HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Assessment Details and Submission Guidelines Trimester T1 2019 Unit Code HI6028 Unit...

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HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Assessment Details and Submission Guidelines Trimester T1 2019 Unit Code HI6028 Unit Title Taxation Theory, Practice & Law Assessment Type Individual Assignment Assessment Title Questions of Taxation Law Purpose of the assessment (with ULO Mapping) The individual assignment will assess students on the following learning outcomes: 1. Demonstrate an understanding of the Australian income tax system, the concepts of income and deductions, CGT, FBT, GST general anti-avoidance provisions and income tax administration. (ULO 1) 2. Identify and critically analyse taxation issues. (ULO 2) 3. Interpret the relevant taxation legislations and case law. (ULO 3) 4. Apply taxation principles to real life problems. (ULO 4) Weight 20% of the total assessments Total Marks 20 Word limit Not more than 2,000 words (acceptable to be 10% above or below this word limit) Due Date Week 10 at 11:59PM Submission Guidelines  This assignment along with a completed Assignment Cover Page is to be submitted by the due date in soft-copy only (Safe assign – Blackboard).  The assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook.  It is the responsibility of the student submitting the work to ensure that the work is in fact his/her own work. Ensure that when incorporating the works of others into your submission that it is appropriately acknowledged.  The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.  Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.  It is the responsibility of the student who is submitting the work, to ensure that the work is in fact her/his own work. Incorporating another’s work or ideas into one’s own work without appropriate acknowledgement is an academic offence. Students should submit all assignments for plagiarism checking on Blackboard before final submission in the subject. For further details, please refer to the Subject Outline and Student Handbook.  Proper referencing in accordance with school regulations. Page 2 of 5 HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Individual Assignment Specifications Purpose: This assignment aims at assessing students on the Learning Outcome from 1 to 4 as mentioned above. Assessment task: Question 1 (10 marks) Your client Helen wants to fund her business as a fashion designer, therefore she has sold some of the assets as follows: 1- An antique impressionism painting Helen’s father bought in February 1985 for $4,000. Helen sold the painting on 1 December 2018 for $12,000. (2.5 marks) 2- Helen sold her historical sculpture on 1 January 2018 for $6,000. She has purchased the piece on December 1993 for $5,500. (2.5 marks) 3- An antique jewellery piece purchased in October 1987 for $14,000. Helen sold the antique jewellery piece on 20 March 2018 for $13,000. (2.5 marks) 4- Helen sold a picture for $5,000 on 1 July 2018. Her mother purchased the picture in March 1987 for $470. (2.5 marks) Advise the Capital Gain Tax consequences of the above transactions. Question 2 (5 marks) Barbara is an economist researcher and commentator. The Eco Books Ltd offers her $13,000 for writing a book about economics principles. Barbara has never written a book about economics principles, but accepts the offer and writes the economics book called ‘Principles of Economics’. She assigns the book’s copyright for $13,400 to The Eco Books Ltd. The book is published and she is paid. She also sells the book’s manuscript to the Eco Books Ltd’s library for $4,350 plus several interview manuscripts she has collected while writing the economics book for which she receives $3,200. Discuss each of the above payments to Barbara separately and states if these are income from Barbara’s personal exertion. (2.5 marks) Would your answer differ if Barbara wrote the Principles of Economics’ book before signing a contract with The Eco Books Ltd in her spare time and only decided to sell it later? (2.5 marks) Support your answer by referring to relevant statutory and case law. Question 3 (5 marks) Patrick paid $52,000 to his son David to provide some assistance in his newly started business. They agreed that David repay his father $58,000 at the end of five years. Patrick provided this loan to David without any formal agreement or security deposit for the sum lent. Patrick told his son that he need not pay interest. However, David repaid the full amount after two years through a cheque, which was included an additional amount equal to 5% on the amount borrowed. By referring to relevant statutory and case law, you need to discuss the effect of these arrangement on the assessable income of Patrick. (5 marks) Page 3 of 5 HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Assignment structure should be as the following (students responses involves calculations, and students must refer to the relevant legislation and cases whenever required according to the questions). Questions 1: Capital Gain Tax regarding antique impressionism painting Capital Gain Tax regarding historical sculpture Capital Gain Tax regarding antique jewellery piece Capital Gain Tax regarding picture Questions 2: Discuss Barbara ‘s income under the case scenario Discuss Barbara ‘s income under the alternative scenario Questions 3: Discuss the effect of these arrangement on the assessable income of Patrick Marking criteria Marking criteria Weighting Question 1 Capital Gain Tax regarding antique impressionism painting 2.5% Capital Gain Tax regarding historical sculpture 2.5% Capital Gain Tax regarding antique jewellery piece 2.5% Capital Gain Tax regarding picture 2.5% Question 2 Discuss Barbara ‘s income under the case scenario 2.5% Discuss Barbara ‘s income under the alternative scenario 2.5% Question 3 Discuss the effect of these arrangement on the assessable income of Patrick 5% TOTAL WEIGHT: 20% Page 4 of 5 HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Marking Rubric Excellent Very Good Good Satisfactory Unsatisfactory Question 1 Capital Gain Tax regarding antique impressionism painting Advised the Capital Gain Tax consequences regarding the antique painting correctly. Supported the answer by accurate referencing. Student demonstrates very good knowledge by giving the exempt capital gain figure regarding the antique painting accurately. Student demonstrates good knowledge of CGT regarding the antique painting, the response needs more elaborations. Student demonstrates sound knowledge of CGT regarding the antique painting. Missed to support the answer by proper referencing. Student failed to identify the Capital Gain Tax consequences regarding the antique painting. Capital Gain Tax regarding historical sculpture Advised the Capital Gain Tax consequences regarding the historical sculpture correctly. Correct CGT calculation method has been chosen. Correct CGT figures and clear final comments are present. Student demonstrates very good knowledge of Capital Gain Tax consequences regarding the historical sculpture. Correct CGT calculation method has been chosen. Minor error in calculation of the CGT figures are present. Final comments are clear. Student demonstrates good knowledge of Capital Gain Tax consequences regarding the historical sculpture. Correct CGT calculation method has been chosen. Minor error in calculation of the CGT figures are present. Final comments need more elaborations. Student demonstrates sound knowledge of Capital Gain Tax consequences regarding the historical sculpture. However, student missed to missed to selects the right CGT calculation method. As a result, the calculation of the CGT figures are incorrect. Final comments are not relevant. Student failed to identify Capital Gain Tax consequences regarding the historical sculpture. Capital Gain Tax regarding antique jewellery piece Capital gain or loss of the antique jewellery has been identified correctly. Clear final comments are present. Student demonstrates very good knowledge of CGT by referring to capital gain or loss of the antique. Clear final comments are present. Minor error is evidenced in the answers. Capital gain or loss of the antique jewellery has been identified correctly. But fails to present clear final comments. Student demonstrates sound knowledge of CGT by referring to capital gain or loss of the antique but not all parts of the questions. Failed to identify the capital gain or loss of the antique jewellery. Capital Gain Tax regarding picture An excellent response presented and identified the Responded the question very good. Identified the Capital Gain Student demonstrates good knowledge of Sound knowledge of CGT is presented Student failed to identify the Capital Gain Tax Page 5 of 5 HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019 Capital Gain Tax consequences regarding the picture correctly. Supported the answer by accurate referencing. Tax consequences regarding
Answered Same DayApr 30, 2021HI6028

