1. Word limit is for the answers to the two questions and does not include footnotes, nor title page.2. Any standard report format is acceptable.3. Footnote citation style: As in prior law related units, students are advised by the MQ Library to use AGLC4 referencing guide.Please refer to this link http://libguides.mq.edu.au/referencing/AGLC
DEPARTMENT OF ACCOUNTING
AND CORPORATE GOVERNANCE
ACCG924 Taxation Law
Session 1 2019
Information and Instructions
• Weighting of this assessment task: 25%
• Format of submission: Microsoft Word document, 12-point type, double spaced.
• Method of submission: on-line, uploaded to iLearn
• Due date and time: Friday, 3 May 2019, at 11pm.
• Your written response to this assignment must be presented in a report format. Bullet points are not acceptable.
• Responses to this assessment task must not exceed 2,000 words.
• No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 20% penalty). This penalty does not apply for cases in which an application for special consideration is made and approved. No submission will be accepted after solutions have been posted.
? You must cite relevant cases, ATO rulings, and legislative references – (as footnotes) – to support your answers.
? Your response must also provide reasons that explain and support your answers.
Fiona Johnson is a well-known software designer, who was born and lived in Sweden. On 1 September 2018, she arrived in Sydney on an unrestricted work permit to take up a job with Australian Software Pty Ltd for a period of eight years. As an incentive to join this company, Australian Software Pty Ltd provided her with two airline tickets and vouchers for a holiday in London valued at $10,000. She was also offered $150,000. This was to be paid in two instalments - $75,000 on joining the company and $75,000 after one year of service. In addition, Fiona will also receive a lump sum payment of $200,000 if she resigns or is terminated. The condition is that she cannot set up a business in Sydney in competition with Australian Software Pty Ltd for five years after resignation or termination.
On 1 June 2019, Fiona sold the following assets in order to purchase an apartment in Sydney:
• 20,000 shares in a Swedish company: acquired on 1 July 1984 at cost of $5,000. The market value was $20,000 on 1 September 2018 and was sold for $25,000 on 1 June 2019.
• An investment flat in Sweden: acquired on 15 July 2018 at a cost of $185,000. The market value was $200,000 on 1 September 2018 and was sold for $210,000 on 1 June 2019.
• An investment property in Melbourne was sold for $550,000 on 1 June 2019. She acquired this property for her daughter who was studying at the University of Melbourne. She paid $300,000 on 1 April 2016 to acquire the property. The market value of the property as at 1 September 2018 was $500,000.
For the year ended 30 June 2019, Fiona received $150,000 by way of salary. As part of the company’s bonus plan, she is also entitled to receive $40,000. However, while she had elected to receive only $10,000, the unpaid balance being credited to Fiona’s account in Australian Software Pty Ltd’s books on 30 June 2019 was paid to her on 5 September 2019.
Following her departure from Sweden on 1 September 2018, Fiona rented out her own house in Sweden at $5000 (in Australian dollars equivalent) per month. On 5 July 2019, Fiona received a notice from her agent that rent received up to 30 June 2019 amounted to $55,000 (in Australian dollars equivalent), of which $5,000 was related to the month of July.
A statement of account from her Swedish bank indicated interest deposited in her bank account was $2,500 (in Australian dollars equivalent), of which $1,500 was related to the period from 1 September 2018 to 30 June 2019.
1. Advise Fiona on what amounts may be included in her Australian taxable income for the 2018/19 tax year. (20 Marks)
2. Calculate the assessable income which Fiona need to declare in her income tax return. (5 Marks)