BULAW 5916 Taxation Law & Practice Assignment – Semester 2, 2021
BULAW 5916 Taxation Law & Practice Assignment
The purpose of this assignment is to enable you to explore and communicate your understanding of relevant aspects of taxation law.
In the future some of you will work as accountants. While doing so, you may have clients who ask for tax advice. They may ask you how transactions they have entered into might be regarded for tax purposes (for example, is a transaction likely to be regarded as income or capital?). You may therefore be faced with clients in real-life situations and be asked to give advice to them about how they should treat these situations for the purposes of their tax returns.
During this course, we will discuss what the law is (through reference to some of the main tax legislation, case law and ATO rulings) and will also discuss from time to time how we would tackle giving advice. For example, with some of the tutorial questions, we will discuss how to study law courses and write answers to tax law exams. While doing so, we will talk about how we must identify the relevant facts in a situation, identify the relevant rules, apply the rules to the facts and reach a conclusion. This will lead us to the exam, where you will continue to gain practical experience in answering problem style questions. This assignment will enable you to develop skills in answering such problem style questions before you sit the examination for this course.
The length of the assignment is to be approximately 2,000 words. Assignments of more than 2,000 words will not be marked; those with less than 1,800 words will be at risk of failing. Please provide a word count with your assignment. Do not use appendices or footnotes as a way around the word limit.
4pm on Thursday of Week 9. Penalties apply for late submission of work. Please submit your assignment via Turnitin through the BULAW 5916 Moodle shell.
Note all Federation University Australia rules relating to assessment apply.
Your lecturer will mark your assignment. Your marks will reflect the extent to which you have demonstrated an understanding of the material examined. This assignment carries a 30% weighting. It contains two questions. You must answer both question 1 and question 2. Feedback and grades will be communicated via Moodle within three weeks of the submission of your assignment.
Please note, as per the course description assessment tasks submitted after the due date, without prior approval/ arrangement will be penalised at 10% of the available marks per day (inclusive of Public Holidays and Weekends). Information about applying for Discretionary Assessment Extensions and Special Consideration is available here: http://federation.edu.au/current-students/essential-info/administration/special-consideration
All written answers (other than calculations) should be presented as complete sentences. Where relevant, answers should be supported by reference to appropriate case law, statutory provisions and ATO rulings. Please do not refer to legislation other than the Income Tax Assessment Acts. For example, please do not refer to legislation governing taxation in other countries. Also, please do not consider residency and source issues. State any assumptions you make, and if your answer requires further information from the hypothetical client, please state precisely what information this is and why this is required. Providing irrelevant detail and lengthy references to facts without attempting to analyse the situation from a tax law perspective will not be looked on favourably.
The taxpayer, Components R Us Pty. Ltd., manufactures and sells car components. In 2016 it entered into a ten-year market sharing contract with XYZ, a company in China, whereby Components R Us agreed not to distribute its products in China and XYZ agreed not to distribute its products in Australia.
In January 2021 XYZ Ltd. paid Components R Us $20 million to terminate the 2016 contract. In return for receiving the $20 million, Components R Us agreed to give up its exclusive distribution rights in Australia. The $20 million was based on the estimation of the profit that Components R Us thought it would lose by allowing XYZ to compete with it in the Australian market.
Advise Components R Us as to whether the amount it has received as compensation constitutes assessable income. Refer to case law and statutory provisions in your answer. 15 marks
Hardeep is a professional basketball player. On 1 January 2021, he entered into an eight year contract to play basketball for the Adelaide All Stars. Under the contract, Hardeep agrees to play in all of the club’s matches, provided that the coach selects him and he is fit to play. After signing the contract the All Stars pay Hardeep $300,000. The All Stars also agree to pay Hardeep $4,000 each month for his living costs. There is no requirement for Hardeep to repay any of the $300,000 if he fails to play because he is not selected or he is not fit to play.
Advise Hardeep whether he has to include the full amount of the contract monies received in advance in his assessable income for the 2020/2021 income year. Refer to case law, statutory provisions and tax rulings in your answer. 15 marks
Criteria used to grade this assessment
In marking your assignment, your lecturer will place emphasis on whether you have demonstrated an ability to:
- Identify and appropriately explain the range of tax issues connected with the fact scenarios posed in the questions
- Apply case law, legislation, and tax rulings (where appropriate) to the fact scenarios posed in the questions
- Communicate in clear written English
- Format your assignment appropriately