough time to arrange this, as December was a
very busy time for his business.
Brett sometimes works from a room in his rented house. The practice room in his house was
originally one of three bedrooms in the house. The practice room contains a desk with a computer
on it, two filing cabinets and two bookshelves. Brett uses the practice room solely for his
engineering consultancy work. Indeed, there are times when Brett works on the dining room table
because the practice room is so crowded with client files. The practice room covers 25% of the
floor area of the house. The rent per week for the whole house is $600 (i.e. $31,200 for the year).
Brett was finding it hard to collect an outstanding debt of $2,250 from one of his clients. He had
to hire a lawyer on 1 March 2024 to assist in collecting the fees. The lawyer charged Brett $250
for this service.
On 2 February 2024 Brett visited one of his clients. He was running late and parked his car in a
no parking zone. He received a fine of $80 for parking in a no parking zone.
In January 2024, Brett attended a conference held at the Sunshine Coast in Queensland Australia.
The conference was organised by the Engineering Society. The conference was for two days. The
papers delivered at the conference were all extremely relevant to Brett’s work. The brochure stated
that there would be 2 days of lectures/seminars on current issues in engineering and then there
would be free time for the delegates. The cost of registration for the conference was $550 for the
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two days. The accommodation at the hotel where the conference was held was $150 per night.
Brett stayed there for 3 nights. He arrived on the night before the conference commenced.
He decided to take a well-deserved one-week holiday in Brisbane after the conference finished.
The decision to take the holiday after the conference was made at the same time Brett decided to
go to the conference. The accommodation in Brisbane cost $175 per night. The return business
class air fare from Sydney to Brisbane was $1,500. An economy return airfare was $250, and a
return premium economy airfare was $500. Brett decided to fly business class. Brett took a coach
from Brisbane to the Sunshine Coast to get to the conference. The return economy class coach
fare was $110. In total, he was away from home for 9 days.
Brett likes to gamble on horses. He has become very good at setting up a system to calculate the
odds of winning and losing on horses. Brett is very good at mathematics and spends 10 hours a
week developing a computer program to gamble on horses. There is very little luck involved as
the system uses mathematics. Brett has won $7,800 by December 2023 in gambling winnings from
horses.
Required:
• Advise Brett of the income tax implications of the above transactions for the year ended 30
June 2024. Your advice must be supported by reference to relevant income tax legislation, tax
cases and/or authorities.
(20 Marks)
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Part B (10 Marks)
During the year ended 30 June 2023, Brett entered into the following transactions:
1. A parcel of Alpha shares was purchased for $9,000 on 1 December 2022.
2. He incurred a capital loss of $ 2,000 on the sale of Beta shares.
3. He incurred a capital loss of $500 on collectables.
During the year ended 30 June 2024, Brett entered the following transactions:
1. Sold Alpha shares for $12,000 on 1 November 2023.
2. Sold Gamma shares which were purchased on 1 January 2006 at a cost of $6,000. During
his years of ownership, he received dividends from the shares totalling $3,000. He
borrowed money to buy the shares and the total interest paid during his period of ownership
was $1,500. He sold the shares on 2 July 2023 for $10,000.
3. Brett owns a house as an investment property in Melbourne which he rents out. The house
was purchased on 1 February 2017 for $850,000. At the time of signing the contract for
the purchase he paid a deposit of $250,000. He obtained a mortgage from Orange bank (an
Australian bank) for $600,000. Settlement (i.e. transfer of ownership) occurred on 1 May
2017. The mortgage was for 25-years and had an interest rate of 4% per annum. Interest is
payable on the first day of each month. (Note: For ease of any required calculations, you
can assume this is an interest only loan – this means only the interest is paid each month.
The principal remains fixed. You can also assume, for ease of calculation that the interest
is not compounded).
In addition to the cost of the property, Brett incurred the following costs at the time of
purchase:
• Stamp duty (on house): $30,000
• Legal (conveyancing) fees: $1,300
• Mortgage broker commission: $1,500
• Application fee for mortgage: $500
As noted above, Brett purchased the house as an investment property. At the time
settlement of the property occurred, there were existing tenants living in the property.
These tenants continued to live in the property once Brett purchased it, paying rent of
$700 per week. They moved out of the property on 1 July 2023 when he decides to sell
the property.
His real estate agent says he should repaint the house before selling it as this will
increase the sale price. Painters commence painting the property on 10 July 2023 and
finish their work on 25 July 2023. The cost of repainting the property was $16,000.
