AYN438 Taxation Law and Practice Page | 1 © Queensland University of Technology QUEENSLAND UNIVERSITY OF TECHNOLOGY QUT Business School School of Accountancy AYN 438 TAXATION LAW & PRACTICE Semester 2, 2023 Assessment 2: HandiTax Group Research Project (Weighting Total: 30%) Due Date: Tuesday 17 th October 2023 (no later than 11:59 pm). Submission: This assignment needs to be submitted electronically via Turnitin (on the AYN438 Canvas site). Each group is required to make two (2) separate pdf submissions for this assignment: (a) The cover sheet i.e. the ‘Group Integrity Declaration’. This document can be found at the end of this assignment. (b) Part A (the ‘2023 tax return’) should be printed from Access HandiTax to pdf. Only one submission is required from each group. Each group member is also required to submit to the UC ([email protected]) the ‘Group Member Contribution Sheet’. This is a confidential document. Group or Individual: Group This assessment item assesses the following learning outcomes: Knowledge and Technological Skills (KS) 1.2 Apply technical and technological skills appropriate and effective for real world business purposes and contexts. Teamwork and Self (TS) 4.2 Apply teamwork knowledge and skills for effective collaboration across diverse purposes and contexts. AYN438 Taxation Law and Practice Page | 2 © Queensland University of Technology ASSESSMENT OVERVIEW Part Description A Client’s 2023 income tax return (using the Access HandiTax software package) (20 Marks) B Research and Client Meeting Presentation (10 Marks) C Professional Approach D Academic Conduct E Submission Requirements Details of your client’s financial affairs for 2023 Various Administrative Documents Notes: ▪ It is each student’s responsibility to form into appropriate groups for this assignment by Week 4. After this time, any student without a group will be assigned to one by the unit coordinator. ▪ It is each student’s responsibility to research the issues contained in this assignment. QUT staff members will not be answering any specific questions or issues relating to this assignment. AYN438 Taxation Law and Practice Page | 3 © Queensland University of Technology Assessment Submission and Extensions In both your QUT study and your professional life you will be expected to meet deadlines. In keeping with this expectation, assessment submitted after the due date will not be marked and will receive a grade of 1 (i.e. 0%). The 48-hour extension is not available for this assessment item. In accordance with QUT policy, extensions are not given due to the fact that this assignment is a group project. Consistent with the entire QUT-wide policy, assignments submitted after the due date and time of 23:59 pm on Tuesday 17 th October 2023, will not be marked and a mark of zero out of 20 will be awarded. Students should note that this policy will be strictly applied. Students are advised not to submit the assignment at the last minute and to allow themselves an appropriate amount of time to compile all of the requisite documents as required and to complete the various on-line submission processes for this assignment. Please note that QUT”s IT HelpDesk closes at 10:00 pm, so no assistance will be available to students should you encounter submission issues after this time. The Turnitin submission links for the Cover Sheets and Part A will be located on Canvas. Please note that the submission links will remain open until 11:59 pm on Tuesday 17 th October 2023. It is the sole responsibility of each group to ensure that the complete (and final version) of the assignment is submitted by the due date and time. AYN438 Taxation Law and Practice Page | 4 © Queensland University of Technology ASSESSMENT REQUIREMENTS FOR EACH PART PART A: Prepare your client’s 2023 income tax return using the Access HandiTax software package in a group of 3 or 4 (20 marks) The group is required to complete (but not lodge) your client’s 2023 income tax return using HandiTax. HandiTax can be loaded on all QUT computers in the computer labs in both B and Z Blocks. However, for those students who wish to use HandiTax from home, there is a link that Access has provided QUT that allows students to download the program on their home computer if they wish to access the software off campus. However, in downloading this software you agree as a student of QUT to only use this software for educational purposes and not for commercial purposes. Please note that the software is only compatible with Windows, not Mac. Access HandiTax software and installation instructions as well as ‘How to’ resources are available on Canvas in the Assessment 2 module. AYN438 Taxation Law and Practice Page | 5 © Queensland University of Technology Students must use HandiTax to complete the assignment Students are not permitted to use any other electronic tax lodgment software packages (e.g. MyTax, Solution 6, MYOB Accountants Office, Tax Assistant, etc.). Failure