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ACC 304 T1 2019 IM Assessment Information Subject Code: ACC 304 Subject Name: Taxation Law Assessment Title: Tax Practice Assignment Weighting: 20% Due Date: Due by Monday 13 May 2019 before 11:30 pm AEST – please note to adjust for time differences if needed. Assessment Description ACC 304 - Learning Outcome 5: “Tax Practice Assignment”. Required: Answer Parts A, B and C listed below. This assignment must be presented as an individual effort. The assignment requires individual research using a range of tax resources. It is expected the you will survey the relevant literature, including decided cases, and select appropriate additional resources. You are expected to identify the facts and issues presented by each question, identify and apply the relevant legislation and/or case law, and reach a conclusion. This assessment assesses your research skills, your ability to synthesise an original piece of work to specific content requirements. It also assesses your written communication skills. Your reasons for your conclusions and recommendations must be based on your research into the relevant cases and legislation. Please check the marking sheet (included below) for each part to ensure that you have followed all the guidelines for presenting your work. Assignment details The assignment consists of three parts: PART A: Written letter of advice. (10 marks) Assignment question: Prepare a letter of advice to your new client, Jack Johnson of Classic Towers, Road No 2417, Manama, Bahrain regarding his residency status for the year ended 30 June 2018. The letter should be no greater than a maximum of 1000 words. ACC 304 T1 2019 IM Jack Johnson is an Australian National having been born in Australia on 11 September 1964. He is an Australian citizen and holds an Australian passport. He also holds a British passport. Jack worked in the Middle East for many years for BAE Systems. He was married and he and his wife had 2 children. In 2015 Mr. and Mrs. Johnson decided to relocate the family to Australia. The move to Australia was always intended to be temporary but only until the security situation in the Middle East improved. In Australia Mr. and Mrs. Johnson purchased a house at Tweed Heads in New South Wales to be near Mrs. Johnson’s parents and siblings. Mr. Johnson remained in Riyadh, Saudi Arabia but returned to Australia in May 2016 to rejoin his family. In Australia Mr. Johnson moved into the family home at Tweed Heads. He commenced working for Tursa Training and Employment as an Operation’s Manager. Although he enjoyed being back in Australia, he earned significantly less income than he could in Saudi Arabia. He remained in Australia for approximately 12 months. In June 2017 he received an offer of employment to join TQ Education Ltd which was a UK based Company. The offer was to work in Saudi Arabia as the Director of Training at a salary of AUD $255,000. This was substantially more than what he was then receiving from Tursa being AUD $75,000. In addition, the income he earned in Saudi Arabia would not be taxed. He took up the position immediately and did so with an intention to live and work in the Middle East permanently or, at least, indefinitely. He said he had no fixed intention of when or if he would return to Australia. He also claimed that he expected that Mrs. Johnson and their youngest son would join him in Bahrain towards the end of 2018 and that they would live with him. He further said that when he left in June 2017, he did not expect to ever live at the property in Tweed Heads again. For that reason, he took his clothes, suits and other personal belongings with him to Bahrain. He sold all of his significant personal possessions in Australia including his boat and his car. He retained joint ownership of the family home at Tweed Heads with his wife. However, he intended that to be for the use and enjoyment by his wife and his children whilst they remained living in Australia. However, Mr. Johnson returned to Australia in November 2017 and again in April 2018. When he returned, he stayed in the Tweed Heads property with his family. He claimed that he did so because that was where his wife and family resided but that he was then effectively only visiting them. Moreover, he did not intend to take up full time work on the Tweed Coast ever again. From about June 2017, Mr. Johnson lived in Bahrain and worked in Saudi Arabia. He purchased a motor vehicle that enabled him to travel to and from work. He had entered into an employment contact with TQ Education. The contract was for 12 months. However, it is apparent the agreement was varied and necessarily extended over time. While Mr. Johnson lived in Bahrain, he resided in an