ASSIGNMENT 2 – SESSION 2 2019
Analysis description: Case Look at requiring preparation of workpapers, calculation of taxable income and income tax payable, preparation of an individual tax return, and a letter of advice.
Weighting: 35% of the complete marks for semester
Topic Content material materials: Take care of Issues 5 to 10, with information of earlier topics anticipated
Due: Friday of Week 11
Submission: ONE (1) EXCEL FILE using TEMPLATE provided, solely to be submitted by means of the hyperlink on MySCU, PLUS ONE (1) PDF FILE containing Handitax ITR and all attendant schedules and estimates.
EXCEL File Title:
SURNAME[YOUR ID]Tax Venture 1.xls/xlsx
PDF File Title:
SURNAME[YOUR ID]Tax Venture 1.pdf
ONLY EXCEL FILES USING THE TEMPLATE PROVIDED WILL BE MARKED.
OBJECTS AND FILES INSERTED INTO WORKSHEETS WILL NOT BE MARKED.
ONLY SUBMIT THE ITR AS A PDF FILE – Totally different work in PDF info will not be marked.
Take into accout: The intention of an challenge is so to exhibit your information and understanding of the themes. Make sure that your options are full enough to comprehend this.
NOTE: THIS IS AN INDIVIDUAL ASSIGNMENT
YOU SHOULD WRITE ALL WORK SUBMITTED YOURSELF AND IT SHOULD BE BASED ON YOUR OWN RESEARCH. EVIDENCE OF COPYING FROM OTHER STUDENTS WILL BE TAKEN SERIOUSLY AND REPORTED.
Your shopper (use your particular person establish as a result of the patron establish) is the one director of Electrical Blue Pty Ltd. The enterprise employs 5 staff members, collectively together with your shopper who holds the place of managing director. Electrical Blue analyses financial information and affords funding suggestion to registered purchasers.
The price summary from Electrical Blue Pty Ltd reveals the following:
? ABN 84 111 122 223
? Gross Funds $160,000
? Tax Withheld $49,897
Electrical Blue moreover paid $99 a month in your shopper’s mobile phone account and further superannuation contributions of $6,000 beneath a wage sacrifice affiliation. This amount is together with superannuation guarantee requirements. The cellphone funds related to a tough and quick month-to-month contract inside the employee’s establish and funds had been made on to the cellphone agency by the employer.
Your shopper owns an Audi Q5. They purchased the automotive on 1 June 2016 for $65,000. The automotive travelled 36,500 kms by means of the yr and your shopper has indicated that about 80% is determine related nevertheless they have not saved a log book. Your shopper pays for the entire working costs for the car. All through the yr these costs included:
Gasoline & oil $6,950
Registration $ 760
Insurance coverage protection $1,800
Further on insurance coverage protection declare.
The insurance coverage protection agency paid for the soundness of the worth of repairs. $750
Automotive washing $1,200
DIVIDENDS & INVESTMENTS:
Electrical Blue Pty Ltd is a giant agency with two (2) shareholders, your shopper and their accomplice. Your shopper owns 60% of the issued shares inside the agency. The shareholders had been paid a lump sum of $140,000 in April. They outlined that the company had been very worthwhile over the past couple of years and had amassed very important cash reserves. They described this price as a completely franked dividend. The proceeds had been used to chop again the street of credit score rating that was taken out to purchase the home whereby they keep. Curiosity paid on the home mortgage for the yr was $24,000.
The consumer moreover has a portfolio of shares that had been inherited from their father. The daddy handed away on July 15, 2018. On finalisation of the property the following shares had been transferred to your shopper and the patron obtained notification that every one the shares had been transferred on 1 December 2018.