to use HandiTax to complete the income tax return will automatically result in the group receiving an overall mark of zero out of 20 for Part A. Instructions on Printing the Final Tax Return in HandiTax When printing the completed tax return to pdf, please click “Edit” from the menu at the top of the screen and choose/click the last option entitled “View return with worksheets”. This will provide you with a print preview of the tax return itself, and also the accompanying worksheets, schedules and the tax estimate (see the screen print on the following page). It is essential that you print “View return with worksheets” as this version of the tax return includes your client’s tax return and all the required schedules and worksheets which we need to review as part of the marking scheme. If you just click “View return for lodgment”, the accompanying schedules and worksheets will not be displayed and will not be printed. Hence, when marking, if you do not include the worksheets, we may not be able to award several marks for those sections. Please ensure that you print the return with worksheets document to pdf, ready to upload to Turnitin by the due date and time. Only one tax return is required to be lodged by the group. This tax return must include all relevant worksheets, schedules, and the tax estimate in one combined file. AYN438 Taxation Law and Practice Page | 6 © Queensland University of Technology Please ensure you print “View return with worksheets” AYN438 Taxation Law and Practice Page | 7 © Queensland University of Technology Points to Note on How Part A is Marked: ▪ Part A (being the tax return itself) is worth a total of 20 marks. A total of 20 numbers will be marked in your client’s 2023 income tax return. Either the answer is correct (1 mark) or incorrect (0 marks). There are no half-marks awarded if the figure is wrong. ▪ In respect of Part A, students will be marked not just on the correct amounts entered into HandiTax, but whether the amounts have been entered at the correct locations (i.e. item numbers and item labels) in your client’s income tax return. For example, all work-related deductions should be entered at Label D5 (Work Related Deductions) and for the group to get the single mark, then the correct final amount must also be entered at this label. ▪ If the amount entered is wrong, no marks will be awarded. Furthermore, if the correct amount is entered at the wrong label in the tax return, no marks will be awarded. ▪ Whilst we mark the overall net capital gain numbers contained in Label 18 of the tax return, if these numbers are wrong, then we will look at the CGT worksheet to award you part marks. ▪ Once again, please ensure that you print and submit all relevant worksheets. If you do not attach the CGT worksheet, then we will not be able to give you part marks. Students will not be able to submit the CGT worksheet after the due date. AYN438 Taxation Law and Practice Page | 8 © Queensland University of Technology PART B: Research and Client Meeting Presentation (10%) Part B of the group research project requires each group to attend a 15-minute meeting to discuss certain aspects of the tax return. The meeting will be via Zoom with the Unit Co-Ordinator as host. The meeting will be at an agreed time and will have a strict 15-minute time limit. This meeting will simulate a client interview scenario whereby the ‘client’ will ask several questions to each student in the group about issues in the tax return. This is designed to simulate the meeting that often occurs between the client and their accountant/tax advisor following the completion of the client’s tax return. The questions asked may range from why a certain item/transaction was not claimed as a tax deduction or to explain how an amount included in the tax return was calculated. Students will need to be able to explain/justify their research findings to the client. Each group is required to schedule one x 15-minute meeting with the unit co-ordinator at a mutually convenient time for both parties via Zoom. Students will be advised of the meeting date, time and Zoom link created by the Unit Co-Ordinator via an email to the group. All members of the group are expected to attend this 15-minute meeting. Each student will individually be asked several questions relating to issues contained in the assignment. The student who is asked the question is the only person that is allowed to respond to the question. In other words, no collaboration with the other group members is permitted. Students will not be made aware of these issues beforehand. For this reason, it is essential that each student in the group understands how each transaction contained in the assignment has been dealt with in the tax return and be able to explain how that amount has been calculated and why (or why not) it has been treated the way it has in the tax return. Students should have the following materials in the 15-minute client meeting: ▪ a copy of the assignment outline (this document); ▪ a copy of the group’s completed 2023 tax return that was submitted via Turnitin; and ▪ a copy of their working papers explaining/outlining the detailed calculations for each item in their client’s tax return. Whilst students are allowed to look up and refer to items in the tax return when questions are posed by the client, it is expected that students will be able to explain to the client the answer by directly addressing them, rather than referring to their notes. The questions that will be asked to each student will relate exclusively to the assignment and the various issues contained in this assignment. Based on each student’s responses, a mark out of 10 will be awarded to each student. Unlike Part A, the mark out of 10 for Part B is an individual mark based exclusively on how each student answers the questions posed by the client about issues in the tax return. Students should refer to the criteria sheet at the end of this document for further information. AYN438 Taxation Law and Practice Page | 9 © Queensland University of Technology PART C: Professional Approach This assessment expects a professional approach to presentation similar to that expected when preparing and delivering a tax return to a real client in the real world. A professional approach also means that it is the responsibility of each student to ensure that the complete assignment is submitted by the due date and complies with the requirements. AYN438 Taxation Law and Practice Page | 10 © Queensland University of Technology PART D: Academic Conduct in Completing this Assessment Academic conduct is expected to be ethical and above reproach in producing this assessment in the same way you would be expected to produce a client’s tax return as their registered tax agent or tax advisor. Students who are found to have committed academic misconduct will be immediately referred to the QUT Business School academic misconduct committee. Please note that penalties will be applied not only to the student(s) who have used this information but also to the student(s) who have shared this information. This integrity standard must be applied to all sections of the assignment. To this end, each student is required to sign a group integrity declaration confirming that they have not used or plagiarised the work of others. More information on plagiarism and QUT’s range of penalties that can be imposed can be found at: http://pilot.library.qut.edu.au/module6/6_5/index.jsp. AYN438 Taxation Law and Practice Page | 11 © Queensland University of Technology PART E: Submission Instructions The HandiTax group project should be submitted (uploaded) via Turnitin on Canvas no later than 23:59 pm on Tuesday 17 th October 2023. As previously mentioned on the first page of this assignment outline, there are 2 separate pdf submissions required by your group for this assignment: a) The cover sheet i.e. the ‘Group Integrity Declaration’ form. This document can be found at the end of this assignment; and b) Part A (the ‘2023 tax return’) should be printed from HandiTax to pdf. For the cover sheet listed in (a) above, students are required to: – print off the page; – complete and sign the page (as detailed below); and then – upload pages to Turnitin. Each group member is also required to submit to the UC ([email protected]) the ‘Group Member Contribution Sheet’. This is a confidential document. (i) Group Integrity Declaration This declaration needs to be read and signed by each member of the group. This is a declaration stating that work submitted by each member of the group (including the group as a whole) is their own original work and that each member of the group has not copied or plagiarised any of the content in their HandiTax project from other people (including current or past students) nor have they provided their work to other groups. Please make sure you carefully read this declaration as this declaration applies to all parts of this assessment task. If you sign this declaration and are subsequently caught using or reproducing the work of other students, then serious penalties will be applied. If any member of the group does not sign and/or submit the group integrity declaration, your assignment will not be marked. It is not acceptable for any member of the group to sign on behalf of another group member. AYN438 Taxation Law and Practice Page | 12 © Queensland University of Technology (ii) Group Member Contribution Sheet Please complete this form, including: ▪ the student numbers and names of each student in your group; ▪ a contribution percentage for each group member (this must add up to 100%); ▪ each student in the group must complete their own ‘Group Member Contribution Sheet’ and submit to the UC. This is a confidential document. It would be hoped, and expected, that an equal contribution would be the norm. For example, if there are 4 members in the group and everybody has made an equal