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TAXATION 1 – LAW2453
You have now been in your graduate role at Malory & Co. Consulting for approximately two months. Markus is happy with how you are settling in and the work you did with the research report with Dave Granger. He has now approached you with a new project. Olivia Patterson, Dave Grangers previous partner, has sought advice regarding her tax situation. Dave recommended the firm after being satisfied with the advice provided on his residency status.
Olivia is seeking advice regarding the tax consequences of some activities undertaken and some proposed. The following outlines the notes taken from the meeting Markus had with Olivia.
Date: 12 April 2019
Client Number: 75443.001
Client Name: Olivia Patterson
Olivia has been living in Australia since 2011 near Phillip Island, at the property Olivia and Dave had purchased (her ex-partner). Previously Olivia had lived in Nepal and Paris. Olivia has one daughter, Alexis, aged 10. Originally Olivia intended to stay only temporarily, while Dave’s mother was recovering, however things did not work out.
Olivia enjoyed the beach lifestyle in Australia and Alexis was extremely settled, so they decided to stay permanently. Dave and Olivia separated in mid-2018.
Olivia completed an environmental science degree at the end of 2017 and had been looking for work since. In August 2018, Olivia successfully gained employment at the Bunurong Environment Centre, located in Inverloch. The contract includes an annual salary of $45,000 plus superannuation of 9.5%. Olivia also receives a 10% discount at the local outdoor and camping equipment store and the Centre’s own gift shop. Olivia was required to purchase wet weather gear and other protective clothing at her own expense, totalling $870. Her employer reimbursed her for the total amount and also provided her with a hand-held radio transceiver (cost $145) and tablet computer (cost $1,349 plus case $149) for whilst she is on site visits.
Due to the closer proximity to her employer, Olivia decided to move into the investment property, that Olivia and Dave had acquired in August 2017, which is also located at Inverloch. Olivia and Alexis moved into the property in September 2018.
Olivia was against selling the Phillip Island property, so they decided to rent it out.
Tenants moved in as soon as Olivia and Alexis moved out.
2 In January 2019, their joint interest-bearing account was closed, and Olivia transferred the remaining balance (including Dave’s share at his request) into an interest-bearing account in her name only.
Olivia has also asked whether she can transfer her share of the ANZ shares into Dave’s name and what that would mean. For the near future at least, Dave will continue keeping his share in the two properties.
To follow up:
1. I have requested Olivia to compile figures/documents regarding for our records:
· The purchase details of their residence near Phillip Island and related
expenses
· The purchase of the investment property and related expenses
· The purchase of the ANZ shares acquired
· The statements regarding the closure of the joint interest account.
2. I have also asked Olivia to speak to a real estate agent for a rough estimation of
the value of each property at the time of the relocation to Inverloch.
Date: 19 April 2019
Client Number: 75443.001
Client Name: Olivia Patterson
Olivia has provided further detail on a number of items, as requested at the
previous meeting. They are attached to this meeting note. Olivia notes she can
bring in originals to support these figures as required.
However, Olivia could not locate documents regarding expenses for her home.
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Investment property, Inverloch:
01 August 2017 Purchased – $450,000
01 August 2017 Settlement/legal fees $4,732
28 August 2017 Partial refund due to unspecified easement $15,000
Rates paid $3,700 (01 August 2017)
$3,986 (1 August 2018)
Interest paid 2018 financial year $28.541.00
July – August 2018 $5,155.56
September 2018 – March 2019 $17,959.46
Insurance paid $870 (01 August 2017)
$889 (01 August 2018)
Phillip Island home:
30 November 2011 Purchased – $650,000
30 November 2011 Settlement/legal fees $6,350
Expenses ???
Real estate agent estimation on value as at September 2018:
Phillip Island home: $1,180,000
Inverloch property: $640,000
ANZ Shares:
13 April 2018 400 shares purchased for $10,684
plus $19.90 brokerage
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REQUIRED:
There are three parts to this assessment. You are required to complete ALL three parts.
