LAW5230 Assignment
Due date: 16th May 2016
Value: 40%
Word Limit: 4 000 words (excluding calculations, examples, footnotes and references)
This assignment consists of two (2) parts. Part A consists of a problem solving scenario (1,000 words) and Part B is a research assignment (3,000 words). You must complete both Part A and Part B. Pay careful attention to the marking criteria at the end of each Part.
Part A – 25 Marks
Luke and Linda Lucky
At the start of the 2015 income year, Luke and Linda Lucky set up an eBay account to sell some of their belongings and save for an overseas holiday. Setting up the account was free. During this first income year, their total sales were $20,000 and this all related to second hand personal items sold below their cost or items sourced cheaply from garage sales or giveaways. However, Luke and Linda discovered through this process there was an untapped market for low-cost home decorator items.
Therefore, at the start of the 2016 income year, Luke and Linda began to import low-cost home decorator items that are similar to expensive designer pieces. They sell the items through their eBay account. Luke and Linda have spent $16,000 during the 2016 income year acquiring stock. Some of the stock is sold exactly as it was purchased, whereas some stock is modified through embellishments, painting, customisation etc. All listings are made with a minimum bid price that represents 210% of the cost price. Up until 30 June 2016 Luke and Linda have made total sales of $38,000 in relation to sales of stock items. Their current orders in progress show a 30% increase in sales volume for July 2016 compared to the same month the previous year.
During the income year, one of Luke and Linda’s customised items was featured on a popular home renovating TV show. This resulted in an influx of orders that they would not have been able to fill given the small nature of their business. They therefore sold the rights to their design to a large retail company and were paid a lump sum of $200,000 in exchange for transferring the original design, existing stock and materials to the company. The agreement states that they are entitled to $1.20 per additional item sold for a period of 12 months, after which all rights to manufacture the items rest with the retail company. Up to 30 June 2016, 20,000 items had been sold by the retail company, with payment due to be received in July 2016.
Luke currently has a full-time job as an engineer and Linda works part-time as a teacher. Linda is also working on a website which will launch in May 2017. The website will allow them to sell their stock directly online without the need for eBay auctions.
Required:
a) Discuss with reference to appropriate legislation, case law and/or rulings whether Luke and Linda are carrying on a business for taxation law purposes in either the 2015 or 2016 income years.
b) Discuss with reference to appropriate legislation, case law and/or rulings whether any amounts received in relation to the sale of the design are ordinary income in the 2016 income year
c) Briefly discuss with reference to appropriate legislation, case law and/or rulings whether the cash or accruals basis of accounting would apply to Luke and Linda.
LAW5230 – Taxation Law
Semester 1, 2016
Assignment Marking Criteria Sheet
Part A – Problem Solving Little
attempt F C B A HD
Identification of legal issues, legislation and case law
Overall the student has identified the relevant
assessable income issues, legislation and where appropriate case law and rulings. 0 0.5 2 3 3.5 4
Application
Demonstrated level of understanding of the specific
derivation, business and ordinary income issues in relation to Luke and Linda through the application of the identified law. 2 5 8.5 11 13 17
Conclusions
Overall, the student has drawn appropriate and valid conclusions after applying the law. 0 0.5 2 3 3.5 4
Total out of 25
Description of Performance Standards;
HD – the student has shown a very high level of demonstrated ability in relation to the stated criteria by covering all valid points in a clear and succinct manner. The student may have also demonstrated an ability to think beyond the facts and recognise the broader implications of the facts, missing facts or alternate arguments.
A – The student has shown a high level of demonstrated ability in relation to the stated criteria by either covering all valid points or by covering the majority of valid points in a clear and succinct manner. The student may have very briefly or occasionally shown ability at the HD level.
B - The student has shown a good level of demonstrated ability in relation to the stated criteria by covering most of the valid points. The student may have made some minor incorrect statements or missed some minor points.
