Prepare tax documentation for individuals
Assessment Activity 1 - Knowledge Questions
This assessment activity is based on knowledge questions. Each question has a word limit. Answer the following task. You must answer all task to get satisfactory performance in this assessment activity.
Task 1.1
Discrepancies must be identified and resolved to give the truly financial position of individuals. List types of discrepancy and unusual features that you should be aware of.(Word limit 100 to 130)
Task 1.2
Discuss the importance of confirming documentation with clients to ensure that legislative requirement are meet. Minimum 100 words
Task 1.3
David failed to disclose $4,000 bank interest in his return for the year-end June 2015 and the notice of assessment has issued. Advise the time limit on the commissioner to amend the 2014-15 assessment.
Task 1.4
For how long an employee must keep records of work expenses.
Task 1.5
Identify the accrued income, prepaid income, expenditure and calculate the taxable income for Murray.He operates a fitness school and use accrual basis accounting for his business. He provides the following information (all amounts are exclusive of GST) for the year of 2013/14: (PC - 1.6)
Murray had the receipts:
- Cash takings from casual lessons $18,000
- Receipts from regular customers $288,000
(All bookings are received in advance of the actual lessons)
He had the following account balance:
- Income received in advance as at 1 July 2013 $22,000
- Income received in advance as at 30 June 2014 $28,000
He also incurred the payments on 1 January 2014:
- For the following 12 months rent of the business premises $40,000
- For the following 12 months lease of the business equipment $46,000
Task 1.6
Describe how you would seek advice and guidance to evaluate and moderate decision process. (Word limit 200) (PC - 2.3)
TASK 1.7
Discuss the importance of taking client authorisation to ensure that legislative requirement are meet. (Pc 2.4)
TASK 1.8
Who must lodge a tax return? When do you lodge a tax return? (3.1)
TASK 1.9
Daniel was audited by the ATO. He runs a furniture business. Throughout the audit, he hindered the ATO by failing to attend schedule meetings and failing to disclose important information. The auditor has discovered undisclosed income of $300,000 over four years, resulting in tax short tax of $100,000. The auditor is of the opinion that Daniel deliberately conceal the shortfall. The auditor also found Daniel did not keep proper record of his transactions. (3.2)
Required: Advise client his expected current tax obligation according to taxation authorities and determine the followings.
(a) How much short fall is the ATO likely to Charge?
(b) What else will the ATO charge on tax shortfall?
(c) Name one other administrative penalty the ATO is likely to charge?
(d) What other further action can ATO take?
(e) If Daniel believes the tax shortfall is incorrect, what resources does he have available to him
TASK-1.10
Michael arrived at his business premises and found two ATO auditors waiting for him. They informed him that they were doing an audit and wanted immediate access to his records. Michael is nervous and phones you for advice. Advise Michael of his rights. (3.3)
Task 1.11
Which legal, ethical and other requirements must be kept in mind, while preparing tax documentations for any client?
Task 1.12
Explain ATO's guidelines for following taxes:
1. Goods and services tax
2. Capital gain tax
3. Fringe benefit tax
4. Employment termination payments
Assessment Activity 2: Case study
Suppose you work as an assistant accountant for an Accounting firm called Maan pty ltd, an accounting firm, firm has many clients. Firm is involved with many accounting functions such Bookkeeping, tax, BAS, GST and other requirements. One of their client Marry came to you after July 2015 to lodge her tax returns. Mary has provided you the following information. Read this information carefully and answer below tasks. You must answer all tasks to get satisfactory performance in this assessment activity.
Mary has advised you she runs a small tapware business from her home, which is not GST registered. Her ABN is 84 491 702 643.
Details were as follows:
- Sales were $58,000
o Costs were as follows:
- Purchase $28,000
- Advertising $5,500
- Bank charge $1,000
- Telephone $4,500
- Stationery $1,500
- Speeding fine $386
- 12-month business insurance payment on 1 March 2015 $2,400
Suzuki 300o C.C travelled for business 1800 kilometres
Mary's TFN is 456 896 543. Mary has resided at Bass Hill for the past four years and would like all correspondence sent there. Her business address is the same as home address, 13 George St, Bass Hill NSW 2777
Mary advises that she owns 2,750 Coles share and received fully franked dividend as follows:
14/10/2014 Franked Dividend $110 Imputation credit $47
14/04/2015 Franked Dividend $126 Imputation credit $54
Mary sold Telstra (TLS) shares 29 June 2015: 3000 TLS shares @4 per share
Mary bought Telstra (TLS) shares 2nd November 2011: 3000 TLS shares @3.40 per share
- Interest received from ANZ bank $2,300
Mary (DOB: 03/05/1977) is married to David. Mary works part time at Coles as night filler
During the work at Coles she has following expenditure:
- Purchase working shoes $120
- Washing uniform 38 weeks
- WHS training paid $420
- Tax agent fess $120
- Donation to Salvation Army $50
You are engaged to prepare Mary's tax return of 2014/15. You need to communicate with her and complete the following tasks for her case.
Task 2.1:
Decide which tax documents are required to prepare Mary's taxation.
Task 2.2
There could be many legal changes in terms of recording and reporting. Which sources would you use to make sure Mary is legally complaint according to changes in tax laws and other updates?
Task 2.3
Identify Mary's assessable income and allowable deduction. You may use following table:
Task 2.4
Complete and record all assessable income and deduction in to individual tax return form. Also, calculate tax payable amount for Mary for the year 2015 with legislative requirement that comply Australian Taxation office requirements (ATO) requirement. Tax return must be completed with appropriate format and show necessary calculation.
Tax return must have assessable income, deduction, taxable income, Medicare levy, relevant tax offset, spouse information, gross tax liability and finally net payable or refund.
You may use ATO's tax return form, which will be available from the link https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Individual-tax-return-2015.pdf it also has been attached with the assessment at the end as an appendix.
Task 2.5:
While collecting tax documents from Mary, there could be some discrepancies. What could be those discrepancies? What actions wold you take identifying and solve them?
Task 2.6
Look at Mary's provided information to Identify and calculate prepaid and expired expenditure, which can be claimed as deduction. What will be its effect on asset on 30thJune?
Task 2.7
Preparing and lodging tax return, as accordance with ATO's timelines is very important to meet legal and compliance requirements. What are the timelines to lodge a tax return for Mary?
Task 2.8
Once you have prepared the tax return, now do a 2 to 3 minutes interview with your trainer, assuming him/her as tax specialist. In this meeting discuss Mary's tax liability with trainer and ask any questions, if you are not clear about anything. This interview will help to get ready to lodge Mary's tax return after taking her signatures.
Your trainer will use following checklist to assess your skills.
Assessment Activity 3- Role paly (Group 2 Students)
This role is based on the same case study, which you have completed in assessment activity two.Which is as below:
Suppose you work as an assistant accountant for an Accounting firm called Maan pty ltd, an accounting firm, firm has many clients. Firm is involved with many accounting functions such Bookkeeping, tax, BAS, GST and other requirements. One of their client Marry came to you after July 2015 to lodge her tax returns.
In last assessment activity, you have prepared Mary's individual tax return and even have taken specialist advice. Now two students will work together, where one student will play the role of the assistant accountant, who has prepared the tax return. Second student will play the role of Mary and vice versa. As a group of two students, you will perform following:
Task
Assistant accountant will show and explain all tax calculations to Mary, take her approval as signatures on those tax documents. Here students will use the form they have used in task 2.4. Make sure Mary sign the papers (taxpayer's declaration section with current date). Advise Mary, how many days Australian taxation office will take follow up her tax return. Also, explain the importance of following up all further enquiries from Australian taxation office.