Taxation Law Assignment
PART ONE (1,000 words)- 20 Marks
The Australian Tax System can be complex for individuals who are looking to navigate their personal tax circumstances.
You have been given the opportunity to present to Government your ideas on ways they could simplify personal and business tax and make it easier for individuals to both understand the requirements and to comply.
1. Outline opportunities to simplify the personal tax system. Your response should consider:
a. High level thematic issues and how your proposals will solve these, you may wish to consider (and are not limited to):
i. Examples of how these issues could be creating complexity and or confusion of interpretation.
ii. Reference to specific Acts or Legislative changes that should be reviewed as a result, including any Case Law findings that indicate weakness in the current legislation.
iii. Opportunities to improve the role of the Private and Public Ruling system.
iv. Other considerations.
PART 2 (1,000 words)- 20 Marks
a) It is July 2025 and Julie, aged 56 is married and has come to see you to prepare her tax return for the 2024/25 Financial Year. Her children are grown up and have left home. She is currently living in their own home in Cremorne (which they own outright), having purchased in 2003.
Julie has been working as an assistant principal and she is also an aspiring singer and song writer, having just started taking lessons. She earned the following income this financial year:
Salary $165,000
Tutoring income (few casual students) $2,200
Prize money from song writing competition $500
She is a great saver and has $150,000 in a term deposit earning 5.65% per annum payable at 30 June 2025.
Julie occasionally works from home, she estimates it is about 40 days for the year. She estimates the allowable costs to be $600.
She also uses her own car to attend seminars throughout the day and to run training at other schools for other teachers (she is a specialist in teaching to Gifted students). She has a record of travelling 600 kms (based on diary entries) however has not kept a log book or detailed expenses.
Julie also owns an investment property (in her own name) that she bought in July 2018 for $900,000. It was tenanted throughout the year and earned her $45,000 in rental income. She has interest costs of $26,000, agent costs of $2,500 and repairs of $1,100 for the financial year.
She has decided to sell the property to her niece for a discount (to give her a head start) for $1,500,000 (even though the market value was $2,200,000 based on comparable sales. Settlement occurred on 30 June 2025.
Julie has been an avid collector of art work over the years and has sold a few paintings during the financial year. Painting A was bought for $400 in 1998 and sold for $2,000. Painting B was bought for $800 in 2000 and sold for $300. Painting C was bought for $900 in 2015 and sold for $7,000.
She has decided to make a concessional contribution of $10,000 (in addition to the SG payment made by her employer and a non-concessional contribution of $6,000.
Julie holds Hospital and Extra private health insurance throughout the year.
With reference to legislation (and any supporting material), explain how each item outlined above would be treated.
Calculate the total amount of tax payable for Julie for the 2024/25 Financial Year (including Medicare Levy and Medicare Levy Surcharge and any offsets or rebates she may be entitled to).
12 Marks
b) Lou, aged 62 operates a mechanic shop in Roseville. He purchased the business from a friend for $300,000 about 10 years ago. He has come to see you to prepare his tax return for the 2024/25 financial year.
Lou purchased a Honda Civic for the business on 1 July 2024 for $40,000 that could be used to drop Clients back home after dropping their car for repairs and to pick them up when required. The car is used 100% for business purposes and has a 5-year effective life.
The revenue of the business includes:
Service income $480,000
Profit on sale of goods $60,000
Expenses include:
Rental of premises $52,000
Salary of staff (including super) $320,000
Insurances $5,000
Car costs $9,800 (insurance, registration, and fuel)
Purchase trading stock $80,000*
*Trading stock on hand at 30 June 2025 is $20,000.
With reference to legislation (and any supporting material), explain how each item outlined above would be treated.
Calculate the tax payable by the business for the 2024/25 financial year.
Lou has received an offer of $800,000 to sell the business. Explain how the small business concessions would work in this situation and how he could eliminate any capital gains tax payable.
8 Marks