LAWS20060 - TERM 1, 2017
ASSESSMENT 1 - INDIVIDUAL ASSIGNMENT
Marks: 40% of the overall assessment for the course
Submission: Online via Moodle
Format: One file in .doc or .docx (MSWord) format.
Submissions in any other file format (e.g. .zip) will be treated as a non-submission.
Word limit: 2000-3000 words
Due date extended: Week 8 Thursday (04-May-2017) 05:00 PM AEST
Return to students: Week 11 Friday (26-May-2017)
The university policy on extensions of time will be strictly enforced. Extensions will usually only be considered if made via the online system and based on medical or compassionate grounds. Any extension application should be made before the due date for submission. Medical conditions should be supported by a medical certificate, and, since students are expected to start the assignment early, temporary or last-minute conditions are usually not grounds for an extension. Professionals are expected to manage their time to meet their obligations, so work or personal commitments are insufficient grounds for an extension.
The university’s plagiarism policy will also be strictly enforced. If plagiarism is found, a minimum penalty is likely to be zero marks for the assessment. It could be worse.
QUESTION 1: 20 marks, 20% of the subject
Australian citizen and tech genius, Marty Goodson, set up “Planks Pty Ltd”, a tech business in Silicon Valley USA in 2012 developing new platforms for web designers and companies throughout the world. He incorporated the company in the USA and issued five shares to himself and five shares to five of his friends. His friends now reside in the US, Europe, Asia, Australia, and New Zealand. Each share was worth $100,000. Marty and his team used the $1,000,000 equity capital to develop a successful tech company in only a few years.
During the 2012/2013 financial year, Marty’s income was $100,000, and he did not return to Australia. During the 2013/2014 financial year, Marty’s income was $200,000 and he returned to Australia during the Christmas period for four weeks to spend time with his mother, father, and sister. His sister and her husband live in his residential home rent free. He met with his accountant to discuss the status of his three commercial investment properties in Brisbane, Sydney, and Melbourne. He also attended a friend’s birthday party and fell in love. During the 2014/2015 financial year, Marty’s income was $400,000 and he returned to Australia from the 1st September to the 1st April to spend time with his girlfriend. During the 2015/2016 financial year, Marty earned $100,000 before he returned to Australia permanently to marry the love of his life and start a family.
During the 2012/2013 financial year, Marty was the sole director and made all the management decisions for the company. The company made $1,000,000 profit. During the 2013/2014 financial year, the company expanded and the shareholders appointed a board of directors who all reside in the USA. However, it was widely assumed by the staff that Marty still made all the important decisions. The company made $10,000,000 profit. During the 2014/2015 financial year, Marty was appointed managing director. From 1st September to the 1st April, Marty made all his management decisions from Australia, and carried out all associated business activities such as signing contracts, and trading Platforms from Australia. The company made $25,000,000 profit. During the 2015/2016 financial year, Marty resigned as managing director, sold his shares to another tech company for $50,000,000, and returned to Australia a very rich man. The company made $50,000,000 profit.
Solve the following issues:
a. Is Marty an Australian resident for tax purposes? (5 marks)
b. Is Planks an Australian resident company for tax purposes? (5 marks)
c. If any, calculate the Australian tax liability relating to Marty’s employment income? (5 marks)
d. If any, calculate the Australian tax liability relating to Planks’ company profit? (5 marks)
QUESTION 2: 20 marks, 20% of the subject
Rommy bought a country property in rural New South Wales in 2000 for $500,000. Initially it was used as a weekend retreat and later as a weekend hobby farm producing a relatively small quantity of grapes which made a few crates of reserve quality wine.
Rommy ultimately drank 5 boxes throughout the year, gave 10 boxes away to friends, sold another 20 boxes at the local market on the one occasion he had a stall, and sold another 20 boxes on the side of the road outside his property with the assistance of an honesty box. Each bottle was worth $20. In 2015, Rommy subdivided his property and sold it for a total price of $1,500,000.
Solve the issue as to whether Rommy should include any financial amounts in his assessable income.
These criteria are a general guide as to the standard expected at the various levels. Characteristics indicative of the respective levels of achievement in the assignment are as follows. It is not necessarily the case that all these criteria will be met at a particular standard as there may be a superior performance on one of the criteria and not so satisfactory performance on another.
High distinction standard
• The answer is very well written and clearly expressed
• There is a demonstrated appreciation and understanding of the issues involved
• The answer is well structured and logically organised
• Demonstrated mastery of referencing system
• There is evidence of a comprehensive analysis of the issues
• Conclusions are backed by well-reasoned arguments demonstrating a detailed insight and analysis of issues
• Comprehensive coverage of all relevant issues
• References are made to the appropriated legislation for particular issues
• Statutory provisions are analysed and interpreted correctly
• The legislation is applied to the particular fact situation in a competent manner
• Consideration is given to the operation of the common law
• There may be consideration of issues not raised in the tutorials and answer guides
• The answer is well written and expressed
• The answer is structured and logical
• The issues have been reasonably well identified and appreciated
• There is correct use of referencing
• Issues have been analysed
• Reference is made to all appropriate legislation, although the analysis and interpretation is not as detailed and reasoned as for the high distinction standard
• The effect of the common law is considered
• There is a comprehensive coverage of the issues
• Occasional errors of law and legal reasoning may still be present
• The answer is generally well written and expressed
• The answer is structured and sequential
• Referencing is satisfactory
• Issues are identified and addressed
• There has been an attempt to analyse some of the issues
• The coverage of issues is reasonably comprehensive often with a good treatment and analysis of particular points
• Errors of law and incorrect reasoning may sometimes be present
• Statutory interpretation may require improvement
• Depth of treatment is often lacking in some of the issues
• Pass standard
• The answer is able to be followed and understood
• The answer could perhaps be better organised and structured
• The referencing may need improvement
• Issues may need to be identified and addressed in more depth
• Analysis when present may be incorrect
• Some familiarity with the legislation and its application is demonstrated
• Sometimes the conclusions reached are simple
• There may be several errors of law
• There may be quantities of material of marginal relevance included in the answer
• The answer may be significantly short of the required length
• The written expression is poor and difficult to understand
• The answer is poorly organised
• There has been a failure to identify and address the issues in the question
• Referencing is generally inadequate
• There is a lack of familiarity with the legislation and its appropriate application
• The reasoning and application demonstrated is poor
• Frequently there is much irrelevant material