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BULAW 3731 Income Taxation Law & Practice
Semester 2 2020 – Written Assignment
Total maximum marks: 100, weighted to 30% of the final mark for the course
Due Date: Friday of Week 9, 11.55 pm (through Moodle)
Length: 2000 to 2500 words in total (do not include any synopsis, references or
bibliography in word count).
Information about this Assignment
There are two parts to this assignment. Part A and Part B are each worth 50 marks.
The Assignment Criteria and Marking Guide is available at the end of the assignment.
The purpose of Part A is to analyse certain business activities of a fictional company, identify
and apply relevant legal principles, then give advice.
The purpose of Part B is to consider and research a topic of current interest and relevance to
Australian income taxation law.
This assignment, particularly Part B, requires you to do independent research. In this regard,
you may find the Library’s databases useful. You should appropriately reference your
assignment, including in the text of your assignment or as footnotes, and provide a reference
list or bibliography at the end of your assignment. All Federation University Australia rules
relating to referencing, citation and acknowledgement must be followed.
This is NOT a group assessment task. Your assignment must be your own work.
Assignment – Part A
You are required to read the Facts below and answer the 5 questions. Each question will
be marked out of 10 in accordance with the Assignment Criteria and Marking Guide. When
answering each question, you are required to:
| | Identify and discuss the relevant provisions of the legislation, case law, ATO rulings and determinations; and Advise the company of the correct legal position, giving reasons. |
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For assessment purposes, these requirements are equally weighted.
Note: Disregard GST and Small Business Entity related matters. You will not
receive marks for discussing these.
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Facts
Cassilk is a resident private company established in 2011 to manufacture quality fashion
garments made of cashmere and silk. These garments are sold to retailers under several
brand names and are also sold directly to the public.
Sales are made for cash, by credit card and by external financing arrangements
[personal loan etc]. The only in-house financing arrangement by Cassilk is their
‘CassilkSelect Club’. Under this arrangement customers may select fashion garments
from the Cassilk catalogue (or the showroom displays) and pay by periodic instalment
over an agreed timeframe. If the selected garment is not in stock, a production order is
issued and the payment schedule usually corresponds to the projected delivery date.
Title and possession of the garments does not pass until the final payment. If the stock
is already available, a ‘sold’ sticker is attached and the garments are put to one side.
1. Should Cassilk return for tax purposes on a cash or accrual basis?
2. How should the company deal with payments received under the
CassilkSelect Club arrangements and what tax consequences follow if
customers default or fail to make all agreed payments?
3. How is trading stock the subject of CassilkSelect Club arrangements to be
dealt with?
Cassilk is a member of nationwide purchasing cooperative, Luxury Fibre Wholesalers.
Each year Cassilk is entitled to a bonus based on the aggregate amount of its purchases
of trading stock and related supplies from Luxury Fibres Wholesalers. The bonus is
credited, approximately 6 months in arrears. It is never paid in cash nor is it refundable in
cash should the membership of the cooperative cease.
In this respect, the accounting records for Cassilk show:
Bonus receivable account.
| Balance at 1 July 2019 Credit granted Provision for credit to come Balance 30 June 2020 | 232,000 Dr. (215,000) Cr. 223,000 Dr 240,000 Dr |
4 Is the bonus receivable ($223,000) and/or the credit granted of
$215,000 assessable income for the year ended 30 June 2020?
5. If either amount is not assessable income, how is it to be dealt with for
taxation purposes?
Assignment – Part B
Part B will be marked in accordance with the criteria set out in the Assignment Criteria and
Marking Guide. You will receive a mark out of 50 for Part B.
You are required to:
Evaluate the Australian income tax system in terms of two criteria, choosing from fairness,
simplicity and efficiency. Then suggest one reform that might improve the effectiveness of
the Australian income tax system based on your chosen criteria. In doing so you should
consider the likely consequences of this reform.
| Note: | In your answer you may refer to and discuss reforms currently being debated (e.g. flattening tax rates, cutting company or personal tax rates). |
You should confine your evaluation and suggested reform to the Australian income
tax system (i.e. you may include capital gains but not GST or state taxes).
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Assessment criteria and marking guide
PART A
Your response to each question in Part A will be assessed and the applicable comment underlined. The
following values are attributed to each comment:
| 5 Marks | 4 marks | 3 marks | 2 marks | 1 mark 0 marks |
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Identifying and discussing relevant provisions of legislation, case law ATO rulings and
determinations.
| Q1 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q2 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q3 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q4 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q5 Very good | Good | Adequate | Attempted | Need to Not improve done |
o Advising the company of the correct legal position, giving reasons.
| Q1 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q2 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q3 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q4 Very good | Good | Adequate | Attempted | Need to Not improve done |
| Q5 Very good | Good | Adequate | Attempted | Need to Not improve done |
Part B
Your response to the requirements of Part B will be assessed and the applicable comment underlined.
The following values are attributed to each comment:
| 5 Marks | 4 marks | 3 marks | 2 marks | 1 mark 0 marks |
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Attempted all parts of the question, with reasonable balance
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Understanding of chosen criteria demonstrated
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Understanding of the income tax system demonstrated (when evaluating the current
system in terms of chosen criteria).
| Very good | Good | Adequate | Attempted | Need to Not improve done |
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o Breadth and depth of evaluation
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Appropriateness of the suggested reform (that might improve the effectiveness of the
Australian income tax system based on your chosen criteria)
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Development of arguments in support of the suggested reform
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Recognition of likely consequences of the suggested reform
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Range and use of appropriate resources
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Referencing of direct quotes and paraphrasing – correct and accurate as to style.
| Very good | Good | Adequate | Attempted | Need to Not improve done |
o Presentation, including proof reading,
| Very good | Good | Adequate | Attempted | Need to Not improve done |
Other comments:
| Part A mark | /50 |
| Part B mark | /50 |
| Total mark | /100 |
Mark for Assignment /30