BFA714 Australian Tax LawAssignment 1

Task description: You are required to prepare a written report for the client described in the scenario below, discussing the various issues that relate to the preparation of their tax return. You are also required to prepare a calculation of the tax payable/refundable. This assignment is to be completed in pairs (i.e. with one other student).

Word limit: A concise and well organised report is expected.

Due date: Monday 26th April

Weighting: The assignment is weighted at 20% of your total mark for the unit.

Assessment criteria: As per the rubric on the last page of this document.

CLIENT INFORMATION:

General Facts:

David Read is employed as an accountant at DCB Accounting (a large firm) in Hobart; he is an Australian tax resident. David has been working for DCB since he graduated from university. David is currently single, and he has no dependants.

Last year, David used the services of a registered tax agent 'Tax Experts' in West Hobart to complete his 2019/20 income tax return. He subsequently determined that the consultant did not claim all the deductions he was entitled to, and he has now approached you to assist him in preparing his 2020/21 income tax return.

David has supplied you with the information set out below relating to his personal income tax return for the year ended 30th June 2021. Because he is uncertain as to which items are assessable or deductible, he has requested that you consider each item to determine whether it is assessable or deductible. David wishes to minimise his 2020/21 taxable income wherever legally possible.

1.Personal information

Full Name: David Read

Date of Birth:2nd September 1983

Main occupation: Accountant

2.2019/20 income tax return

On 10th October 2020, David received an invoice (dated 8 October 2020) for $440 from 'Tax Experts' for their work in completing his 2019/20 income tax return. David paid the invoice on 12 October 2020.

David's 2019/20 notice of assessment indicates he had additional income tax payable of $1,010. As David paid this amount late (on 2 June 2021), the Australian Taxation Office imposed $208 in general interest charges (GIC), which David also paid on 2nd June 2020.

3.Salary and Wages

For the entire 2020/21 income year, David worked as an employee accountant for DCB.

David was provided with a PAYG Payment Summary from DCB for the period 1st July 2020 to 30th June 2021, which revealed the following information:

Name of Payer:DCB Accountants

Gross payments: $130,000

Allowances: - refer to note (a)$4,000

PAYG tax withheld:$41,200

Note:

(a) The allowance (of $4,000) is made of up of the following:

a travel allowance of $1,500,

a phone allowance of $1,000,

a professional development allowance of $1,500 (to attend conferences, seminars etc).

4.Interest

David maintains several bank accounts. He provided you with the following information in relation to interest earned during the 2020/21 income year:

ANZ transaction account (gross interest) - refer to note (a) $5

CBA savings account (net interest) - refer to note (b) $265

Westpac term deposit (gross interest) - refer to note (c)$830

Notes:

(a)The ANZ bank account is David's ordinary transaction account and is where his monthly pay from DCB Accountants is deposited.

(b)When David opened his CBA savings account on 1st July 2020, he neglected to provide the bank with his tax file number (TFN). The bank, therefore, deducted 47% TFN withholding tax ($235) in respect of the interest earned. The net amount of $265 was credited to his account during the 2020/21 income year.

(c)On 30th July 2020, David deposited $30,000 in a six-month term deposit with Westpac, which had an interest rate of 3% p.a. On the maturity of the term deposit on 30th January 2021, David chose to rollover the interest of $450 together with the principal of $30,000 for a further six months, with a new maturity date of 30th July 2021. David estimates that approximately $380 in interest would be accruing on this new term deposit from 30th January 2020 to 30th June 2021.

5.Share Investments - Australian

David owns shares in several Australian listed public companies. During the 2020/21 income year, he received the following dividend income:

Company Name

Date paid

Cash received (franking percentage)

Afterpay

2nd October 2020

$960 (fully franked)

Rio Tinto

13th October 2020

$1,400 (60% franked)

Qantas

2nd April 2021

$1,080 (unfranked)

In the case of all dividends received, the company tax rate was 30%.

In respect of the Afterpay dividend, David elected to take part in the company's dividend reinvestment scheme. This meant that instead of receiving the cash dividend of $960, on 2nd October 2020, David was issued with 8 additional shares in Afterpay valued at $120 each.

6.Other receipts

During the 2020/21 income year, David also received the following:

(a)A $2,500 honorarium for his work as the treasurer of a local charity.

(b)David travels interstate frequently for work as some of the clients are based interstate. While his employer pays for the flights, David is a member of the Qantas Frequent Flyer club. It follows that, even when he is flying for business purposes, he earns frequent flyer points. For the 2020/21 year, David has accumulated 90,000 frequent flyer points, which could be used for $1,700 worth of flights.

