Your task is to analyze client information outlined in the three different case studies below and present the findings in three Statement of Advice.

1. 1) You are required to prepare Lucy’s individual taxation return.

2. 2) You are required to provide recommendations and tax calculations to Susan regarding the taxation implications and tax payable by the trustee for Megan and Isabel, the beneficiaries.

3. 3) You are required to calculate the franking account and tax payable by Otago Pty Ltd.

For each question you are expected to:

1. 1) identify the facts and issues for each case

2. 2) apply the relevant legislation and/or case law.

Instructions

Statement of Advice 1 – Prepare a tax return for an individual taxpayer (10 marks for technical and calculation accuracy and relevance and 10 marks for writing style; refer to marking rubric for more guidance)

Your client Lucy has attended your office to have her 2021-year tax return prepared. Lucy is 52 years old, single resident taxpayer employed by Burwood Council as a clerk. Lucy is also a friend of yours.

She has the following documentation and admits that she is not good at keeping her receipts and invoices:

Payment Summary for the period 1 July 2020 to 30 June 2021 from Burwood Council.

Gross Wages $56,000
Allowances – Clothing $400
Tax withholding Deducted $12,000

Date	Paid to	Details	Amount ($)
30 July 2020	Eastern Clothing	Non-compulsory uniform (registered design of Council)	$380
1 October 2020	Foodbank Australia	Donation	$50
1 December 2020	Tax agent	2019 tax return fees	$100
1 December 2020	Lim’s Computer	Computer (est. 50% work use with 3 years effective life)	$1,200
1 February 2021	Corp Bookshop	Textbooks for clerical course	$500

Other Information

1) Lucy estimated total $490 annual train ticket used to travel to and from work.

2) Lucy advises you she spent $600 on personal grooming which was essential for her job and insists that she claims this amount.

3) Lucy held $2,000 for the whole year in an interest-bearing account but insists that she did not receive any interest during the year. Lucy has not supplied any bank statements.

4) Lucy sold various shares on 20 June 2021 as follows.

• Apricot Shares (Australian company): purchased in January 1998 for $20,000 and sold for $55,000.

• Pear shares (Italian company): purchased in March 2019 for $7,000 and sold for $5,000.
• Cherry shares (Australian company): purchased in May 2021 for $9,000 and sold for $14,000.

Required.

2. 1) Calculate taxable income for Lucy. As the Tax Agent, what advice would you provide for the best outcomes in relation to depreciation, CGT method and general deductions for Lucy within Australian income tax law? You are required to explain all income & deduction details with section numbers and/or cases in your explanations. Advise Lucy on the CGT consequences of the share sales. You must provide all methods available for her and choose the best method to minimize Lucy’s net capital gains.

Answer rating: 100% (QA)

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