Microsoft Word - T120 ACC708 Taxation Law Take Home Final Examination 9 June 2020
T120 Take-Home Final Examination: ACC708 PG – Taxation Law Page 1 of 4
KINGS OWN INSTITUTE
ACC708 Taxation Law
T120
Take-Home Final Examination
Due Date for submission: 12 Midnight Sunday 14 June 2020 (submitted on TURNITIN).
Word Limit: Maximum 2,000 words.
Total Value: 50 Marks out of 100 in the overall assessment.
Instructions:
1. The Take-Home Final Examination (Final Exam) will be made available on Moodle on Friday
night 12 June 2020.
2. The Final Exam MUST be submitted electronically on TURNITIN by midnight on Sunday 14 June
2020.
3. Late submissions will be penalised according to KOI rules.
4. The KOI rules regarding plagiarism apply to the Final Exam.
5. Students should limit their answers to 2,000 words.
6. The Final Exam will consist of three (3) parts.
7. Students should attempt all parts of the Final Exam.
8. The marks that are allocated for each part are indicated at the start of each part of the Final
Exam.
9. Students must show all calculations and reasons for their answers.
10. Students must complete the standard KOI title page for assignments and submit this with their
answer but this will not count towards the word limit.
11. You are not permitted to:
a) Copy any part of your work from anyone else or
) Allow anyone else to copy any part of your work or
c) Obtain assistance by improper means or
d) Ask for help from any other person or
e) Give help to any other person.
T120 Take-Home Final Examination: ACC708 PG – Taxation Law Page 2 of 4
Newsletter TitleSECTION A (20 Marks)
Baldrick bought an investment property on 1 July 2018 for $2,000,000. He rented out his property from 1
July XXXXXXXXXXHe bo
owed $1,800,000 on the same day from the bank to buy the property. The term of the
loan was 8 years. The building was originally constructed in 2001 at a cost of $900,000. He received rent in
cash from his tenants during the year ended 30 June 2019 in the amount of $93,000. Included in this
amount was a payment of $9,000 on 30 June 2019 as rent for the month of July 2019.
Baldrick incu
ed the following expenses during the year ended 30 June 2019 in relation to the property:
State Government Land Tax $22,500
Loan Repayments ($52,000 principal and $130,000 interest) $182,000
Real Estate Agent’s fee to evict a tenant for non-payment of rent $2,300
The front window was badly damaged at the time of acquisition and replaced on 4 July 2018 $2,800
A new refrigerator was purchased on 1 March 2019 $3,800
Loan application fee (paid on 1 July 2018) $2,000
Legal costs for the loan to buy the property (paid on 1 July 2018) $2,600
Legal costs for buying the property (paid on 1 July 2018) $4,600
Stamp duty on the purchase of the property (paid on 1 July 2018) $95,000
Baldrick wants to minimise his taxable income for this year. Assume all depreciating assets, if any, have an
effective life of 6 years. He does not wish to use the SBE election.
Required:
Advise Baldrick as to what his taxable income or loss is for the year ended 30 June 2019.
You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections
of the relevant legislation, rulings and the relevant case law. If relevant, you must show your calculations.
T120 Take-Home Final Examination: ACC708 PG – Taxation Law Page 3 of 4
Newsletter Title Page 3
SECTION B (15 Marks)
Edmund Pty Ltd (an Australian resident private company) is wholly owned by Melchett Pty Ltd, another
Australian resident private company. All the shares in Melchett Pty Ltd are owned by George, an Australian
esident.
During the year ended 30 June 2019 the following events occu
ed in relation to Melchett Pty Ltd:
1 July 2018 Opening balance of franking account $60,000
4 July 2018 Payment of dividend franked to 55% $480,000
3 August 2018 Payment of Payroll Tax $170,000
28 September 2018 Payment of income tax $27,000
31 January 2019 Refund of income tax $460,000
22 Fe
uary 2019 Receipt of dividend from company outside the group, franked to 90% $280,000
2 March 2019 Payment of dividend franked to 30% $420,000
31 March 2019 Payment of income tax $44,000
2 May 2019 Refund of Land Tax $150,000
4 May 2019 Payment of Fringe Benefits Tax $3,000
30 June 2019 Payment of dividend franked to 65% $380,000
Required:
Prepare the franking account for Melchett Pty Ltd for the year ended 30 June 2019 and indicate the
consequences for Melchett Pty Ltd of the final balance of the franking account and of any beaches of the
Benchmark Rule.
You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections
of the relevant legislation, rulings and the relevant case law. If relevant, you must show your calculations.
T120 Take-Home Final Examination: ACC708 PG – Taxation Law Page 4 of 4
Newsletter TitleSection C (15 Marks)
Mrs Betty Blue runs a restaurant business in Sydney as a sole trader. Her net profit from the business is
around $200,000 per year. She has no other income. Her husband, Ba
y, is not working because he is a
house husband who looks after the family. Betty and Ba
y have three children, Peter (aged 15 at school
with no income), Paul (aged 17 working full-time on $30,000 per year) and Mary (aged 19 at business
college with no income).
From your knowledge of the taxation of different entities discuss the advantages and disadvantages (purely
from a tax perspective) of Betty switching from running her business as a sole trader to each of the
following different structures:
(a) Partnership (5 Marks);
(b) Company (5 Marks) and
(c) Family Trust (5 Marks).
You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections
of the relevant legislation, rulings and the relevant case law. If relevant, you must show your calculations.
END OF THE EXAMINATION