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Assume
you are the associate who has received the following email from a senior
partner in your firm. Using the template

on the following page, respond to the email addressing each of the points
contained therein.


 



From: William
Lye  [removed]
Date: Friday, 5 April 2019
at 4:42 pm

[removed]
Subject: Research (New
Client)


 

Rachael,

 

I had a meeting today with a new client Lillian Van de Stadt. She
runs Van de Stadt Engineering Ltd in Lonsdale (VDSE). They manufacture
specialist machine parts for the global market.

 

VDSE has recently signed up to a Federal Government program
whereby they train welfare recipients as apprentices. VDSE is receiving $20,000
a year from the Federal Government per trainee, they currently have five in
addition to their other apprentices. VDSE are also currently licencing one of
their manufacturing methods to Globo-Tech Ltd. VDSE are currently receiving a
fixed fee of $10,000 per month from Globo-Tech Ltd for the right to use the
manufacturing method. She is interested to know how these payments might be
assessed?

 

She also wants to give $15,000 to her long term secretary who is
retiring this month. I understand that they have worked together for a number
of years and that she has been a great personal confidante of Ms. Van de Stadt.
The payment is intended to be a thank you for her loyal friendship, this is
highly unusual as she has never previously given a non-performance related
bonus to an employee. Ms. Van de Stadt wonders whether her secretary will be
assessed on this payment? (Ignore any FBT consequences)

 

Ms. Van de Stadt  has also
recently sold her house in Toorak Gardens. She bought the home on 1 Febuary
1996 for $500,000 and sold for $1.5 million in February of this year. She and
her family have lived in this home continuously except for the period between 1
July 1998 and 1 July 2006, where the property was leased to tenants whist she
was heading up the new VDSE factory in Perth.

 

Ms. Van de Stadt has also recently inherited a house in Melbourne and
its contents from her late aunt, the property was acquired in 1990 for $1.2m.
At the date of her aunts death, the property had a market value of $3.5m. Her
aunt was living in the property at the date of her death, Ms. Van de Stadt has
since been leasing the property out to tenants. She wants to sell theproperty
and wants to know what the tax consequences might be on the inheritance and
potential sale?

 

She’s already auctioned off the contents of the property mainly
personal effects, household furniture ect. Estimated value of each item not
exceeding $4,000-5,000, total contents sold for $17,800. However, there were
some items of note particular a Heysen oil painting we assume was acquired
sometime between 1958-1962 sold for $10,000. We assume it was purchased for
approximately £500. Also a 1982 Bentley Turbo Rsold for $58,000, an Edwardian
Sterling Silver Soup Tureen sold for $6,000, the bill of sale indicates it was
purchased in 2003 for $5,000 and a set of Fresh Water Pearls purchased in 2008
for $5,000 sold for $3,000. She is interested to know if there are any tax
consequences from these sales?

 

Could you please prepare a letter of advice for me to send to Ms.
Van de Stadt explaining any tax consequences in relation to the above matters.

 

If you could email that to me by Monday morning.

 

Sincerely,

 

Will Lye.

 

Phone:
038 383 9378


Email:
[removed]

Office:
Level 12, 174 King William Street Adelaide


Text Box Hyde Cash  Lye Advisory  Adelaide  Sydney  Melbourne  




 

 

 

 

TEMPLATE:



From:Rachael [removed]
Date: Monday, 8 April 2019
at 2:42 am

To: William Lye  [removed]

Subject: Re: Research
(New Client)


 

Will,

 

In relation to your email Friday 5 April 2019 I’ve Identified to
following issues.

 

1.    
Whether the $100,000 a year from the Federal Government is
assessable as statutory income underSection 15-10 ITAA97


 

2.     Whether the $120,000 per year
from Globo-Tech Ltd for the right to use the manufacturing method is assessable
asstatutory income undersection 15-20 ITAA97


 

3.     Whether her secretary will have
the $15,000 assessed as ordinary income under section 6-5?


 

4.     What are the Capital Gains Tax
Consequences arising from the sale of the house in Toorak Gardens / will the
main residence exemption apply?


 

5.     What are the Capital Gains Tax
Consequences arising from the inheritance and potential sale of the Melbourne
property / will the main residence exemption apply?


 

6.     What are the Capital Gains Tax
Consequences arising from the sale of;


 

a.     The personal effects, household
furniture ect; and


b.     The Heysen oil painting; and

c.     The 1982 Bentley Turbo R sold
for $58,000; and


d.     The Edwardian Sterling Silver
Soup Tureen; and


e.     The set of Fresh Water Pearls.

 

I’ve summarised the relevant law and how it applies in respect of
each issue below.

 

Item
1.           
.


Item
2.           
.


Item
3.           
.


Item
4.           
.


Item
5.           
.


Item
6.           
.


a.     .

b.     .

c.     .

d.     .

e.     .

 

Sincerely,

 

Rachael Underwood.

  Email:
[removed]

Office:
Level 12, 174 King William Street Adelaide


Text Box Hyde Cash  Lye Advisory  Adelaide  Sydney  Melbourne  




 

 

 

 

 

 

 

 

 

 

 

 

 

QUESTION II.

 

Research one of the following issues:

 

·        
Summarise
the recent changes to the tax system that the Australian Government has
introduced in response to COVID-19 and discuss what businesses are likely to be
affected by these changes and how.


 

·        
Explain
the recently introduced Multinational Anti-Avoidance Law (MAAL) introduced as
part of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015
(Cth) and the Diverted Profits Tax (DPT) introduced as part of the Treasury
Laws Amendment (Combating Multinational Tax Avoidance) Act 2017 (Cth). What
business are likely to be affected by these law? How have these business
responded to these new laws? Have these new laws been effective in changing
corporate tax behaviour?


 

·        
Explain
the recent instant asset write-off and accelerated depreciation changes in
detail and discuss what businesses are likely to be affected by these changes
and how?


 

·        
Explain
the recent Land Tax changes in South Australia and discuss what businesses are
likely to be affected by these changes and how?


 

·        
Explain
the tax implications of working from home during the COVID-19 pandemic. Who is
likely to be affected by these changes and how?


 

Your answers should be approximately 1-2
pages in length and should cite all sources used.

 

You may use whichever method of
referencing you wish.

 

There is no set structure to answer the
research question. However, a good approach would be to write as if you were
explaining the issue to a colleague or a client.

 

You will be assessed on the clarity of your explanation of the issue and
the depth of your understanding of the issue, as evidenced by