Share Date Purchased by Father Number of Shares Purchased Worth Paid per Share at time of purchase Market Price at Date of Dying
BHP 4 Jan 1985 2,200 $5.00 $20.30
CBA 12 Sept 1991 2,000 $5.40 $75.94
COH 4 Dec 1995 1,000 $2.90 $124.77
FLT 1 Dec 1995 1,000 $zero.95 $32.29
MYR 7 Nov 2009 9,000 $4.10 $1.21
TLS three Nov 1997 2,000 $three.30 $5.75
The subsequent completely franked dividends had been obtained by your shopper by means of the yr:
? CBA $ 880.00
? COH $1,100.00
? FLT $ 300.00
? TLS $ 185.00
The taxpayer provided the BHP and MYR Shares on 5 January 2019 to spice up the deposit for the property purchase talked about beneath. The BHP Shares provided for $25.63 each and the MYR Shares for $1.35 each. The brokerage cost was based mostly totally on a proportion of the sale proceeds for each parcel of shares and amounted to $115 for the BHP Shares and $50 for the MYR Shares. These portions embrace GST.
RENTAL PROPERTY: 4/285 Pacific Parade, Bilinga, 4225
The taxpayer owns a unit on the Gold Coast which is rented to their daughter. A contract was entered into to purchase the property on 22 January 2019 for $600,000 and settlement occurred on 1 March 2019. The taxpayer’s daughter moved in immediately. She pays lease prematurely of $460 on Wednesday each week. The first price was made on the day she moved in. (HINT: It is worthwhile to evaluation the issues spherical renting properties to household and embrace your findings in your workpapers and letter of advice.)
The setting up was initially constructed in 2005. A quantity surveyor’s report commissioned on the time of purchase reveals the event worth of the unit was $180,000.
The taxpayer purchased a fridge for $1,080 and a washer for $1,500. These had been put in inside the unit for use by the tenant on settlement date. The taxpayer elects NOT to utilize a low price pool for depreciating belongings and chooses the diminishing price methodology of depreciation the place related.
Totally different costs paid in relation to the property sooner than 30 June 2019 embrace:
Stamp accountability on property purchase $20,025
Licensed costs on property purchase $ 1,340
Physique firm costs $ 1,400
Council costs $ 950
Water Expenses $ 360
Insurance coverage protection $ 685
Mortgage repayments (curiosity solely) $ 7,200
Quantity surveyor’s report cost $ 899
? Dry cleaning of labor matches $950
? Donations had been made to:
o Most cancers Council Australia $1,300
o The “Sea Shepherd” $1,300
? Affiliation of Financial Advisors Membership Expenses $1040
? Subscription to “The Economist” $150
? “Vegan Residing” journal subscription $200
? Expenses paid to the monetary establishment in January 2019 to determine the mortgage to purchase the unit had been $970. The mortgage is for 25 years.
? The taxpayer moreover has an insurance coverage protection protection that covers their income inside the event of an accident or lack of life. The premium is paid instantly from their checking account each month. The general for 2018/9 was $6,000 of which 50% pertains to the choice of income inside the event of an accident.
? In 2015 the taxpayer was involved in a automotive accident and sustained accidents that required medical consideration and rehabilitation treatment. In December 2015 the courtroom docket awarded the taxpayer $10,000 as compensation for medical payments incurred because of the accidents from the accident. Value was obtained in December 2018.
? The family is roofed by personal medical insurance coverage with BUPA. The protection was taken out on 1 Might 2019. The premium paid to the tip of the yr was $930 after they claimed a rebate of $83. The protection amount is RDA1465 and the effectively being fund has notified them that the Revenue Code is 30.
? The taxpayer’s date of begin is 5 August, 1979, and so they’re married. It’s also possible to make up the establish & date of begin of the accomplice. The accomplice earned a wage of $91,000 for the 2018/19 yr and was entitled to deductions of $2,300.
1. Using the EXCEL template provided, put collectively a set of labor papers – separate sheets inside you EXCEL doc as indicated. Embrace detailed explanations about whether or not or not each merchandise is assessable income or affords rise to an allowable deduction. Current all workings, make clear why you’ve got dealt with devices as you’ve got, and provide relevant authority in your alternatives by referencing sections of the legal guidelines, case laws and/or income tax rulings. Your work papers ought to be full so that they’re typically reviewed by your supervisor and relied upon inside the event of any future audit. They should even be reconciled and cross-referenced to reporting labels on the income tax return.
