Best LAW303 – Taxation Law Sample
Question 1- Income from business
In this particular scenario, it is found that the business is about cattle breeding and ACM is the business’s owner. This farm specializes in planting embryos from stud cows to regular breeding cows.
In order to transfer the embryos, ACM got paid $ 5250 by Georgia by cheque. There is an agreement formed between Georgia and ACM, in which it is clearly mentioned that six calves will be provided by ACM in the upcoming two years to Georgia.
In case the cows are not impregnated properly in this case study, then according to the agreement, ACM must provide calves from a third-party source. There was no news of recipient cows of Georgia in spite of the fact that she paid ACM fees for the second year (Arnold, Ault & Cooper, 2019).http://Best LAW303 – Taxation Law Sample
ACM ensured that the cows will be impregnated and it shall provide three calves to Georgia. It seems that ACM failed to provide this important report to Georgia. In the first year, if the embryos are not injected properly, ACM must inject embryo properly in the cow’s body for the second time.
It was stated in this agreement that if any loophole is found within this embryo transfer, it should be corrected within a year. The embryo transfer did not take place as expected by ACM, and hence the cows failed to provide calves within the set time.
In this situation, ACM should inject an embryo in a cow’s body within a time period of 12 months in order to impregnate those (Chaise & Ji, 2018).http://Best LAW303 – Taxation Law Sample
After two years, ACM tells Georgia that the calves are not growing properly, which was to be expected. It was also told to Georgia that the calves will be not provided in the due time.
Georgia told her accountant to get information on the situation of calves. There was insufficient information provided by ACM about the developing embryos inside the ordinary cows. Meanwhile, Georgia says that she was going through difficult times due to a serious illness of her 12-month old child.
In the course of these two years Georgia should have inquired about the embryos, but she failed to do so. There was no query from her part over the two years (Dong, 2018).http://Best LAW303 – Taxation Law Sample
It is possible for ACM to refund the fee to Georgia after deducting some amount. There is a possibility for ACM to arrange another customer in order to sell the calves.
Legal action can be taken against ACM regarding this matter by Georgia. There is a breach in an agreement between the two parties. Six calves are not provided by ACM according to the agreement due to which legal action can be taken against it.
In this case study, it is clearly mentioned that Georgia wants to stop the business and focus on taking care of her child.
Question 2- Capital Gains Tax
Capital Gains Tax is a crucial component that is considered while carrying out transactions of goods that are of a capital nature (Endres, Uhlmann & Hoff, 2019).http://Best LAW303 – Taxation Law Sample
Capital gains tax is owned by an individual over a certain time period. According to the given question, it can be stated that CGT consequences are crucial to be assessed for sales of goods made by Anita.
This will be helpful in determining her net income that can be generated under the method of capital gain and can be used to meet up with professional commitments. Assets under CGT, such as collectibles or personal use assets as mentioned under s 108-10(2).http://Best LAW303 – Taxation Law Sample
The following transactions have been evaluated by Anita based on this fact.
- The antique ceramic bowl possessed by Anita was bought with an amount of $4000. However, as the bowl was acquired before 20th September 1985, the extra amount of $ 8000 was not accessible (Gordon, 2018).http://Best LAW303 – Taxation Law Sample
- Thus, the gain that is made by selling the antique ceramic bowl is a non-assessable income for Anita, as mentioned under; CGT: s 104-10(5).
- The sculpture was acquired by Anita in December 1993 for an amount of $5500, which was sold at the month of December of the current year for $12000.
- It was $500 more than the acquired price that was bought after 20th September 1985. Therefore, it is considered taxable under capital gain. The indexation method can be suggested to Anita in order to effectively calculate cost basis based on the given numerical- 7/61.2*5500=6194. From this calculation, a conclusion can be drawn that there is a capital loss of $194. However, the net capital gain suffered by Anita on a general method is $250.
- The third transaction deal with the bronze figure that was possessed by Anita was acquired in October 1987. Similarly, like the previously mentioned under income tax, she has come across a loss of $ 1000 while selling her bronze figure. Therefore, one comes to the conclusion that the loss generated on this transaction can be used to make a decline in other collectible gains incurred by Anita (Hamzah, Saida & Ilyas, 2018).http://Best LAW303 – Taxation Law Sample
- In the final transaction, it can be mentioned that the painting was acquired by Anita during March 1987 at a price less than $500. Collectables that are purchased by an acquirer under $500 are not liable to be assessed in case of profit or loss as mentioned under s 118-10(1) of CGT events. Therefore, it can be seen that the total capital gain of $4300 is exempted under CGT assessment for Anita.
Question 3-Tax accounting
There was a need for the business to change its structure according to meet up with the growing business infrastructure. It can be seen from the current scenario that the company was in business from 1st July 2010.http://Best LAW303 – Taxation Law Sample
In this case study, one can see that the business received an amount of $40000 on 30th June from its previous financial year. The amount is the same as in the previous year’s account. It will be easy for the book company to calculate the profit and losses if it has access to the amount of the previous year.
The profit in the current financial year is not shown properly in their books (Ismail et al. 2019).http://Best LAW303 – Taxation Law Sample
The company should be able to maintain its records and data so that the previous records can be utilized to enter the current transactions. The company must be encouraged to maintain their books by considering proper accounting rules and regulations.
