Reference no: EM132886884

BULAW5916 Taxation Law & Practice - Federation University

Purpose

The purpose of this assignment is to enable you to explore and communicate your understanding of relevant aspects of taxation law.

In the future some of you will work as accountants. While doing so, you may have clients who ask for tax advice. They may ask you how transactions they have entered into might be regarded for tax purposes (for example, is a transaction likely to be regarded as income or capital?). You may therefore be faced with clients in real-life situations and be asked to give advice to them about how they should treat these situations for the purpose of their tax returns.

During this course, we will discuss what the law is (through reference to some of the main tax legislation, case law and ATO rulings) and will also discuss from time to time how we would tackle giving advice. For example, with some of the tutorial questions, we will discuss how to study law courses and write answers to tax law exams. While doing so, we will talk about how we must identify the relevant facts in a situation, identify the relevant rules, apply the rules to the facts and reach a conclusion. This will lead us to the exam, where you will continue to gain practical experience in answering problem style questions.This assignment will enable you to develop skills in answering such problem style questions before you sit the examination for this course.

Word limit
The length of the assignment is to be approximately 2,000 words. Assignments of more than 2,200 words will not be marked; those with less than 1,800 words will be at risk of failing.

Question 1

Jo, a lawyer, took a voluntary redundancy from her full-time position at a law firm. She had done some photography when she was younger and decided to engage an architect to build her a dark room in her house.

The dark room was completed at a cost of $55,000, equipped with all of the equipment that she needed to take her photography further. Jo advertised her services in the local newspaper and hired an assistant to help carry her expensive photography equipment around photo shoots, but few people were interested in paying Jo for her photography. For the year ending 30 June 2020 Jo sold $12,200 worth of professionally finished photographs and had expenses of $16,500. She is considering selling her photography equipment and taking up painting.

Referring mainly to income tax cases, advise Jo of the tax implications of these activities. Would she be carrying on a business? What implications would this have? Please include specific advice on whether receipts would be assessable and whether expenses would be deductible. Refer to relevant cases and statutory provisions in your answer.

Question 2

ABC is in the business of selling computer equipment and related software. In January 2019, ABC entered into a contract with XYZ, a computer retailer, to supply XYZ with computers and software over a period of two years. The contract provided that each computer sold by ABC to XYZ within the two-year period would be sold for a fixed price.

Due to a change in ABC's suppliers in November 2019, the price of ABC computers increased by an average of 20%. As a result, ABC indicated that it wished to cancel the contract from 1 December 2019. The cancellation of the contract meant that XYZ had to purchase other computers from another supplier at a higher price.

XYZ commenced legal action against ABC seeking $2,000,000 in compensation, being compensation for the increased cost of having to purchase its computers and software elsewhere and also for the fact that the software which XYZ had already purchased from ABC was not compatible with the new computers which XYZ purchased from another supplier. The legal action was discontinued when XYZ paid ABC $1,500,000 to settle all claims against it.

Advise XYZ as to whether the amount it has received as compensation constitutes assessable income. Refer to case law and statutory provisions in your answer.

• Identify and appropriately explain the range of tax issues connected with the fact scenarios posed in the questions
• Apply case law and legislation (where appropriate)to the fact scenarios posed in the questions
• Communicate in clear written English
• Format your assignment appropriately

Attachment:- Taxation Law.rar