Student Number: (enter on the line below) Student Name: (enter on the line below) HA3042 Taxation Law Online Supplementary Assessment Trimester 1, 2020 Instructions: All questions are compulsory. All...

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Student Number: (enter on the line below) Student Name: (enter on the line below) HA3042 Taxation Law Online Supplementary Assessment Trimester 1, 2020 Instructions: All questions are compulsory. All questions must be answered by using the answer boxes provided in this paper. NOTE - Students must refer to the relevant legislation and cases where required by the question. Assessment Weight: This assessment accounts for 50 Marks. This paper consists of five (5) questions (with sub-sections). The questions include a combination of calculations and case studies. Each question is worth 10 marks each. QUESTION 1(10 MARKS) Isabella is 19 years old and a full-time student at Holmes Institute studying the Bachelor of Fashion and Business. She is saving for an overseas holiday to Poland and works part-time at a major department store in Melbourne. Two months before her planned trip to Poland she finds that she still needs $5,000. Her father employs her for four weeks as an office assistant in Harrolds Melbourne, a busy fashion department store. He pays Isabella $5,000 for this work. The other office assistant receives $500 a week. With reference to relevant cases and legislation, advise as to the assessability of the $5,000 in the hands of Isabella and the deductibility of the amount for her father. ANSWER: ** Answer box will enlarge as you type QUESTION 2(10 MARKS) Dr Elizabeth Grace is an Academic employed by Imperial College London. She takes five-month leave to undertake research at Holmes Institute in Melbourne. While Elizabeth is in Australia, she continues to be paid her salary by Imperial College London. While she is in Australia, Elizabeth lives in accommodation provided to her by Holmes Institute in Melbourne. Her husband stays in England and only joins her in Australia for a brief holiday. At the conclusion of her leave, Elizabeth returns to England and Imperial College London. With reference to relevant cases and legislation critically discuss whether Elizabeth is an Australian Resident for tax purposes? ANSWER: QUESTION 3(10 MARKS) Oliver is the sole shareholder, director and employee of Northrop Consulting Engineers. Oliver's company owns and operates a spraying aircraft for spraying crops and pastures with either fertilizers or pesticides. The business charges farmers on an hourly basis for the use of the aircraft and for Oliver’s time in flying the aircraft. Oliver charges $400 per hour of which around $50 per hour would be for his labour. The business also charges farmers for the spray being used. The only way a farmer can engage the aircraft is together with Oliver as the pilot as he lets no one else fly because the aircraft is his major asset. The company maintains simple books of account and records income when it is received. Most clients pay cash on completion of a job. Oliver rarely extends credit to his clients and only in special circumstances. Oliver keeps virtually no supplies of fertiliser or pesticides on hand and orders them for specific jobs. He does have a small amount of fuel and oil in his hanger. With reference to relevant cases and legislation, critically discuss whether Oliver returns his income for tax purposes on a “cash” or on an “accruals” basis? ANSWER: QUESTION 4(10 MARKS) Lucas and his wife Avery bought an apartment in Sydney for $130,000 on 1 September 2003. Lucas and Avery used the apartment as their main residence until Lucas received an offer to work in Melbourne. Lucas and Avery left Sydney for Melbourne on 1 September 2014. The apartment was rented out until the apartment was sold on 1 September 2018 for $555,000 to fund the purchase of a new home in Melbourne for $620,000. Calculate the Capital Gains Tax (CGT) on the sale of Lucas and Avery’s apartment. Your answer must include references to relevant Tax Law and / or cases. ANSWER: QUESTION 5(10 MARKS) Mrs Kely Hoppen is a well-known Australian Interior Designer. She has entered into a partnership with her husband, but they have no written partnership agreement. Mrs Kely Hoppen performs all the decorating work and all receipts and business documents are only in her name. Any cheques received are made out in her name, but they are deposited into a joint bank account. This account is used by both Mr and Mrs Hoppen and is used for household and business outgoings. Mr Hoppen helps in the business by taking phone calls from clients and suppliers. Mrs Kely Hoppen believes that she and her husband are in a taxation law partnership and that she acts for the partnership. Advise Mrs Kely Hoppen as to whether she and her husband are in partnership. You must refer to relevant legislation and/or case law in your answer. ANSWER: END OF SUPPLEMENTARY ASSESSMENT HA3042 Online Supp T1 2020