Brett advertised the property for sale (via his real estate agent) on 1 August 2023 for
$1,400,000. On 15 August 2023, a buyer offers Brett $1,400,000 for the property. Brett
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accepts the offer. On the same day, a deposit of $300,000 is paid. Settlement (i.e., transfer
of ownership) occurs on 30 September 2023 at which time the remaining $1,100,000 for
the house is paid.
Costs associated with sale include:
• Advertising: $3,200
• Real estate commission: $25,000
• Legal conveyancing fees: $1,400
Brett repays his mortgage to Orange Bank on 30 September 2023.
.
Required:
• Discuss the income tax implications of the above transactions and calculate the net capital
gain/loss for Brett for the year ended 30 June 2024. Show all relevant calculations and
indicate the likely way in which the capital losses will be applied in calculating the net capital
gain, if any, for the year. Your answer must be supported by reference to relevant income tax
legislation, tax cases and/or other authorities. The calculations should be included in the
assignment and not an appendix. You are to ignore GST for the purposes of this question.
• Apart from the transactions listed in this question, you can assume Brett has no other
transactions that will impact on any net capital gain (or net capital loss) calculation.
• You should assume that Brett wants to make use of any available elections/exemptions to
minimise his net capital gain for each year.
(10 Marks)
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Further information / tips:
• You are not required to calculate Brett’s taxable income for the year as you do not have
all the information to do so. Rather, for each transaction described above, you are to advise
what amount (if any) will be assessable income or an allowable deduction.
• You are to ignore GST for this question.
• Appropriate explanations (with reference to relevant legislation, case law, and other
sources as appropriate) must be provided.
• You can assume that the various taxation laws that are current apply for the year ended 30
June 2024 also applied for earlier years. (That is, when considering transactions that
occurred in earlier years, you can assume there have been no differences from current law).
• You can (and are encouraged to) use headings / sub-headings in your answer.
• You can (and are encouraged to) use tables to display calculations / figures. (As noted in
the instructions, calculations do not form part of your word count).
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ASSIGNMENT INSTRUCTIONS
Read all instructions before completing and submitting the assignment.
1. Your assignment must be submitted electronically via the link that will be made available on
Moodle.
2. You should follow the ‘quick presentation and referencing guide’ which immediately follows the
marking criteria at the end of this list of instructions. Failure to do so will be reflected in your
mark for the assignment.
3. The word limit will be strictly enforced.
4. Late Submission Penalties:
Late submission will incur a penalty of 5% per day or part thereof (including weekends) from the
due date and time. An assessment will not be accepted after 5 days (120 hours) of the original
deadline unless special consideration has been approved. An assignment is considered late if the
required format, such as hard copy or electronic copy, has not been submitted on time or where
the ‘wrong’ assignment has been submitted.
For example, if an assignment is submitted 1 day late and the assignment is worth 20 marks there
is a deduction of:
5% x 20 = 1 mark deduction from the mark originally awarded
Calculations for further late days:
• 2 days late = 10% x 20 = 2 marks deduction
• 3 days late = 15% x 20 = 3 marks deduction
• 4 days late = 20% x 20 = 4 marks deduction
• 5 days late = 25% x 20 = 5 marks deduction.
• 6 days late = 0 => submission no longer permitted
5. In preparing an answer, you will inevitably discuss issues raised by the assignment with other
students. There is nothing in the UNSW rules prohibiting such discussions. However, in the end,
you must be able to state that the work that you have submitted is your work. Importantly, you
should ensure that you have not committed (either deliberately, or without intent) an act of
plagiarism (e.g. presenting another’s work or ideas as your own, failing to acknowledge the source
of a quotation, submitting the same or similar version of work to that of another student).
6. Given that this assignment is a problem type question that may require you to undertake research,
no staff member working on this course will provide assistance to you in writing and researching
your answer. If you require clarity in relation to any facts contained in the assignment question,
these should be directed to the lecturer-in-charge.
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7. Although the broad topics raised in the assignment will be topics covered in the course, the
assignment will raise issues that will not necessarily have been discussed in lectures or tutorials.
This means that that you may have to go beyond the prescribed materials for the course in relation
to some issues. Whilst you will not be given a separate mark for research, reading beyond the
textbook / required readings may assist you in writing your answer.
8. You are welcome to source information from the ATO (particularly from Taxation Rulings or
similar), but extensive reliance on ATO documents (and the ATO website) instead of legislation
and case law will be reflected in your mark. You should use the ATO publications to support your
understanding of the legislation, (and should reference any ATO materials appropriately), but you
should not use it as a replacement for referring to legislation and cases.