contribution, 25% should be entered beside each person’s name. However, if each person has not made an equal contribution, then differing percentages that reflect each person’s contribution should be entered. Additional comments can be provided on this form to explain the contribution percentages awarded. AYN438 Taxation Law and Practice Page | 13 © Queensland University of Technology TIPS ON USING HANDITAX ▪ Students are expected to learn how to use the HandiTax software package themselves. To this end, instructional videos have been curated to help you learn how HandiTax works. This series of videos are available on Canvas. ▪ The ‘2020 HandiTax User Manual’ is on the AYN438 Canvas site for students to refer to for assistance in completing the tax return. This manual is available for students to download in pdf format. ▪ The ‘2020 HandiTax Quick Start Guide’ is also on the AYN438 Canvas site for students to refer to for assistance in completing the tax return. ▪ HandiTax also has a useful “Help” feature within the program itself. At each item in the tax return, more information about what should be (and what should not be included) at each item can be found by pressing the function key “F1′. ▪ HandiTax has a useful “Errors” button at the bottom of the screen. Students are advised to regularly click this button as it will reveal any errors with the tax return. The end goal is to ensure that there are no error messages and that the tax return is ready to lodge. ▪ In clicking the “Errors” button, HandiTax does provide you with “Warnings”. However, these warnings are not serious (as they do not constitute errors). Instead, warnings are designed to provide alerts to the preparer to double check calculations. In effect, they are “tips” to the preparer to look out for things in the tax return. Generally speaking, if the data has been entered correctly, then these warnings can be ignored. ▪ If you get an “SBR” warning (such as the one shown below), please ignore this, as this refers to data encrypted in HandiTax to ensure that the data is SBR-compatible with the ATO’s internal processing systems. AYN438 Taxation Law and Practice Page | 14 © Queensland University of Technology TIPS ON USING HANDITAX (Continued) ▪ Please ignore the electronic funds transfer (EFT) – bank account details on the front cover the tax return. ▪ Either during, or after completing the tax return, when you check for errors, you might see the following screen: o In terms of the top part of the screen, if it comes up with an error regarding entering taxpayer details or Declarer/Declaration details, it is safe to ignore these error messages. o Furthermore, in the bottom part of the screen, it may come up with warnings regarding bank account details, the capital gains tax worksheet and CGT schedule, transferring details to the ATO and the tax estimate. Once again, if you see these warnings, please disregard them. AYN438 Taxation Law and Practice Page | 15 © Queensland University of Technology HANDITAX GROUP PROJECT (20%) Client Details FACTS: Robyn McCreary is an Australian resident. She works full-time as an academic for an Australian University, TUQ, in Brisbane. Robyn lives in a three-bedroom house in Bardon with her husband of fifteen years, Mike, and their two children, Anna, aged eleven and Connor, aged nine. Robyn and Mike purchased this property in joint names in December 2015 for $600,000 and have lived there with their children since that date. As such, they regard this property as their main residence. Robyn has various investments, including shares in listed Australian and foreign companies and a rental property which was bought in her own name during the 2004 income year. Last year, Robyn utilised the services of a local tax agent in Bardon. However, she was dissatisfied with their service and has approached your group to assist her in preparing her 2023 income tax return using Sage’s HandiTax software program. Robyn has supplied your group with the following information relating to her personal income tax affairs for the year ended 30 June 2023. However, not being a tax expert, she is not certain whether everything she has supplied your group with is necessarily assessable or deductible. Accordingly, she asks your group to carefully go through each item in order to determine its assessability and deductibility. Needless to say, Robyn wishes to minimise her 2023 taxable income wherever legally possible. AYN438 Taxation Law and Practice Page | 16 © Queensland University of Technology PERSONAL INFORMATION Full Name: Dr Robyn McCreary Date of Birth: 26 August 1978 Occupation: Academic Tax File Number: 490 854 180 Daytime Telephone Number: (07) 3138 9205 Mobile Telephone Number: (0409) 123 456 E-mail address: [email protected] Home Address: 3 Sixth Avenue Bardon, QLD, 4065. Postal Address: as above —————————————————————————————————————————– Information relating to Robyn’s husband, Mike, is shown below: Full Name: Mr Mike McCreary Date of Birth: 3 April 1976 Period: Mike was Robyn’s spouse for the entire 2023 income year. Spouse’s TFN: Not required Further details relating to Mike McCreary and his income are contained at Item 16 of this assignment. AYN438 Taxation Law and Practice Page | 17 © Queensland University of Technology DETAILS RELATING TO INCOME 1. Gross Salary and Wages During the entire 2023 income year, Robyn worked solely for TUQ. Robyn was provided with her annual PAYG Payment Summary from her employer in relation to the period 1 July 2022 to 30 June 2023. Her 2023 PAYG Payment Summary revealed the following: Name of Payer: TUQ ABN of Withholder: 45 328 520 939 Gross Salary: $190,250 PAYG Tax Withheld: $67,100 Reportable Fringe Benefits Amount: $12,500 Reportable Employer Superannuation Contributions: $10,400 The reportable fringe benefit amount of $12,500 shown on Robyn’s 2023 PAYG Payment Summary relates to an arrangement that Robyn has in place with TUQ. As a part of her salary package TUQ pays for several personal expenses on her behalf. These expenses were all subject to fringe benefits tax. 2. Car Reimbursement As part of her job, Robyn is frequently required to use her own motor vehicle to visit students on WIL (work integrate learning) assignments. During the 2023 income year Robyn received a gross car allowance of $5,500. PAYG withholding tax of $1,650 was deducted from this amount. Both of these amounts were shown separately on Robyn’s 2023 PAYG Payment Summary. If your group decides to enter these amounts into HandiTax, please enter them at Item 2 and not Item 1 of Robyn’s tax return. AYN438 Taxation Law and Practice Page | 18 © Queensland University of Technology 3. Interest Income Robyn maintains bank accounts at NAB and Suncorp, two Australian banks. Interest Robyn has earned on these accounts during the 2023 income year include: $ ▪ Suncorp savings account (net of 47% TFN withholding tax – see below) 212.00 ▪ NAB savings account (total gross interest received) 150.00 ▪ NAB term deposit (income year interest – see below) ? Robyn opened her Suncorp savings accounts on the 18 January 2016. When opening the bank account, Robyn forgot to take her tax file number (TFN) with her. She subsequently has not provided the bank with her tax file number. Accordingly, the bank has deducted 47% in TFN withholding tax in respect of interest paid on this account during the 2023 income year. The net remaining amount (representing 53% of the gross interest which was owing) was credited to her Suncorp savings account. Further, on 1 November 2022, Robyn invested $50,000 into a twelve-month term deposit earning 1.25% interest with NAB. Interest is to be credited on maturity i.e. 31 October 2023. When entering the above information into HandiTax, please leave the “Branch” and “Account Number” boxes blank. The above interest has been derived from personal investments, and not in relation to any business activity undertaken. 4. Dividends Received Robyn owns shares in several Australian listed public companies (tax rate 30%). During the 2023 income year, Robyn received the following dividend payments: Name of Company Unfranked Franked Franking Percentage attached to Franked Dividends 1. National Australia Bank $481 $721 40% 2. Telstra $0 $165 60% 3. BHP $303 $707 70% 4. Rio Tinto $0 $3,999 30% 5. Woolworths (see ‘a’ below) $1,470 6. Tabcorp $88 $132 50% 7. Santos $36 $54 90% 8. Wesfarmers (see ‘b’ below) ? AYN438 Taxation Law and Practice Page | 19 © Queensland University of Technology (a) Woolworths Dividend: Robyn owns 600 shares in Woolworths. In March 2023, the company announced an unfranked dividend of $2.45 per share which entitled Robyn to a total unfranked dividend amount of $1,470. However, Robyn once again forgot to quote her tax file number (TFN) to the share registry and the share registry consequently deducted 47% in TFN withholding tax in respect of this dividend. This net amount was paid into Robyn’s bank account on 31 March 2023. (b) Wesfarmers Dividend: Robyn owns 2,000 shares in Wesfarmers. In September 2022, the company announced an unfranked dividend of $1.12 per share which entitled Robyn to a dividend of $2,240. However, instead of receiving the cash dividend, Robyn elected to apply this amount under the company’s dividend reinvestment scheme so that she received an additional 40 shares in the company. On the date the dividend was declared, the share price of the company was $56.00 per share. Hence, instead of taking the $2,240 cash dividend, Robyn elected to receive an additional 40 shares in the company. 