C - The student has shown a satisfactory level of demonstrated ability in relation to the stated criteria by covering the main valid points. The student may have made a number of minor incorrect statements but did not make incorrect statements in relation to major points.
F - The student has not shown a satisfactory level of demonstrated ability in relation to the stated criteria by missing some main points or by making incorrect statements in relation to major points.
Little Attempt – The student has not addressed or attempted to address this criterion.
Part B – 75 Marks (3,000 wds)
You are required to prepare a written research assignment that addresses one of the provided topics below. The purpose of the task is for you to demonstrate high level critical reflection and analytical reasoning skills in the context of the application of Australian taxation law and taxation law policy. You must undertake academic research which demonstrates the following:
• An in-depth your understanding of how the specific tax law applies,
• The policy context of the law and if relevant how other jurisdictions deal with similar issues,
• Critical reflection as to whether the law achieves its stated purpose, aligns with principles of good tax policy or could be improved/amended. These critical reflections should be supported by the research you have undertaken as well as your own independent thought.
Topic Choices
1. CGT Discount for Foreign Residents – discuss and critically evaluate the policy reasons for the removal of the CGT discount for foreign tax residents. You should include a discussion of the policy objectives and your evaluation of whether the removal will achieve these policy objectives.
2. Negative Gearing – discuss and critically evaluate the extent to which tax deductible negative gearing impacts upon savings and investment decisions. Your paper should clearly outline what is meant by negative gearing from a tax perspective and how the Australian tax system treats negatively geared investments. You should include an evaluation of whether negative gearing from a tax perspective should be removed.
3. Deductions – discuss and critically evaluate the extent to which Australia’s deduction regime satisfies the principles of a good tax system (specifically simplicity and fairness). You may like to compare and contrast this with the deduction system in New Zealand.
4. CGT Small Business Concessions – discuss and critically evaluate the Small Business CGT Concession regime in Australia. You should include a discussion of the overall policy objectives and your evaluation of whether regime currently meets these objectives or whether further amendments are necessary.
5. Division 7A (treatment of private company loans) - discuss and critically evaluate Division 7A as a specific anti-avoidance provision. You should include a discussion of the overall policy objectives and your evaluation of whether the Division currently meets these objectives or whether further amendments are necessary.
6. Part IVA Amendments – The general anti-avoidance provisions were recently amended. Discuss and critically evaluate the policy reason for these amendments and whether they are likely to meet these objectives or not.
LAW5230
Part B – Research Assignment Criteria Little attempt F C B A HD
Demonstrated technical
understanding of the chosen tax law topic. No/little attempt made in relation to this criterion
1 Very little technical understanding of the
legal topic demonstrate
and/or many instances of incorrect
understanding.
4 Sound technical understanding of the
legal topic demonstrated with some instances of
incorrect understanding.
7.5 Good technical understanding of the legal topic
demonstrated, with few instances of incorrect understanding.
10 High level technical understanding of the legal topic
demonstrated, with
no/very few instances of incorrect understanding.
12 Very High level technical understanding of the legal topic
demonstrated, no
instances of incorrect understanding.
15
Ability to analyse and present practical applications of the law in the context of the overall paper, rather than simply describe the law. No attempt made in
relation to this criterion.
0 Did not demonstrated an ability to explain tax law concepts in the context of how it is
relevant to practical applications.
3 Demonstrated sound
ability to explain tax law concepts in the context of how it is relevant to
practical applications in some instances. Some insightful and relevant
applications made.
6 Demonstrated a good
ability to explain tax law concepts in the context of how it is relevant to
practical applications in some instances. Practical applications were mostly insightful and relevant.
7.5 Demonstrated a very good ability to explain
tax law concepts in the context of how it is
relevant to practical
applications in many
instances. Practical
applications were mostly
insightful and relevant.