9. If you are dissatisfied with your grade, you should review your assignment and the feedback given.
Discussions regarding grades will not be entered into until you have reviewed your marked
assignment. You should then discuss your grade with the lecturer-in-charge. If you are still
dissatisfied with your grade, you are allowed to request a formal re-mark. Please note that such a
re-mark can result in your grade either (i) staying the same; (ii) being increased; (iii) being reduced.
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MARKING CRITERIA
Markers will be evaluating your assignments based on the following criteria:
Knowledge/Critical thinking and problem solving
For each transaction, have you:
• correctly identified the issue;
• correctly identified appropriate law (legislation and/or cases as appropriate);
• correctly applied the law to the facts;
• clearly argued points that may be in doubt;
• reached a conclusion as to the taxation treatment.
Written communication/presentation:
• Does your assignment have a clear structure?
• Is it free of errors (such as spelling, grammatical or typographical errors)?
• Does your assignment follow the “presentation and quick reference guide” included in
this document?
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PRESENTATION AND QUICK REFERENCE GUIDE
Presentation
1. You must use one and a half (1.5) spacing and a font size of 12. You must leave at least
a 2.54 cm margin from both sides of the A4 page (note that this is the ‘normal’ margin setting
in Microsoft Word).
2. Your assignment is required to be referenced. You should use footnotes and your
assignment should also include a reference list. Taxation law courses generally follow the
Australian Guide to Legal Citation (“AGLC”). Some examples of this referencing style are
provided below.
3. Footnotes are not generally counted in the word count. However, you must not place
substantial parts or central parts of your answer or argument in footnotes.
4. Calculations are not included in the word count. We encourage you to use tables to present
calculations. These can be included in the body of your assignment.
5. Quotations are included in your word count. The reason for this is that we do not want you
quoting large portions of the legislation in your assignment. The markers know what the
legislation says. (Similarly, although you will at times need to refer back to specific facts
given in the question, we do not want you to restate all the facts in your assignment. This is
a waste of words).
6. You are encouraged to use headings in your assignment.
7. You should carefully proof-read your answer (a number of times) before submission.
Referencing
1. Your assignment must be fully and properly referenced. Failure to reference your
sources is plagiarism and amounts to academic misconduct.
2. In your assignment, you will need to refer to, at a minimum, legislation and cases.
You may also want to refer to a range of other material including government
documents, books and websites. Provided in the below tables are some examples of
how to cite these sources. Note that these are examples only – some of these will not
be relevant for your assignment, and you will be expected to refer to sources that are
not included in the table.
3. Table 1 (“Reference examples”) contains examples of how you should reference
sources in your reference list. Table 2 (“Pinpoint reference examples”) contains
examples of pinpoint referencing. This is when you refer to a specific page,
paragraph or section. Your assignment should utilise pinpoint references as much as
possible. Table 3 (“Subsequent reference examples”) contains examples of how you
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are allowed to reference the sources provided in Table 2 if you have already given
the full reference in an earlier footnote.
4. Please note that for this assignment, we are allowing certain abbreviations and
modifications that do not strictly follow the AGLC style guide. This is to simplify the
referencing process for you. If you are studying further Taxation Law courses, you
should follow the AGLC (or the referencing guide given in that course).
Table 1: Reference examples
Legislation Income Tax Assessment Act 1997 (Cth).
Cases Sun Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR
337.
AusNet Transmission Group Pty Ltd v Federal Commissioner of Taxation
[2015] HCA 25.
Taxation rulings Australian Taxation Office, Income Tax: Carrying on a Business as a
Professional Artist, TR 2005/1.
Books Frank Gilders et al, Understanding Taxation Law 2017 (LexisNexis, 2017).
(Note: “et al” is used following the first author as there are more than three
authors. Where there are two or three authors, the names of authors should be
included).
Journal articles Diane Kraal, ‘University teaching: A reflection of tax teaching and cultural
diversity’ (2014) 9 Journal of the Australasian Tax Teachers Association
215.
Websites Australian Taxation Office, Income you must declare (20 May 2016)
Australian Taxation Office and-deductions/Income-you-must-declare/>
(Note: the first reference to “Australian Taxation Office” is as the author of
the webpage. The second reference to “Australian Taxation Office” is the
title of the general website on which the document is located. The date is the
last date the webpage was updated. Where there is not a full date available,
as much of the date that is available should be included).