ACBUS301A_Assessment 2_S2 2022
Bachelor of Applied Commerce
Subject Number: ACBUS301A
Subject Name: Applied Income Tax
Assessment 2 – Case Study - Semester 2, 2022
Pages: 7 (including this page)
Assessment Event Due Date
Learning
Outcomes
Assessed
Marks
Part A - Partnership Tax Return
Preparation
Week 10
2
20
Part B - Presentation
Week 11
2
10
Case Study
You are an employee of the tax agent services firm Financial Issues. Your firm has obtained a
new client Monique and Aden Smarts trading as MA Speech Pathology Clinic. Monique and
Aden require their 2022 partnership income tax return and their individual tax returns to be
prepared.
Following an initial meeting with Monique and Aden, you have been sent a letter and source
documents containing the information required to complete the tax returns and working
papers. You will be required to review the documentation to determine what is relevant for
the preparation of the final tax returns. In line with the guidelines provided by the ATO’s
lodgement program, you are required to complete and lodge partnership tax returns
progressively so there is sufficient time to allow lodgement of the partners’ tax returns by
their lodgement due date.
Part A)
Preparation of Partnership tax return – 20 Marks
Prepare the partnership’s 2022 tax return ONLY in accordance with organisational policy and
procedures.
You will need to download a pdf version from the ATO website or use tax return preparation
software such as Xero Tax. For the purposes of preparing the final tax returns, assume that the ATO
private ruling has been received advising that the $20,000 paid to Milo is deductible in full.
You have also ascertained from the client’s Business Activity statements that $40,000 PAYG
instalments have been remitted in respect of the 2022 year for Monique and $30,000 in respect of
Aden.
Once completed, the return should be saved as an electronic file in PDF format and named
ACBUS301A_Family name_First name_P Tax return.pdf and submitted via the subject Moodle.
APPENDIX 1
Letter from Monique and Aden Smarts
(Source Documentation Monique and Aden Smarts)
Dear Tax Agent,
It was great meeting you last week. Please find enclosed the partnership profit and loss statement
and Balance sheet and other information you requested relating to our 2022 partnership and
individual income tax returns.
Partnership
• We would like to minimise our tax liability.
• Our home address is a 220 Yellow Street Willoughby 2068.
• Monique's TFN is XXXXXXXXXX.
• Aden's TFN is XXXXXXXXXX.
• Total Loan Repayments made to Monique $80,000 including $63,000 interest.
• The opening balance of accounts receivable was $30,000.
We would also like you to consider the following as we believe they may affect our tax returns.
Included in the salary and wages is $20,000 paid to our daughter Milo (age 17), Milo works on
eception for us 3 afternoons a week after school. She worked for 48 weeks of the year. Can we claim
all of this?
As discussed with you we sold the premises in which we were operating the business and decided to
lease the premises. You mentioned that we might have to pay capital gains tax on this. How do we do
that?
We received $835,000 from the disposal on 1/7/21 after $15,000 agent fees. We purchased the
property in 2014 for $495,000.
During the year, we spent $20,000 on new office desks. We have included these in our plant and
equipment in our balance sheet
During the year, we took out the following amounts for personal expenses:
• Monique $100,000.
• Aden $140,000.
Tax decline in value (excluding new office desks purchased in 2022 is $14,000.
A receipt has also been obtained for a donation of $3,000 made by Monique to the Red Cross.
As discussed, we authorise you to prepare our 2022 partnership and individual tax returns. Please let
us know if you have any further questions.
Kind regards,
Monique and Aden.
A
MA Speech Pathology Clinic
Profit and loss statement
for the year ending 30 June 2022
Income
Sales $615,000
Less Expenses
Salaries paid to employees(includes $20,000 paid
to Milo) $186,000
Rent of premises after sale of freehold $92,000
Bad debts $2,500
Interest paid to Monique $63,000
Superannuation contributions on behalf of
Monique $15,000
Superannuation contributions on behalf of Aden $5,000
Supplies and overheads $25,300
Depreciation $25,000 $413,800
Net profit $201,200
MA Speech Pathology Clinic
Balance sheet as at 30 June 2022
Cu
ent Assets 222,600
Cash at Bank 162,600
Deposits at call 20,000
Trade Debtors 40,000
Non-Cu
ent assets 487,400
Plant and Equipment (includes $20,000 paid for
new office desks) 557,400
Less accumulated depreciation 70,000
Total assets 710,000
Cu
ent Liabilities 160,000
Loan—Monique 150,000
Trade Creditors 10,000
Total Liabilities
NET ASSETS 550,000
Partners equity
Capital—Monique
Closing balance 350,000
Capital—Aden
Closing balance 200,000 550,000
You have previously reviewed the partnership agreement that you have received at the initial
meeting and extracted the following:
• All profit and losses are to be distributed equally after allowing for interest on capital at 6%
and interest on drawings at 9%. It also states that Partnership income is equally spilt after
considering salaries.
• Partnership TFN XXXXXXXXXX.
• Partnership ABN XXXXXXXXXX.
• Post address PO BOX 555 Willoughby 2068.
• Main business Speech Pathology clinic.
• The clinic has been operating since 1 July 2007.
• The business does not sell on the internet.
• Main business address 12 Green Willoughby.
The criteria for marking this assessment part are given below.
Grade Marking Criteria
High
Distinction
85% – 100%
A ‘high distinction’ grade may result for any of the following reasons:
• Displays an original approach in responding to the question (where
appropriate)
• Displays an original approach to calculations (where appropriate)
• Demonstrates a high level of critical thinking
• Extensive research of relevant issues
Distinction
75% – 84%
A ‘distinction’ grade may result for any of the following reasons:
• The question is answered co
ectly and in full
• Calculations have no e
ors
• Displays a critical/analytical approach
• A high level of research of relevant issues
Credit
65% – 74%
A ‘credit’ grade may result for any of the following reasons:
• Key issues are identified, and the question is answered satisfactorily
• Calculations have minimal e
ors
• An analytical approach has been attempted rather than descriptive
• A moderate level of research of relevant issues
Pass
50% – 64%
A ‘pass’ grade may result for any of the following reasons:
• Main issues are identified
• Calculations are incomplete
• Work is descriptive rather than analytical
• An acceptable level of research of relevant issues
Fail
50%
A ‘fail’ grade may result for any of the following reasons:
• The response to the question is superficial, inadequate or incomplete
• Calculations are inco
ect
• Lack of analysis or research
• Plagiarism
Part B)
Presentation – 10 Marks
For this part of the assessment, you will be required to present part of the Partnership tax return
preparation to the class who will be substituting for the client. The presentation should be a maximum
of 10 minutes in duration and may be accompanied with a maximum of 10 PowerPoint slides.
Your presentation should set out the particular area of the Partnership tax return you are addressing
and evaluate the taxation outcome with regard to the client’s circumstances.
The presentation will be conducted in the first two hours of your scheduled class time in Week 11.
The criteria for marking Part B of this assessment will be uploaded to the subject Moodle by the
eginning of Week 6.