Reference no: EM132444898

HI6028 - Taxation Theory, Practice & Law - Holmes Institute

Purpose of the assessment

Students are required to follow the instructions by your lecturer to confirm any relevant information. You also need to follow any relevant announcement on Blackboard to confirm the due date and time of the assignment.

The individual assignment will assess students on the following learning outcomes:
1. Demonstrate an understanding of the Australian income tax system, the concept of deductions, CGT, general anti-avoidance provisions and income tax administration.
2. Identify and critically analyse taxation issues.
3. Interpret the relevant taxation legislations and case law.
4. Apply taxation principles to real life problems.

Assignment Specifications

Problem 1

Emmi studies accounting at Holmes Institute and works part-time in Crown Melbourne restaurant. During the year Emmi has receipts as follows:

(i) Tips from customers of $335 cash;
(ii) Income of $25,000 from working in the Crown Melbourne restaurants;
(iii) An expensive perfume worth $250, from a regular customer gifted to Emmi at Christmas time. Emmi does not use the perfume and gave the perfume to her mother;
(iv) A monthly entertainment event paid by the restaurant owner. The owner spends around $380 on the meals that Emmi consumed. Emmi enjoys these events and sees them as a reward for her hard work;
(v) Emmi received $15,000 as Christmas gift from her father.
With reference to relevant legislation and case law discuss Emmi's assessable income for the year.

Calculate Emmi's Total Assessable income.

Problem 2

Liu is a 65 years old Australian resident but born in China, Liu is retiring from her business and decides to sell all of her Australian assets and moving home to China.

The assets that she is selling include:

(i) A house Liu purchased in 1981 for $55,000 and now worth $630,000. This house was Liu's main residence for the entire period of ownership.

(ii) Liu's car which cost $37,000 in 2011 and is now worth around $8,000.

(iii) Liu's has a small business enterprise, Monte Liu Photography Studio. She started the photography business herself and has found a buyer to take over the business for $125,000. The sale price includes $53,000 for all of the photography equipment, which cost $63,000, and $50,000 for goodwill.

(iv) Liu's furniture for $4,800. No single furniture item being sold cost more than $2,000.

(v) Liu paintings for $28,000. All of her paintings were purchased in second hand shops or markets and no single painting cost more than $500. The one exception was a painting she purchased direct from an artist for $1,000. This painting being sold for $8,000.

Advise the capital gains tax (CGT) consequences of the above sales. Your answer should include appropriate legislative references.