BLO2206 TAXATION LAW AND PRACTICE
SEMESTER 2 - 2013
INSTRUCTIONS TO STUDENTS
Length: Total word length should be approximately 2000 – 2,500 words. It is in the discretion of students to decide on the word length for each answer..
Marking: Mark allocation is set out for students in the introductory work notes. Students must refer to appropriate sections of legislation where applicable. Reference to cases should be made where there is a case that is important to the answer. The answer is to be an individual piece of work. This is not a group assignment.
Due Date: An electronic copy must be submitted through Turnitin on the homepage of the website for this unit. A hard copy must also be handed to your lecturer. If Turnitin will not accept your assignment, please email a copy to your lecturer by the due time and date.
Extensions: Extensions will not be granted without medical certificate. No extension will be granted within 24 hours of due date.
Plagiarism Students should familiarize themselves with the university policy on plagiarism.
Both question 1 and 2 must be answered.
(a) Michelle ran her own accountancy business. During the year she was persuaded to change premises which she ran her business from, and which she rented. A new building not far from where she ran her business had been completed. The owners of this new building agreed to give to Michelle $45,000 over 12 months if she agreed to move to their premises. Michelle accepted this offer.
(b) Roger was a tax adviser. He had a very wealthy client who asked Roger for some advice on how best to structure a new business the client was starting up. As a result of the advice given the client paid 15?ess tax than had been paid in the past. The client paid Roger the fee of $7,000 he had charged. Because he was very pleased with the advice he had been given he also gave Roger another $2,000 as well as the $7,000.
(c) Bill & Ben Cookies had a number of agreements with overseas companies to produce selected biscuits from each overseas company’s biscuit range in Australia. One of these companies, Wharfdale biscuits, wrote to Bill and Ben Cookies stating it wanted to withdraw the right of Bill and Ben Cookies to produce its biscuits. After much negotiation it was agreed Bill and Ben Cookies would cancel their agreement with Wharfdale and not produce any of Wharfdale’s biscuits in Australia. Wharfdale paid Bill and Ben Cookies $70,000 on the 30th September for cancelling the agreement.
Discuss whether the amounts referred to in each question are assessable income for Australian tax purposes. Fully explain your answer..
Joe runs his own small business. Unfortunately, one day whilst out visiting a client, he was severely injured in a car accident and left a paraplegic. As a result of the accident Joe has had to make the following modifications to enable him to continue his business.
(i) $3,000 of changes to his car to enable him to drive to work;
(ii) $5,000 for parking expenses immediately next to his office;
(iii) $8,000 for expenses in modifying parts of his office to allow him to work more efficiently, such as ramps and rubber protective strips against the walls.
(iv) New clothes to enable him to be better able to do his work.
(v) Special adapted communications equipment for being able to answer the phone and to be able to talk to his computer to give commands and for it to take dictation (notes from spoken word.
All medical evidence agrees that after his accident Joe could not physically get to work except by car, and by parking close by his work place. All other modifications made, including his special clothing, also make running his business far easier. Real estate experts however suggest the modifications made by Joe to his office have actually decreased the value of the premises, and may well impact on the ease of access for clients, thus perhaps having an adverse impact on the overall profitability of the business.
Are the above expenditures deductible for Joe? Fully explain your answer.