Question 1
Amber owned and operated a boutique chocolate shop in Sydney that she purchased for $240,000 in August 2010. The purchase price consisted of equipment and stock worth $110,000 and the balance being goodwill. Following the birth of her child, Amber decided to sell the shop in February 2018 for $440,000 of which $280,000 was attributed to goodwill.
Amber was also required to sign a contract restricting her from opening another similar business within a 20km radius for the next 5 years. She received an additional sum of $50,000 for this contract.
Due to their expanding family, Amber and her husband purchased a four bedroom home in the outer suburbs of Sydney in June 2018. The purchase was partly funded by the sale of the business but also by the sale of Ambers one bedroom inner-city apartment. Amber had lived in the apartment since she inherited it from her Uncle in October 2013. He had purchased it in September 1992 for $180,000 and lived in it until he died. At the time of his death the apartment was valued at 5390,000. Amber signed a contract for the sale of the apartment in May 2018 for 5550,000 and settlement took place in July 2018.
Required
Advise Amber of the taxation consequences of these transactions. You are not required to calculate any capital gains or losses. (20 marks)
Question 2
Jamie is a real estate agent working for Houses R Us real estate. As part of his employment contract, Jamie receives a base salary of S50,000 per annum plus 10% of the agencys commission on sold properties where he has had a direct connection with the sale. He is also provided with a car, a Toyota Kluger costing S48,000. He is not required to contribute to the running costs of the car which total S13,500 per year and is allowed to use the car outside of work hours and on weekends.
Jamies salary package also includes a laptop which cost S2,300 and a mobile phone costing S1,200 per year. His employer also reimburses his annual professional subscription of S550 and provides him with an entertainment allowance of S2,000 per year.
Jamie was also lucky enough to achieve the highest sales for the previous six month period and was rewarded with a high tech home entertainment system worth S4,800.
`Houses R Us also offer their staff loans of up to S100,000 towards purchasing their own house at a rate of 4% per annum. Jamie is considering taking up this offer to purchase his first home.
Required
Advise Jamie and Houses R Us of the taxation and FBT consequences of these transactions. You are not required to calculate any FBT liability.(15 marks)
General Guidance for Law Assessment Tasks:
•Word-process or type your assignment clearly.
•Clearly show the subject name, your name and the date at the beginning of the assignment.
•Use size A4 paper and leave at least a 3 cm margin on the right-hand side of the page. (This is the best format for both marking and photocopying.)
•Number each page of the assignment.
•The answers should be confined to 3,500 words in total, bibliography excluded. Assignments should be neatly typed in Times New Roman, 12 point font.
•A consistent system of footnotes or the APA Referencing System is required. Case and statute names should be italicised.
•Answers must be original. They should demonstrate that students not only have read and understood the Study Guide and prescribed readings but also have broadened their knowledge by having read other reference works. Marks will not be awarded for duplication of paragraphs from the Modules or textbooks.
•Answers should have a complete bibliography listing all books and articles consulted. Beware of using the unacknowledged work of others. Plagiarism will result in zero marks and possible failure of the subject. (Refer to handbook rules).
•Students must, in the course of answering questions, refer to and discuss relevant case authorities and appropriate statutory provisions in order to support the propositions and submissions made.
Also note the following style guide:
1. You should use the ILAC style of essay writing for this assignment
2. Do not re-state the question as part of your answer. This often gets repeated in the issue section, however that is incorrect.
3. Use in-text referencing. Do not use footnotes.
4. Names of cases or statutes should be italicised, and followed by the jurisdiction not in italics, for example: Acts Interpretation Act 1901. Note the abbreviation for Commonwealth is `Cth not `Cwlth.
5. Do not start a new line simply because you are starting a new sentence.
6. Start each paragraph on a new line, and leave a clear line gap after the preceding paragraph. Dont make your paragraphs too long.
7. You must end your assignment with a bibliography that is divided into three separate parts, listing statutes, cases and books / articles / on-line Modules.
PLEASE NOTE THAT YOU WILL LOSE MARKS IF YOU DO NOT COMPLY WITH THIS STYLE GUIDE.
NOTE: Assessments for this subject are required to be submitted via EASTS.