9 Demonstrated an
excellent ability to
explain tax law concepts in the context of how it
is relevant to practical applications in all
instances. Practical applications were
insightful and relevant.
12
Ability to demonstrate critical reflection on the topic researched incorporating independent thought and ability to critically analyse research presented. No/little attempt made in relation to this criterion
1 Insufficient evidence of effective analysis,
balanced evaluation,
personal perspectives made.
4 Few instances of careful analysis of the research.
Limited ability to balance and evaluate
competing arguments in the literature and/or
limited articulation of
personal perspectives throughout paper.
7.5 Some evidence of careful analysis of the research. Some
instances of an ability to balance and evaluate
competing arguments in
the literature as well as some personal
perspectives throughout paper.
10 Evidence and multiple instances of careful
analysis of the research.
Evidence of an ability to balance and evaluate
competing arguments in
the literature as well as clearly articulated
personal perspectives throughout paper.
12 Strong evidence and multiple instances of
careful analysis of the research. Strong
evidence of an ability to balance and evaluate
competing arguments in
the literature as well as clearly articulated
personal perspectives throughout paper.
15
Ability to demonstrate independent, high quality research. No/little attempt made in relation to this criterion
1 Little evidence of quality and independent
research. Many major sources overlooked.
Very few sources from outside course materials.
4 Some evidence of
careful, relevant, quality and independent
research undertaken.
Many major research sources/authors
overlooked. A few
sources from outside course materials.
7.5 Evidence of careful, relevant, quality and
independent research undertaken. Few major research
sources/authors
overlooked. Some
sources from outside course materials.
10 Evidence of careful, relevant, high quality and independent
research undertaken.
No major research sources/authors
overlooked. Many
sources from outside course materials.
12
Evidence of careful, relevant, high quality and independent
research undertaken.
No research sources/authors
overlooked. Many sources from outside course materials and all high quality.
15
Overall clarity of expression, use of grammar and appropriateness of the language and terminology for an academic research paper. No/little attempt made in relation to this criterion
1 No instances of sophisticated and
academic language
used. Many instances of incoherent. Lacks readability. 2 Few instances of sophisticated and
academic language
used. Somewhat clear and readable
expression used
throughout. Many
instances of unclear expression. 3 Mostly sophisticated, clear and readable expression used throughout.
Moderately academic language used
throughout. Few
instances of unclear expression. 4 Some sophisticated language, but
otherwise, very clear
and highly readable expression used throughout.
Appropriate academic language used
throughout. 5 Sophisticated, clear and highly readable expression used
throughout. Very
appropriate academic language used
throughout. 6
Clear and logical structure, development of clear arguments, supported conclusions reached. No/little attempt made in relation to this criterion
1 Very little persuasive argument used in
paper. Little structure or flow. Many inconsistent / unsupported
conclusions reached. 2 Somewhat persuasive argument built
throughout paper.
Some structure presented, though
paper may have some flow problems, or
inconsistent / not well
supported conclusions presented. May have
some inconsistencies. 3 Moderately persuasive argument built
throughout paper.
Clear structure resulting in some supported
conclusions/
recommendations with
few inconsistencies. 4 Persuasive argument built throughout paper.
Clear and logical structure resulting in
some well supported conclusions/
recommendations. 5 Highly persuasive argument built
throughout paper.
Very clear and logical structure resulting in well supported conclusions/
recommendations. 6
Ability to use chosen referencing method appropriately and correctly No/little attempt made in relation to this criterion
1 Inability to use chosen referencing method appropriately and
correctly. Inconsistent and fundamental errors.
2 Acceptable standard of referencing,
citations and
bibliography. Some
fundamental errors. 3 High standard of referencing, citations and bibliography.
Some minor errors. 4 Very high standard of referencing, citations
and bibliography. Very few errors. 5 Very high standard of referencing, citations and bibliography. Almost no errors. 6
Total out of 75
TOTAL (out of 100)
END OF ASSIGNMENT