apartment building called “Classic Towers”. Whilst he moved from unit to unit as his circumstances required, it appears that he remained located in the same unit block. Initially he took a two-bedroom apartment because he believed that his wife and children would visit him from time to time. He remained in that apartment from 10 June 2017 until 9 June 2018. It would appear that when his marriage broke down in May 2018 and he realised that his wife would not be moving to Bahrain, he moved in to a one bedroom apartment where he remains today. Classic Towers is a hotel complex, so it was easy for Mr. Johnson to change units as he had no lease agreement. ACC 304 T1 2019 IM Advise Jack whether he is a resident of Australia for tax purposes for the year ended 30 June 2018. PART B Calculate the net income of the partnership and the distribution statement for each of the partners for the year ended 30 June 2018. Show all workings. (6 marks) J&J Barista School opened for business on 1 July 2017. The accounting profits and losses are to be shared equally. The following transactions were recorded in the partnership’s cashbook in the year ended 30 June 2018. Receipts $ Fees received 350,000 Bank loan 55,000 Loan from Judy 45,000 Interest on drawings - Jared 500 Interest on drawings - Judy 750 Payments Rent of the training venue and sundry expenses such as utilities (all deductible) 35,500 Cost of ingredients used in Barista classes 6,600 Salary of part-time teachers 125,000 Salary of Jared 35,000 Salary of Judy 60,000 Superannuation contributions for part-time teachers 11,876 Bank loan repayments – principal 2,800 Bank loan repayments – interest 1,500 Interest on capital - Jared 1,000 Interest on capital - Judy 1,000 Interest on loan from Judy 2,500 Drawings - Jared 6,000 Drawings - Judy 12,000 Part C - Video Presentation (4 Marks) You are required to deliver a 1-minute presentation that chronicles how you determined Jack’s Australian tax residency status. and the calculation net income of the partnership. ACC 304 Taxation Law: Tax Practice Assignment ACC 304 T1 2019 IM Each of these parts is to be completed as separate exercises that will require students to show their workings, where necessary, and describe the reasoning behind their treatment of the items of data for taxation purposes. You should make sure you are familiar with the guidelines relating to the presentation of written work, late policy and academic integrity. You should also note the assessment marking matrix below which shows how marks will be allocated. Submission: You are required to submit the following electronically on Turnitin: 1. (Part A) a letter of advice on Jack’s residency for Australian tax purposes 2. (Part B) the calculation of the net income and distribution statement for the partnership J&J Barista School including all working papers and 3. (Part C) You are also required to prepare a 1-minute video presentation of your findings to be emailed to your lecturer Tax Practice Assignment Marking Matrix TASK MARKS AVAILABLE Part A 10 Part B 6 Part C 4 Total marks 20 Weighting – assessable value 20% ACC 304 Taxation Law: Tax Practice Assignment ACC 304 T1 2019 IM ACC 304 Assessment 3 Information - Individual Assignment Assessment Description Required: This is an individual assignment. All questions, must be attempted. The assignment must be submitted before the above due date to avoid any late penalties. Please make sure you follow the usual assignment presentation guidelines especially those relating to presentation and grammar of written work, late policy and academic integrity. Do not compare your answers with other students this must be your own work. Penalties apply where you are found to have plagiarised or copied or contract cheated. Submission: The assignment will need to be submitted electronically through the student portal – use the link under “Assessments” to submit the information. Instructions on the Assignment: Referencing: Any sources that you use need to be acknowledged in order to avoid plagiarism. Information on referencing can be found in the Guidelines for Referencing and Presentation at the Kaplan website using the following address: (https://elearning.kbs.edu.au/mod/page/view.php?id=128881). In‐Text Referencing and the Reference List: Sources of information must be cited in the body of the text (in‐text referencing). A reference list at the end of the assignment is not required. Failure to do so will result in penalties. Remember that when referencing an Annual Report, it is a corporate document that does not have a particular author but it will still require referencing any time you use information from it. Any other documents or books or other references you use will also require referencing.