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HI6028 Taxation Theory T1 2019

Trimester T1 2019 
Unit Code HI6028 
Unit Title Taxation Theory, Practice & Law 
Assessment Type Individual Assignment 
Assessment Title Questions of Taxation Law Purpose 
Holmes Institute

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)

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)

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