Calculation of Tax Position for Frank Spencer
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Calculation of Tax Position for Frank Spencer
Determination of taxable income; decline in value; and miscellaneous business deductions…
LAWS20023 – Term 3, 2010
Australian Taxation Law
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Assistance with Assignment
by Michael Gallagher – Wednesday, 15 December 2010, 04:22 PMStudents,
The following comments may assist you in the preparation of assignments. You must use these comments as a mere skeletal guide to the issues that you must address in full in your assignment.
Please remember that Tax is a law subject and accordingly you must support any of your comments, assertions and calculations with one of the three sources of Tax Law namely Legislation ( ‘Black letter law’) , Common Law (Case Law) and ATO Tax Rulings.
Please ensure that you use the group assignment cover sheet when submitting as a group.
TASK 1
You are required to prepare a report so you need to understand the contents and style of a report. You may prepare a letter report in which you will render advice.
The first issue in the assignment is whether Mr. Lee loses his PPR exemption in full or partially by his absence overseas. He has made a capital gain on sale. You need to research the temporary absence rules and variations (if any) relating to the derivation of assessable income during the absence.
The second issue is to research by referring to the legislation whether the stamp collection is a ‘CGT asset’. Will a partial sale of an asset be assessable? You may need to look at the CGT ‘apportionment rules’ and review the formula given in s112-30 of ITAA 97 to obtain the answer.
You may need to ascertain a new cost base of the remaining part of the asset and to assess whether the indexation or discount method is to be used in the ascertainment of net capital gain. You will need to apply the method that will yield the best tax result for Mr. Lee.
Mr. Lee made a capital loss on the sale of the unit. You will need to follow the CGT rule of ‘losses before discount’ if you are using the discount method in ascertaining the net capital gain on the sale of the stamp collection. If using the indexation method then you would deduct the loss on sale of the unit from the gain on the sale of the stamp collection.
You need to advise My Boyang of the consequences of the death of Mr. Lee. Will his death ‘trigger’ a capital gain?
What are the consequences of the real estate being owned the estate ( a will trust) created by Mr. Lee’s death being left to Sylvia a nonresident of Australia?
You need to assess whether there will be any CGT payable and any remedial course of action that Sylvia could adopt by reference to the appropriate legislation.
You need to research the legislation on the tax effect of the remaining part of the estate (a will trust) being left to a nonresident. Who will pay and what tax (if any) will need to be paid?
Remember to address the question in your report by separate headings of what information needs to be provided in order to prepare a taxation return on behalf of the estate.
TASK 2
You must read and answer the questions posed in this task.
You will need to calculate the net income of the trust and distribute the net income (if any) to the beneficiaries including Frank Spencer.
You will need to use the ‘Taxation Formula’ to calculate the taxable income and tax payable or refund due to Frank Spencer.
You must support their each assertion and each calculation by reference to one or more of the sources of Australian Tax Law.
If making assumptions, you must state clearly the assumptions made within their assignment.
Calculation of Net Trust Income
In relation to the mechanics of the calculation of Trust Net Income, you should be mindful of the items in the accounting profit and loss that include GST and adjust figures accordingly for tax purposes.
You should be aware of the ‘Simplified Imputation System’ under s200-35 ITAA 97. Students may need to be mindful of the amount and the mode of distribution of any imputation tax credits.
You will need to understand the treatment of ‘borrowing expenses’ under s25-25 ITAA97.
You should be aware of the Capital Works provisions under Division 43 and the Pooling of Assets provisions under Division 328 ITAA97 relating to Small Business Entities (SBEs).
You must be aware of the limitations relating to the claiming of losses under Division 36 and the order in which losses are to be claimed. Be mindful of the differences in treatment of losses between a Trust and a Company.
Calculation of Tax Position for Frank Spencer
You will need to use the’ taxation formula’ to calculate the taxable income and tax payable (or refund due) by the taxpayer.
You will need to be able to distinguish between items that are assessable income s6-5 and items that are exempt income S6-20 and S11-10.
You will need to be aware of the ‘Simplified Imputation System’ under s200-35 ITAA 97.
You will need to assess what general deductions are claimable by the taxpayer by reference to the ‘cornerstone’ section s8-1 having regard to the positive and negative limbs of this section.
You will need to ascertain whether the taxpayer can claim any nonrefundable tax offsets and refundable tax offsets and credits.
You should be aware that Frank and Betty are separate taxpayers who prepare their separate tax returns for the fiscal year.
I trust that the above comments will assist you in the preparation of the assignment.
Michael Gallagher
Course CoordinatorYou are logged in as Amit Jindal (Logout)
LAWS20023_2103
LAWS20023 – Term 3, 2010
Australian Taxation Law
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Assistance with Assignment – Task 3
by Michael Gallagher – Saturday, 1 January 2011, 09:49 PMI did not cover task 3 in my previous advice.Please read the advice carefully.
Task 3
The following advice must be seen as a guide and finite. You are expected to research and to produce detailed explanations of the issues.
You are required to produce a letter of advice in the form of a letter report.
Question (a)
This problem requires a discussion of revenue repairs versus capital improvement. You should research cases in this area covered in your lectures and slides. Note that it is insufficient to state merely that the items are deductible or not deductible. You should explain the tax treatment of all amounts. What happens to all amounts mentioned in the preparation of a tax return? You should use the figures provided in the question. You must validate your treatment by using sections, cases or ATO rulings.
(b)
You need to discuss the components of the cost base of depreciating assets under Division 40. You may need to make assumptions concerning the purchase price. You need to perform calculations in order to explain the treatment of the assets. You must validate your treatment by using sections, cases or ATO rulings.
(c)
You should analyse the two scenarios ‘with and without modifications’ to the factory. You should explain the tax treatment of all items in the tax return and you must use calculations to explain your understanding. You must validate your treatment by using sections, cases or ATO rulings.
(d)
You should discuss the availability of the carried forward ‘trading loss’ under Div 36. You will need to have an understanding of the tests under Section 165. You should give clear reasons for your statements and you should apply your reasoning to the facts in the question. You must refer back to the facts in the question to show clear understanding of the issues. You must validate your treatment by using sections, cases or ATO rulings.
Michael Gallagher
Course CoordinatorYou are logged in as Amit Jindal (Logout)
LAWS20023_2103
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