Part A – Research Report 23 Marks
Markus has asked you to research Olivia’s Australian taxation issues arising from her situation.
Prepare a research report for Markus.
To get you started, Markus has made the following suggestions:
• Markus indicates your report structure should include:
– An overall introduction;
– The body should include sections for each tax issue with section headings
and section conclusions;
– An overall conclusion; and,
– A listing of the sources of tax law referred to in the document.
• Ensure you clearly identify the key tax issues.
• Ensure you include reference to appropriate legislation, case law and rulings.
• Markus wants to be sufficiently persuaded by your analysis, which will require
your analysis to incorporate sufficient supporting evidence obtained from the
sources of tax law.
• Ensure your conclusion is clear and logically arising from your analysis and
Ensure you include an explanation of what that conclusion means.
• Ensure your report is presented in a professional manner as Markus will use the
final version as the basis for advising the client.
• You should aim for 1,500-2,000 words.
ACCOUNT NAME: D.M & O.F. GRANGER
BSB NUMBER: 333 148
ACCOUNT NUMBER: 145000372
DATE DESCRIPTION DEBIT CREDIT BALANCE
01/01/2019 BALANCE B/F 30,753.45 CR
18/01/2019 INTEREST 1,230.14 31,983.59 CR
18/01/2019 TRANSFER FROM
BRANCH
31,983.59 0.00 CR
ACCOUNT CLOSED
TOTAL INTEREST FOR THE 2019 FINANCIAL YEAR: $1,230.14
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Note: You are not required to consider International Double Tax Agreements or foreign
taxation law. Please assume that Olivia is an Australian tax resident: you are not required to
assess tax residency in this instance.
Part B – Timesheet 2 Marks
Markus reminds you that you need to input the time spent into the timesheet against the client. He explains that your time is billable, therefore your time will contribute to the fees that
will be charged to the client.
Use the Excel timesheet provided to record your time spent on the report. Markus further explains that it is important that the time sheet is filled out in a professional manner, as if a client queries a bill received, the timesheet is presented as evidence of time spent on client matters. You will find in the timesheet that there are already billable hours associated with the client.
The timesheet should include any time spent researching, reading and writing your report, as well as any discussions you have with other parties in your preparation. Ensure you provide
sufficient description of what you have done in that time.
You will need to record the date, your name, description of what you were doing (e.g.
reading textbook, reading case, analysing Olivia’s situation etc.), the category of activity
(selected from the drop-down box, e.g. researching), start time, end times, and your advisor
category (e.g. Graduate, selected from the drop-down box). The required fields you will see
are coloured in blue. You will then see that the spreadsheet does the rest. Once your entries
are input, you will be able to see the time spent and the billable fees building up.
You will need to submit the excel spreadsheet.
Part C – Guided Reflection 5 Marks
This assessment part requires you to prepare a short, guided reflection on your experiences
undertaking this assessment.
As a guided reflection, you are required to respond to the following five questions. In your
construction, consider how your perceptions may have changed between Assessment 1 and
Assessment 2:
1. How did you approach change in resolving the uncertainty and ambiguity in Australian tax law when responding to the client brief?
For example, do you feel you better supported your analysis with evidence?
What changed?
2. Would you feel more comfortable in giving this report to your employer?
Think about quality of presentation and content here. How have you improved or changed?
3. How much do you feel, as a tax advisor, that you must rely on the word of a client?
For example, did your perceptions change towards the reliance on client information and issues arising from this position?
4. Based on your completed timesheet, and therefore the work completed to date, how much would you charge the client for this advice?
6.Consider for example, whether you were more alert to the time you were spending on the task for this assignment? How did this affect your efficiency and effectiveness?
5. What grade would you give for your report component (out of 23 marks)?
Think about how you would decide this and do not forget the rubric can also
be of use.
It is recommended that you consider this reflection as you progress through the assignment.
For general tips on writing reflective journals, please refer to the RMIT Learning Lab:
https://emedia.rmit.edu.au/learninglab/content/reflective-writing-1
Length: You should aim for 400-600 words.
(23 + 2 + 5 = 30 marks)
