Preview File Edit View Go Tools Window Help @ 4 ) 98% Sun 7:16 pm Q DE BFA391 - - Letter of Advice and Tax Return Preparation (1).pdf (page 1 of 7) ~ Q. Search BOOKMARKS 2. WHAT YOU NEED TO DO You will be required to prepare a letter of advice and an associated tax return for a fictitious client. You will need to undertake research into, or otherwise, investigate the clients' affairs and transactions to prepare the advice and determine what to include in the tax return. Specifically, you will need to address: . Which transaction result in assessable income and in what form? i.e., ordinary income or statutory income. * Which transaction result in allowable deductions and in what form? i.e., general deductions or specific deductions. * Tax payable or refundable by the client. * Make sure you consider niche topics such as CGT, trading stock and depreciation. 3. SUBMISSION REQUIREMENTS 3. SUBMISSION REQUIREMENTS SEP 15 X W LSDCLIENT SCENARIO 123 Purchased Apr 1, 2000 for 28,000 32,000 Bill Ding, an Australian resident for tax purposes residing at 456 Funky Drive, Hobart, TAS Hobart $300,000 + $58,000 Road 7000, visits your office seeking guidance on their tax return for the current year. They wants stamp duty to fully understand what transactions constitute assessable income and which expenses 5. Property Transaction they can claim as deductions. "Bill sublet the property for the first time this FY to his niece while she studies at Upon an extensive initial consultation, you uncover the following facts about Bill: Uni 1. Employment and Income Details: Bill is employed as a construction consultant with Get Em Up Sold 123 Hobart Road on Oct 1, CY for $680,000 with $5,000 in advertising Group Pty Ltd (ABN: 54 987 654 321) (GEU). Her income statement from GEL fees. This was Bills main residence up until he moved into 456 Funky Drive on details the following figures January 15, 2008. . Upgraded windows at 123 Hobart Road on Sep 15 CY with double-glazed units Description Amount (SAUD) costing $1,800. Gross Payments 150,000 6. Depreciable items for 123 Hobart Road include (all have or will use the DV method): Tax Withheld 64,000 Carpet (OAV:10,000) acquired 30 March PY Overtime Meal Allowance 4,000 Fridge (OAV:3,500) acquired 1 January CY Laundry Allowance 2,000 Dishwasher (OAV:2,500) acquired 10 July CY. 2. Investment in Shares: Bill received dividends from three different companies (all non- 7. Side Business - Bill Dings Consultation (ABN: 123 455 555) Bill also runs a business as a sole BRE's). To fund these investments, they took out a loan on 15 April PY: trader providing specialist building advice and recommending products which his stores at his warehouse Company Dividend Received (SAUD) Franking Level Expense Description Cost ($AUD) XYZ Ltd 5,000 100% Warehouse Lease 600/month MNO Ltd 10,000 50% Total KM travelled 8,000km PQR Ltd 7,000 80% Total cost incurred in maintaining and running vehicle $4,000 3. Business Loan Details: Bill has kept a logbook and estimates that 60% of her travel relates to work purposes. Principal: $100,000 Borrowing Costs: $4,500 Further details of Bill's business activities are included below: Loan term: 8 years Sales $10,000 . Annual Interest: $4,500 Opening stock $5,000 4. Rental Properties: Bill owns two properties with the following details and income: Purchases $12,000 Bill also earned $30,000 in consultation fees. These fees were from 4 independent Property Purchase Details Yearly Rental Interest on clients. Invoices as follows: Client 1: $20,000, Client 2: $3,000, Client 3: $5,000, Address Income Loan ($AUD) Client 4: $5,000 SAUD) 456 Purchased Jan 15, 2008 for 10,000* 14,000 Funky $280,000 + $25,000 stamp Drive dutyClosing stock Cost price $4,000 Market value $3,500 Replacement cost $3,750 Note: a shipment of stock (amounting to $1,500) was still on board a vessel at the end of the CY. The terms of the shipment were FOB destination. Required Prepare a letter of advice for Bill. The letter should advise on the tax consequences associated with each transaction. Ensure that your letter is well supported by reference to the fact pattern and relevant statue and/or case law. Your letter should also communicate to Bill the overall tax liability /refund they may face or receive based on your analysis. You may wish to prepare an appendix (not included in the word count) outlining your calculations. You should use your analysis to populate Bill's return on the myGov Simulator. You may assume that Bill had an appropriate level of health cover and therefore will not be liable for the additional Medicare surcharge