Answer To: HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI6028 Taxation Theory, Practice and Law Individual...

Preeta answered on May 08 2021
136 Votes
Question 1:
Capital Gain tax regarding antique impressionism painting:
Helen received an antique impressionism painting from her father in heredity and was currently in possession of that. The painting was originally bought by her father in February 1985 for $4,000. The painting was sold by Helen on 1 December, 2018, for $12,000 for business fund.
Two methods can be used
to calculate the capital gain on the asset. The two methods are indexation method and discount method. There are some conditions which needs to be fulfilled if indexation method is to be applied on an asset (Australian Taxation Office). The conditions are as follows:
(i) The acquisition of the asset was before 11.45am (by legal time in the ACT) on 21 September 1999.
(ii) The owner possessed the asset for more than 12 months.
But some exceptions have been granted for the 12 month possession period which are as follows:
(a) If the owner comes to the possession of the asset as a legal personal representative or beneficiary of a deceased estate. In addition the deceased made the acquisition of the asset 12 months before disposing.
(b) If the owner comes to the possession of the asset because of a marriage or relationship breakdown and the combined period for which both the spouses were owner of that asset is more than 12 months.
All the criteria for indexation method and 12 months are satisfied because Helen got the asset from her father in heredity and their combined period of holding is exceeds 12 months.
In case the owner is a company, only indexation method has to be used. But for non company owners, the choice is open and any of the two methods can be adopted. Helen is individual and so has the choice of method. It is better to use indexation method since the painting is an antique.
So, Capital gain = Sale proceeds – Acquisition Cost.
As per indexation method,
Acquisition Cost = Original Acquisition Cost * (CPI of selling year/CPI of purchasing year)
CPI - December 2018 = 114.1
CPI - February 1985 = 37.9
Acquisition Cost = 4000*(114.1/37.9)
Acquisition Cost = $12,042.22.
Capital gain = $12,000 - $12,042.22.
Capital loss = $42.22.
Capital Gain tax regarding historical sculpture:
Helen was in the possession of a historical sculpture from December 1993. The Acquisition Cost was $5,500. Same sculpture was sold by her on 1 January 2018 for $6,000 for business fund.
Two methods can be used to calculate the capital gain on the asset. The two methods are indexation method and discount method. There are some conditions which needs to be fulfilled if indexation method is to be applied on an asset (Australian Taxation Office). The conditions are as follows:
(i) The acquisition of the asset was before 11.45am (by legal time in the ACT) on 21 September 1999.
(ii) The owner possessed the asset for more than 12 months.
All the criteria for indexation method and 12 months are satisfied since Helen bought the asset 25 years ago.
In case the owner is a company, only indexation method has to be used. But for non company owners, the choice is open and any of the two methods can be adopted. Helen is individual and so has the choice of method. It is better to use indexation method since the sculpture is an antique.
So, Capital gain = Sale proceeds – Acquisition Cost.
As per indexation method,
Acquisition Cost = Original Acquisition Cost * (CPI of selling year/CPI of purchasing year)
CPI - January 2018 = 112.6
CPI - September 1999 = 68.7
Acquisition Cost = 5500*(112.6/68.7)
Acquisition Cost = $9,015.56.
Capital gain = $6,000 - $9,014.56.
Capital loss = $3,014.56.
Capital Gain tax regarding antique jewellery piece:
Helen was in the possession of a piece of antique jewellery from October 1987. The Acquisition Cost...
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