Assignment: TAXATION LAW
Purpose
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. Knowledge of tax law concepts
2. Ability to analyse tax law issues
3. Ability to apply legal tax principles.
Length: 2000 words.
Question 1
On 1 April 2018, Spiceco Pty Ltd provided a car to their employee Lucinda for her private use. Throughout the 2018/19 FBT year, the cost of the car was $18,000, repairs $3,300 Insurance $2,200, Fuel $ 990 (all above expenses are GST inclusive). Distance travelled 20,000 km (for the entire 2018/19 FBT year), Business use 70% Lucinda contributed $1,000 towards the cost of the car.
Using the 2018/19 rates, calculate the FBT liability for Spiceco Pty Ltd for the 2018/19 FBT year, assuming Spiceco Pty Ltd would like to minimise its FBT liability. If there is more than one method of calculating the FBT liability, conclude which method should be used. Show full workings to support your conclusion.
Question 2
Daniel Ray is in his late 50s and would like to plan for his retirement. Daniel has visited his accountant last week (15th March 2019). As part of his plan he likes to contribute to his superannuation fund (i.e. BT Super for Life) before end of financial year this year. (i.e. 30 June 2019).
Daniel has different assets worth around $1m and plans to see these and contribute this to his super fund. He also wants to lease his house and withdrew tax free amounts from huis super account when he turns sixty in august 2020. As part of his plan to collect $1m for his super investment, he has sold the following assets:
1- A house located at Doncaster (suburb of Melbourne). Daniel lived in this property for the last 30 years. At that time, he bought the house for $70,000 and sold the house for $865,000 in an auction on Saturday 29th June 2019. Out of this, he paid $15,000 to the real estate agent for the sales commission. The buyer deposited $85,000 on the property, however after 14 days the buyer advised the real estate that he did not have enough money for proceed with the contract of [purchase, therefore forfaiting his deposit to Daniel on 1st May 2019. After this the real estate agent started looking for another potential buyer.
2- Daniel has an artistic piece of painting by Margaret Preston. He purchased this on 20 September 1985 for $15,000. The painting was sold for $125,000 at an auction on 31 May 2019.
3- Daniel had a luxury yacht that he has since he was active member of Port Melbourne Yacht Club. He purchased the yacht in November 2004 for $110,000. Daniel sold the luxury yacht on 1st June 2019 for $60,000.
4- Daniel had shares in BHP mining company, which he has purchased these shares on 10 January 2019 for $75,000 and sold all of these shares on 5 June 2019 for $80,000. Indeed, he got a loan of $70,000 in order to buy these shares and incurred $5,000 interest on the loan. Daniel has paid $250 for stamp duty on the purchase, and $750 of brokerage fee on the sale of these shares. Daniel spoke to his tax adviser and he has advised Daniel that $5,000 interest incurred on the loan is a non- deductible expense.
In his previous financial year's tax return (i.e. 2017-2018) Daniel has incurred a net capital loss of $10,000 from the sale of AZJ shares. AZJ shares were the only asset that he sold in 2017-2018 financial year.
(a) Based on the above information, you are required to determine Daniel Ray's net capital gain or net capital loss for the year ended 30 June 2019.
(b) What Daniel will do with a likely net capital gain in this financial year.
(c) What Daniel will do with a likely net capital loss in this financial year.
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).
For question 1, address the following elements:
Depreciation
Interest
Total operating cost
Taxable value
FBT
Statutory method formula
FBT liability
Conclusion
For question 2, address the following parts:
a) Based on the given information, students are required to determine Daniel Ray's net capital gain or net capital loss for the year ended 30 June 2019.
b) What Daniel will do with a likely net capital gain in this financial year.
c) What Daniel will do with a likely net capital loss in this financial year.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.