As per the rules of a company, it is prohibited to advise its clients to pay their dues, but in this scenario, the company asked its client to pay $40000 after 30th June. This was done by the company to avoid the taxes which is considered unethical and is against the accounting standard.
It should give real and accurate figures in the actual financial year. The company wants to show that its revenue in the current financial year is $40000, but the source of income is based on previous year’s transaction. In the cash flow statement of the company, the accountant must do proper entry as per cash received from the previous year.
The total amount of cash is increasing but the accountant should be able to separately treat this transaction (Kleinert et al. 2018).http://Best LAW303 – Taxation Law Sample
Question 4- Taxation of Trust
The discretionary notes play a major role in protecting the assets of the capital nature of Australia. This is also used to extend the planning and helps a company to accumulate its assets for organizational growth.
The process of accumulation in a company is usually done discreetly. Flexibility in the capital is crucial for an organization in order to give a more access to the assets. The expenses from the gross income are carried out to make the company more flexible in the industry.
A discretionary trust is required to reflect the proper income distribution of a company. This trust enables a company to show its potential performance under more simple accounting methods of both cash and accrual basis.
Discretionary trust helps to provide the company proper guidance in order to attain its short term as well as long term goals (Mitchell, 2018).http://Best LAW303 – Taxation Law Sample
The company benefits from it by learning the ways and skills to survive in the market for a long time period. Using and applying trust in a negative way can result in drastic changes within the company.
Discretionary trust helps to design and create the policy of a company by enabling certain areas within it. Discretionary trust may sometimes lead to losses and a decrease in the overall profit margin of the company.
The company can plan a suitable price structure for its products and services. This trust comes in handy in these situations. There should be the maintenance of regulatory burden and there is a need for this trust to cover this burden as well. The concept of discretionary trust is popular in the businesses of Australia.
According to a study, it is seen that the majority of the family businesses in Australia follow this trust. It enables an owner to have a better control over the business. Discretionary trust helps a business to come up with decisions to increase their profit margin (Olkola, 2019).http://Best LAW303 – Taxation Law Sample
References
Arnold, B. J., Ault, H. J., & Cooper, G. (Eds.). (2019). Comparative income taxation: a structural analysis. Kluwer Law International BV. Retrieved from: http://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=1026&context=lsfp
Chaisee, J., & Ji, X. (2018). Soft Law in International Law-Making: How Soft International Taxation Law in Reshaping International Economic Governance. Asian J. WTO & Int’l Health L & Pol’y, 13, 463. Retrieved from: https://pdfs.semanticscholar.org/9a75/2eef869799aefa3b6c5d5f83056fba1d2e4d.pdf
Dong, J. (2018, October). Research on the Fairness of Income Distribution from the Perspective of Finance and Taxation Law. In 8th International Conference on Management and Computer Science (ICMCS 2018). Atlantis Press. Retrieved from: https://download.atlantis-press.com/article/25904261.pdf
Endres, A. B., Uchtmann, D., & Hoff, G. (2019). Law and Taxation: A Retrospective of 20 Years. farmdoc daily, 9(170). Retrieved from: https://ageconsearch.umn.edu/record/298646/files/fdd120919.pdf
Gordon, R. N. (2018). REIT and MLP Taxation under the New Tax Law. Journal of Taxation of Investments. Retrieved April, 18, 2019. Retrieved from: http://www.twenty-first.com/pdf/REIT_and_MLP_Taxation_Under_the_New_Tax_Law.pdf
Hamzah, A., Saidi, M. D., & Ilyas, A. (2018). THE USE OF FORCE MAJEURE BY ATTORNEY AGAINST TAXATION CRIME. Hang Tuah Law Journal, 2(2), 182-190. Retrieved from: http://law-journal.hangtuah.ac.id/index.php/htlj/article/viewFile/69/46
Ismail, Z., Ahmad, A. S., Ahmad, N. L., & Mahjom, N. (2019). An Analysis of Students’ Knowledge Construction and Their Achievement in a Taxation Subject. Retrieved from: https://pdfs.semanticscholar.org/55f8/35f4f0f16f3acce977b89e505ca66a987528.pdf
Klenert, D., Schwerhoff, G., Edenhofer, O., & Mattauch, L. (2018). Environmental taxation, inequality and Engel’s law: The double dividend of redistribution. Environmental and Resource Economics, 71(3), 605-624. Retrieved from: https://ora.ox.ac.uk/objects/uuid:20474cbe-42de-44ba-b119-3f6d97d3dcdd/download_file?safe_filename=Klenert_et_al_postprint.pdf&file_format=application%2Fpdf&type_of_work=Journal+article
Mitchell, R. (2018). Legal advice privilege in the taxation context: disconnected ethical regimes for lawyers and tax advisers in the United States and New Zealand. New Zealand Journal of Taxation Law and Policy, 24(1), 63-82. Retrieved from: http://nrl.northumbria.ac.uk/31694/2/Legal%20advice%20privilege%20in%20the%20taxation%20context%20NZJTLP%20%28002%29.pdf
Olokooba, S. M. (2019). Nigerian Taxation: Law, Practice and Procedures Simplified. Springer. Retrieved from: http://dlib.scu.ac.ir/bitstream/Hannan/561931/1/9789811326073.pdf
