Reference no: EM132400086

FNSACC502 - Prepare tax documentation for individuals - Elite Education Vocational Institute

Qualification : FNS50215 Diploma of Accounting

Assessment task 1 Portfolio of activities

Task 1-Basic Knowledge check
Question 1. Define assessable income AND allowable deductions
Question 2. ATO can carry out audits if they find any discrepancies in tax return. Mention the names of three such audits conducted by ATO with brief description for each
Question 3. What are the four key differences between residents and non-residents for tax purpose
Question 4. Now assume that you are the taxation accountant.
Please prepare a document check list and conversation key points to inform your client of the legal requirements. (Hint: 1. Mention the name of five records/documents that can be kept by taxpayers as evidence and certificate of authorization 2. How to ask for extra information if needed ).
Question 5. Mention the correct lodgment date for the following scenarios
Question 6. Give two examples of "adequate and effective conflict management arrangements" that you as a "tax practitioner" can apply future in your workplace
Question 7 How much assessable income was derived by each of the following taxpayers?
Question 8. Advise whether the following are assessable income, statutory income, exempt income or non-assessable income.
Question 9 Identify each of the following business outgoings as either an expense or Capital
Question 10 Calculate Tax:
Using the table of income tax rates, calculate the primary tax for the following taxpayers:
Question 11. Leila Karim is a doctor who made the attached payments during the year:
a) Advise which of these are deductible for tax purpose and cite relevant legislation.
b) If according to your opinion, any of the expenses are not deductible, briefly mention the reasons to the client.
c) Explain the substantial requirements that she will need to satisfy.
Question 12 Briefly state responsibilities of tax agents, including code of professional conduct obligations under the tax agent services act (TASA) and tax agent services regulations (TASR)

Assessment task 2 Case study

Question 1: Prepare an income tax return form for the following taxpayer
Your client David Lucas (Role played by your assessor), is a single taxpayer. David is a bank manager and has approached to you to prepare his 2017-2018 income tax return. Before the scheduled appointment with you, some relevant income and expense information has been provided as follows,
• Salary: $55 630; Allowances $230; Reportable fringe benefits$4000. Employer's ABN: 12 345 678 910 PAYG tax paid $10 560
• Unit trust distribution was $2264, which had franking credit of $ 113. There was also a gross capital gain of $260 that was fully discountable.
• David earned a $47 interest from an overseas bank account but he only received $40 after they subtracted a foreign tax credit of $7.
• Other income: bank interest $84; fully franked dividends $240; unfranked dividends $50.
• He received refunds of $450 from Medicare and his health insurer over the year.
• David owns an investment property that earned $13 240 rent. The expenses were: interest
$10700, agent commission $910, repairs $128, rates $930 and advertising $45. When he bought it three years ago, the building itself cost $ 212 000 and at the end of last year the appliances had a WDV of $ 1285 in the low value pool.
• During the year David drove his 2.5 -litre car 85 km on work- related travel. He also spent
$320 on union fees, $42 on laundering his grey trousers, $400 on Internet access (half of which related to his work), $45 on a text book, $80 on donations to the Red Cross and $2380 on hospital/doctors' bills. Private health insurance cost $1230 and he did not receive any upfront Government contribution for his health insurance premium

Instructions:

Not all the required documents are provided by your client, therefore, you are required to make an appointment with your client (your assessor) to gather all the required information and then prepare for the income tax return for him.
From the ATO website (www.ato.gov.au) you can download the Tax return for individuals 2018 form in Portable Document Format (PDF) NAT 2541. Based on the information above, you need to submit a soft copy of the tax return completing all relevant details for the 2017-18 year, specifically pages 2- 7 inclusive.

In place of the front page, attach the cover sheet and show all workings, calculate the taxpayer's taxable income and tax payable/refundable for the financial year ended 30 June 2018?

Australian tax is levied annually on the taxable income of a taxpayer. Taxable income is calculated on the basis of assessable income less allowable deductions. Once taxable income is worked out, tax on taxable income, tax offsets, Medicare levy and tax credits need to be included to calculate the tax payable. The actual tax liability is worked out when the annual income tax return is assessed. The
PAYG instalments for the year are credited against your assessed tax to determine whether there is a tax payment or a refund.

To complete the task, you are to take the role of a tax agent and need to schedule two sessions with your client (assessor) either by phone or in person to complete the enquiry session and the result explanation session. Each session should be approximately 10mins in duration.
For the enquiry session, you need to:
describe the key sources of information and data required to calculate taxable income. Ask for any further information you need, for example, insurance company details, employer's ABN;
Explain your key responsibilities under the Tax Agent Services Act (TASA) and Tax Agent Services Regulations (TASR) as a tax agent to your customers;
describe the procedures relating to the preparation of tax documentation for individual taxpayers.

For the result explanation session, it should be done after you complete all the calculations and filing. During this session, you need to:

explain the rules and principles of Australian tax law and main concepts included in this case, e.g. Low-income benefits, franking credit, car expense.

administrative aspects of the taxes identified above including documentation, tax collection and withholding mechanisms, assessments, obligations, rulings, penalties and audits

outline the key accounting principles and practices relevant to the preparation of tax documentation for individual taxpayers.

Question 2 Tax audit - Role Play and Response Letter

ATO reviewing your client Daniel's 201X income tax return and the refund will not be issued until the finalisation of this audit.

Your client has claimed that the National Affordability Scheme refundable tax offset in the correct label T11. For an individual taxpayer, it should be claimed 13B. ATO may process his return, but documents and information for national affordability scheme refundable tax offsets must be provided by Daniel.

Now Daniel approached to you for seeking advice on the audit.
What need to do
a) Make an inquiry to ATO officer to obtain the information about the tax audit and be able to advise the client for documentation (Role Play with the Assessor)

b) Respond by drafting a response letter before the due date. Please insert the following text in the subject field: Attention XXX for XXX Audit. This will ensure quick allocation and fast processing of the information.

Attachment:- Prepare tax documentation for individuals.rar