(c)As a result of an error made by the payroll, on 28th June 2021 David received a $500 allowance that he is not entitled to. His employer sent him a letter on 30th June requiring repayment of the allowance, and David has authorised his employer to deduct the funds from his first pay of the 2021/22 tax year.

7. Expenses

During the 2020/21 income year David incurred the expenses listed below, and he believes that some are related to his employment. David has advised that he has receipts for all the expenses listed.

Accounting Seminars (for Continuing Professional Development purposes)

During the 2020/21 income year, Davis paid for and attended two professional development seminars held by CPA Australia. It is a requirement of his professional membership that he attend such seminars. Each seminar cost $1,000 to attend.

$2,000

Taxi fares

As the accounting seminars are held in a location a few kilometres away from his workplace, David travelled by taxi from his office in the Hobart CBD to the seminar location, and back again both occasions. The total cost of the four taxi fares was $80.

On four other occasions, David travelled home from work (i.e. his office) by taxi, as he worked back until late in the evening when there was no public transport. The taxi fares were $220 in total.

$80

$220

Public transport

During the 2020/21 income year, David took the bus to work from his home. He kept a record of his fares for the year and they were $890 in total.

$890

Qantas Club

Because David travels frequently, he purchased a membership of the Qantas Club, which allows him to access Qantas airport lounges before flights. The membership cost David $600 for the 2020/21 income year.

In any given year, 80% of David's flights relate to work.

$600

Briefcase

As his old briefcase was completely worn out, David bought a new briefcase for work on 1st November 2020.

His employer decided to reimburse him for this expense.

$6005

Assessment Rubric for Assignment 1

(20% of final grade)

Criteria

HD (High Distinction)

DN (Distinction) 70% - 79%

CR (Credit) 60% - 69%

PP (Pass)

50% - 59%

NN (Fail)

0% - 49%

90% - 100%

80% - 89%

Locate and identify relevant legislation, cases, rulings, and principles of taxation law.

AND

Analyse, interpret, and explain relevant legislation, cases, rulings and principles underpinning taxation law.

(weight = 30%)

Locates, identifies, and explains numerous relevant sources and principles of taxation law applicable to the scenario described.

Locates, identifies, and explains many relevant sources and principles of taxation law applicable to the scenario described.

Locates, identifies, and explains some relevant sources and principles of taxation law applicable to the scenario described.

Locates, identifies, and explains limited relevant sources and principles of taxation law applicable to the scenario described.

Analyse real life scenarios, identify the issues involved and critically apply taxation law to reach a conclusion. (weight = 20%)

Identifies all issues in scenario.Presents a logical, informed, and reasoned argument that critically and correctly applies taxation law to all identified issues and reaches conclusions.

Identifies most issues in scenario.Presents a logical, informed, and reasoned argument that critically and correctly applies taxation law to identified issues and reaches conclusions.

Identifies many issues in scenario.Presents a logical argument that correctly applies taxation law to identified issues and reaches conclusions.

Identifies more than half of the issues in scenario.Presents an argument that correctly applies taxation law to identified issues.

Limited issues in scenario are identified.Attempts an argument using limited references to taxation law.

Calculate components of taxable income and tax liability/refund. (weight = 30%)

90% - 100% of calculations correct.

80% - 89% of calculations correct.

70% - 79% of calculations correct.

60% - 69% of calculations correct.

50% - 59% of calculations correct.

0% - 49% of calculations correct.

Communicate independently with a client or superior in clear and coherent English in the form of a written report.

(weight = 10%)

Logical, concise, well developed report following structure suggested by assignment instructions and using legal writing conventions.

Reasonably well developed report following structure listed in assignment instructions and using legal writing conventions.

Report partially follows structure specified in assignment instructions.

Adheres to English conventions making report easy to read.

Mostly adheres to English conventions making report reasonably easy to read.

Occasionally adheres to English conventions - report difficult to read.

6

Justify calculations and support arguments by including legislation, case law and rulings.

AND

Apply legal referencing conventions. (weight = 10%)

Acknowledges all sources and referencing is accurate and consistent.

Acknowledges all sources and referencing is mostly accurate and consistent.

Acknowledges most sources and referencing is mostly accurate and consistent.

Acknowledges most sources and some referencing is accurate and consistent.

Acknowledges some sources and some referencing conventions are followed.

END OF ASSIGNMENT

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