Subject: Taxation Law (BBAL501)
Students are evaluated on their skills to explain and apply their knowledge of the relevant Australian Tax Laws using the three step process. Briefly the process is:
1. Identification of correct legal issues;
2. Articulation of arguments and application of law to facts; and
3. Depth of analytical thinking shown in logical reasoning and calculations.
This is a group assignment. It has four (4) scenarios/problem based questions. The weightage is 20% of the overall assessment. Forty 40 marks (10X4) are available for 4 questions. Questions will be assessed as per the instruction given below:
Requirement Marking Criteria
1) Proper analysis of the scenario by identifying the correct legal issues. Articulation of arguments and application of law to facts.
2) Evidence of analytical thinking shown in logical reasoning, calculations and recommendations. 9.0-10.0: Detail analysis of the scenario using relevant Tax Law and sections. Proper application of Law matching the scenario. All data used correctly. Correct calculations with proper recommendations.
7.0-8.0: Partial analysis of the scenario using appropriate Law. Application of Law matching the scenario. All data used correctly. Correct calculations with proper recommendations.
5.0-6.0: Short description of the scenario using appropriate Act only. Application of Law partially matching the scenario. Correct use of partial data. Correct calculations with short recommendations.
3.0-4.0: Short description of the scenario with no analysis but using appropriate Act only. No application of Law. Partial correct calculations. No conclusion given.
1.0-2.0 No description of the scenario. No Analysis. Identification of correct law matching the scenario. Shows little ability to collect, organize and present information.
0.0 No attempt was made to present the report. No analysis. No identification of laws. No Calculations.
Scenario-1: Topic: Residence and Source (Marks-10)
Bradley is a Professor of Chemistry at the University of London. He comes to Australia under a contract to work for eight months (January to August) on a research project. He is married and has got two school going kids aged 9 & 12 who are currently living with his wife Mary in London. Bradley and Mary have got a small family business in London which will be managed by Mary while Bradley is in Australia for research purpose.
Bradley intends to leave Australia after he finishes the project. While staying in Australia Bradley takes on an eight months lease for a small furnished house near work. He also buys a Toyota 1995 model car in February. He regularly makes contact with his family via skype also prefers writing letters to his two kids. On weekends he visits his friends and colleagues houses. During his stay he also went to Sydney and Adelaide for a short trip.
Bradley has opened a bank account with Commonwealth Bank of Australia (CBA). His salary gets deposited to CBA by his employer on the 30th of the month. As soon as he receives his salary he transfers a part of it to his wife in London for family expenses.
Bradley has got a house in London, his country of domicile. He is also a regular taxpayer in London.
Bradley has come to you for a professional advice as one of his colleagues has told him that he has to pay tax in Australia for his Australian sourced income. Is Bradley a resident of Australia for tax purpose? Why or why not? Demonstrate Bradly’s situation and establish your opinion with a full analysis of relevant source and act.
Scenario-2: Topic: Residence & Source (Marks-10)
Analyse and compare the decision of the High court in “FCT v Applegate (1979) 9 ATR 899” and “FCT v Jenkins (1982) 12 ATR 745”. Summarise your answer by critically discussing the cases.
Scenario-3: Topic: Income According to Ordinary Concepts (Marks-10)
Morgan Brothers is a market research firm in Australia specialising in public opinion, corporate image and media measurement, and gradually expanding to cover all aspects of market research with information gathering via personal interviews, telephone, online and self-administered questionnaires. During year 2014 they were conducting a market surveys for the tobacco industry. The company has contracts with five cigarette manufacturers. As a result of amendments to state laws concerning cigarette advertising, one contract was terminated. The contract had five years to run and provided up to 65% of Morgan Brother’s gross income. The cigarette company obtained a release from the contract for a payment of $250,000.
Advise Morgan Brothers whether the amount of $250,000 is income for their business.
Scenario-4: Topic: Capital Gain (Marks-10)
Brian, 45 years of age, is a local plumber in Melbourne’s eastern suburb. Recently he has sold his gift shop and family home in Melbourne and decided to move to South Australia on 21 June 2014. Brian had originally acquired the shop on 10 October 1992 for $450,000. He sold the gift shop on 20 May 2014 for a net consideration of $840,000. Of this sum, $120,000 was attributed to goodwill. Additionally, Brian received a further $70,000 for signing a contract not to open another business within a 10 km radius for the next five years.
Brian also sold his principal place of residence in Victoria. He had originally acquired the house for $1,140,000 on 19 July 1998. It was sold on 10 June 2014 for $1,980,000. Estate agent’s and solicitor’s costs associated with the sale were $31,000.
Advise Brian on the tax consequences regarding the above-mentioned transactions for the year 2013/2014 tax year.
Sadiq,K., Coleman, C., Hanegbi, R., Jogarajan,S., Krever, R.,Obst, W.,& Ting, A.(2014). Principles of Taxation Law, General ed.Thomson and Reuters,Sydney.
Nethercott, L., Richardson, G.,&Devos,K. (2013). Australian Taxation Study Manual, (CCH, Sydney).