2. The TEMPLATE consists of separate sheets for:
a. Wage & Wages Income
b. Totally different Income (e.g., curiosity and dividends)
c. Capital Helpful properties
d. Rental Property
f. Tax calculation
g. Letter of advice
three. Tax Payable, Offsets, & Levies: Embrace all levies and offsets considered (Medicare, Medicare surcharge, franking credit score, tax paid, low income rebate, personal effectively being rebate) and make clear why they’re or normally should not related and reconcile to the tax return calculation).
4. Organise your work papers so that portions are instantly transferrable to devices on the Income Tax Return and provide cross references to the tax return label the place the amount is reported. Make sure that all calculation steps are seen in your workpapers to ensure your full work is markable and marked.
5. Depreciation calculations could also be carried out using Handitax with the complete transferred once more to the rental property a part of your workpapers for reconciliation capabilities.
6. Use Handitax to rearrange the income tax return, along with any associated schedules, for the yr ended 30 June 2019. Use your particular person establish, and the Dummy TFN from the patron prepare sheet. All totally different particulars are to return again from the challenge instructions.
7. Write an skilled letter of advice to your shopper summarising their tax state of affairs and explaining the mandatory options of the devices that are included of their tax return and folks which had been disregarded. It’s essential to embrace suggestion to the patron about potential enhancements to their file defending and totally different information that is associated for future tax planning. It is endorsed that you just simply search help from Scholar Finding out Help to just be sure you’ve used expert language and your letter is error free. Your letter have to be about 2 pages prolonged – full nevertheless concise. Whether or not it’s too prolonged your shopper gained’t trouble finding out it (and it will NOT be marked). It have to be written in language and pitched at a level your shopper will understand. It should not be too technical; your shopper is unlikely to have an curiosity whereby sections of the legal guidelines sort the thought of your alternatives. Do it is important current your shopper with any instructions?
SUGGESTED SCHEDULE FOR COMPLETION:
1. Weeks 1-5: You will have downloaded the HandiTax software program program and familiarised your self with navigation and shopper prepare.
2. Week 6:
a. Organize your shopper as per Venture instructions.
b. Organize your EXCEL worksheet file from the TEMPLATE.
c. Study by the use of the complete challenge. Begin to create heading and formulation and fill in your worksheet(s) with ALL INCOME information, notes, and calculations.
three. Week 7: Do the CAPITAL GAINS worksheet and calculations.
4. Weeks eight & 9: Catch up over Look at Break AND full the DEDUCTIONS worksheet with information, notes, and calculations.
5. Weeks 10 & 11:
a. First full your worksheet TAX CALCULATION and subsequent your HANDITAX I Kind and ALL schedules.
b. Cross reference and correct the place essential.
6. Friday end of Week 11: SUBMIT 2 info in format required.
NB: DO NOT LEAVE HANDITAX UNTIL THE END OF WEEK 11 AS IT WILL TAKE THIS LAST WEEK TO COMPLETE ALL SCHEDULES CORRECTLY.
7. One (1) EXCEL file using the TEMPLATE provided, containing your work papers and associated explanations have to be submitted by means of the hyperlink on MySCU. Your letter of advice have to be in as a separate sheet within the an identical EXCEL workbook – NOT as an embedded doc.
eight. ONE (1) PDF FILE containing Handitax ITR and all attendant schedules and estimates.
BOTH THE ABOVE FILES MUST BE INCLUDED IN A SINGLE SUBMISSION
DO NOT WAIT FOR THESE INSTRUCTIONS TO START YOUR ASSIGNMENT – IT SHOULD BE ALMOST COMPLETE BY THE BEGINNING OF WEEK 10. THIS WILL ALLOW YOU TO FOCUS ON COMPLETING THE TAX RETURN COMPONENT IN WEEKS 10 AND 11.