Income Taxation Law & Practice
Assignment: Semester 2/2014
INSTRUCTIONS
1. See the Instructions and Assessment Criteria in the Course Description and make sure you follow them!
2. Please answer all parts of the question.
3. Attached to this document is a Checklist to be filled in by you and attached to your essay/assignment. Read this now before you start your research. If you have followed this checklist, there is a good chance you will do well.
4. All work presented for assessment in this course must comply with the format outlined in the University's Presentation of Academic Work publication, available from the bookshop or on-line at www.ballarat.edu.au/generalguide.
5. All essays must be accompanied by a signed official cover sheet ('Plagiarism Declaration Form'), available at www.ballarat.edu.au/ard/business/student_info_webct.shtml and lodged as appropriate for your campus.
6. You MUST reference in the body of the essay every time you use information from other people. This requires you to keep a track of where you are taking information from and then writing the reference up. You should use the Harvard/APA style; and use the University’s new Presentation of Academic Work. The Library’s website also has a citation style guide site. If you plagiarise (intentionally OR unintentionally) you will be given zero: see Regulation 6.1.1 for more details. 7. DUE DATE:……. Please check with the Course Description for details of where and when to submit your assignment. If you need an extension you must ask for one BEFORE the due date (unless this is impossible).
8. The assignment should not exceed approximately 2000 words.
9. The assignment is worth 25%.

Page 1 of 3
Part A
James Cookie is a ship’s officer employed by Sails International Inc, a company incorporated in Bermuda that owns cruise boats and operates passenger cruises in the Pacific Ocean.
James owns a house in Sydney which was formerly his family home but his estranged wife and children now live in Singapore. James rents the house to his cousin and family. The house is let fully furnished; the furniture belongs to James. Whenever he is in Sydney, James stays in the house and has his own room in which are stored his personal belongings. In the current income year James spent 80 days in the house. The remainder of the time was spent on a cruise ship except for 20 days spent visiting his children in Singapore.
The ship on which James serves visits a variety of ports, mainly in the South Pacific. James’s employment contract was negotiated and signed in Hong Kong.
Required 1: For Taxation purposes, is James a resident of Australia? What is the source of his salary from Sails International? Required 2: If James sold his house, would he be entitled to the main residence exemption in Subdiv 118-B?
Part B
On 1 July 2012 Lee commenced business as an architect. He operated as a sole proprietor from a converted garage at the rear of his residence. Much of his work consisted of preparing building designs and specifications for local council building permits but he quickly gained a reputation for quality drawings prepared within tight timeframes. By the end of 2012/13 he had a small client base of local builders and private referrals and billings (fees) of $75,000.
During the year Lee submitted a design as part of a national competition for the Citadel, the centrepiece of an urban redevelopment. His visionary design and revolutionary use of local materials left the judging panel speechless with admiration and, to national acclaim, he was awarded the prize and commissioned to build the structure. Immediately he borrowed $1 million, rented premises on Main Terrace, acquired state of the art equipment and employed six draughtsmen and two administrative staff. During 2013/14 his billings were $1.75 million.
Required Should Lee return on a cash or accrual basis in 2012/13 and 2013/14?
You must refer to appropriate case law. Your answer must include (but should not be limited to) a discussion of the following: • What factors affect the choice of a cash or accrual basis? • Does Lee have a choice of the basis he adopts? • Does the Commissioner of Taxation have a right to insist on a particular basis? • Should Lee’s basis be the same in both years?
Page 2 of 3
Please check that you have done the following. Tick the boxes to show you have! ? Submitted an assignment that is your own work. (You may discuss the essay topics with others but you cannot copy another’s work, give your work to someone else to copy, or work closely with another student on how to structure or write the essay.)
? The assignment is no more than 2000 words long (excluding abstract, references, bibliography).
? Read and tried to address the criteria in the Course Description.
? Read and addressed the issues raised in the University’s Presentation of Academic Work
? Read Regulation 6.1.1, Plagiarism and asked questions if you are unsure about what it means.
? Referenced direct quotes (use quotation marks or indent) AND summarising from another person’s work in the body of the essay. (This includes internet sources). ? Indicated what referencing style you have chosen Harvard/APA and USED IT.
? Answered all parts to the question.
? Used headings (even though this is not a report, headings are encouraged to assist structure and flow).
? Proof read the assignment for spelling, punctuation and grammar errors.
? Where required, used relevant sections of legislation, legal rules/principles
? Where required, used cases to support your points or arguments. These cases can be obtained from textbooks, or the CCH online libraries, articles found via AGIS PLUS TEXT database etc.
? Put case citations in the body of the work as well as listing the case in the List of References.
? Discussed the issues as required and put arguments and gave your view.
? Used a range of resources.
? Included a title page with your name, student number, course code and name and lecturer’s name.
? Have a margin so comments can be added; put page numbers and your name and student number on each page.