Part A (worth 20 marks)

Topic

ABC Ltd. is a property developer which manages a large shopping complex on five acres of land at Officer, Victoria. As part of the expansion, they purchased an adjoining twoacres of land in 2020, at a cost of $7 million, for future expansion of the complex.

Also in 2020, ABC Ltd. sold some of their share investments which had been acquired two years ago. The shares had originally cost $1.5 million and were sold for $1.8 million. The funds from the sale of the shares were used to partly finance the purchase of the two acres of land.

Unfortunately, because of planning difficulties ABC Ltd. was only able to develop one acre of the land. It therefore later decided to sell the acre that it could not develop. To make this land more attractive to potential developers it subdivided the land into 5 parcels. By the end of the 2020/21 financial year, ABC Ltd. had sold three of these parcels. The first parcel was sold for $555,000. The second for $573,000 and the third for $567,000.

Required:

1. Citing all relevant legislation and case law, advise ABC Ltd. as to the tax consequences of the above transactions

2. If ABC changes its intentions to sell the remaining parcels of land and instead builds residential properties on the land and rents them out, what would be the tax and accounting consequences? Please advise with reference to tax law and relevant accounting standards.

Part B (worth 10 marks)

Topic

Jenny works full-time as an accountant and has a farm where she trains four horses for racing. During her spare time, she places many bets on horse races. Last year, she placed 504 bets and won $15,500. She keeps a spreadsheet containing records of the bets and attends many horse races.

Required

Advise whether Jennys gambling winnings would be assessable, referring to case law and legislation, and tax rulings where appropriate.10 marks

Marking criteria

Except where otherwise stated, in marking part A and part B your lecturer will place emphasis on whether you have demonstrated an ability to:

Identify the core provisions of the income tax legislation

Distinguish between and explain, where relevant, why some incomings/outgoings are assessable/ deductible and others are not

Compare and contrast accounting principles and principles of taxation (only relevant to Part A)

Analyse fact scenarios and provide solutions to the range of tax issues connected with the transactions

Apply principles and authorities to commercial scenarios

Conduct empirical research, evaluate legal information, and express opinions using communication skills

Solve problem scenarios through application of legal principles and rules

Apply the tax legislation and authorities to moderately complex fact scenarios

Advise entities of the tax consequences of prospective courses of action

Present the results of research and evaluation with responsibility and accountability for your own learning

You will be expected to:

Identify and appropriately explain the range of tax issues connected with the fact scenarios posed in the questions

Apply case law, legislation, and tax rulings (where appropriate) to the fact scenarios

Communicate in clear written English

Format your assignment appropriately