5. Foreign Dividend Received Robyn also owns 1,500 shares in The a2 Milk Company (NZE:ATM). On 30 March 2023, Robyn received a dividend cheque from the company’s share registry in New Zealand for an amount of NZ$750. According to the dividend statement that accompanied the cheque, the total amount of the dividend paid was NZ$750, but foreign withholding tax of NZ$112.50 equivalent to 15% of the gross dividend had been deducted. The foreign exchange rate on the date the dividend was received was $NZ1.00 = A$0.93. The dividend is unfranked. This is Robyn’s only investment in a foreign asset. AYN438 Taxation Law and Practice Page | 20 © Queensland University of Technology 6. Rental Property – 16 Flora Road, Charlestown NSW 2282. On 16 February 2004, Robyn purchased a three-bedroom house in Charlestown in her own name at a cost of $205,000. Stamp duty and legal fees relating to this acquisition totalled $17,175 and were also paid on the same date. To finance the purchase of the rental property, Robyn borrowed $200,000 from NAB. The bank paid this money directly to the seller upon settlement of the property on 16 February 2004. Loan establishment fees, totaling $300, were charged to Robyn on this date. The term of the loan is 20 years. Robyn paid the remaining balance of $5,000 in cash from her own savings account to fund the acquisition of the property. When she purchased the house, Robyn was notified that the previous owner/builder constructed the house in March 1994 and that the original construction cost of the house was $95,000. Further, on purchase it was obvious that the plumbing of the house was badly in need of repairs as there was a significant leak in the bathroom that had damaged the floorboards and gyprock. Robyn engaged the services of a builder to fix the plumbing and repaint the interior of the house. The builder was paid $8,300 on 2 October 2004. The property has been permanently rented out since 18 October 2004. For the 2023 income year, Robyn derived gross rental income of $28,500. Expenses relating to the rental property for the 2023 income year were as follows: $ ▪ Council rates 1,540 ▪ Interest on NAB loan (for current income year) 2,750 ▪ Landlord insurance 1,730 ▪ Property agents commission (on rent collected @ 7%) 1,456 ▪ Repairs and maintenance (all tax-deductible) 4,500 Important Tips Relating to the Rental Property Schedule in HandiTax (a) Please ensure that you enter data and complete the “Rental Schedule” in HandiTax. HandiTax does not allow you to enter data directly at Item 21 of the tax return. The rental property schedule asks you to enter the address of the rental property, as well as details relating to the rental income and expenses during the period of ownership. (b) When entering expenses into the rental property schedule in HandiTax, if you press the function key “F5” it will reveal the full list of items/deductions that relate to a rental property. HandiTax automatically pre-populates the key financial figures (such as gross rent, certain expenses and the net profit/(loss) from the rental property schedule directly into Item 21 of the tax return. AYN438 Taxation Law and Practice Page | 21 © Queensland University of Technology 7. Capital Gains/(Losses) Robyn advises you that she sold the following assets during the 2023 income year: (a) As previously indicated, Robyn owns a number of Australian shares. On 23 January 2023, she purchased 1,000 Westpac shares under a contract of purchase for $19,370. Brokerage costs separately incurred on the same date came to $581.10. Later on 12 May 2023, Robyn sold 500 of these shares for $12,555. Robyn also paid brokerage fees of $376.65 in relation to the sale on this date. These shares were a non-active asset. Robyn did not receive any dividends from these shares during the period of ownership. (b) On 16 February 2023, Robyn’s grandmother, Patricia, aged 67, passed away. Under Patricia’s will, Robyn inherited a vacant block of land at Floraville. Patricia initially purchased this block of land on 9 September 1986 for $160,000. As at the date of Patricia’s death, the market value of the land was $300,000. On 6 June 2023, Robyn sold the vacant block of land for $320,000 under a contract of sale. Incidental costs of disposal, including legal fees and sales commission totalled $5,250. Settlement occurred on 30 June 2023. The vacant block of land at Floraville was a non-active asset and no income was derived by Robyn from this property during her ownership period. (c) On 20 March 2023, Robyn sold a painting for $15,000. Robyn purchased this painting on 3 July 2009 for $18,000. The painting has hung in the family dining room for many years. There were no incidental costs of acquisition or disposal. (d) On 18 November 2022, Robyn sold Pokemon trading cards for $3,100 which she purchased on 26 August 2015 for $1,500. There were no incidental costs of acquisition or disposal. Robyn informs you that she has two carried-forward (unapplied) capital losses from prior years. Firstly, there is a net collectable capital loss of $250 relating to the sale of a ring in the 2019 income year. Secondly, there is a net capital loss of $4,500 relating to the sale of some AMP shares in 2020. Robyn wishes to minimise her capital gains tax payable wherever legally possible. Assume that Robyn is not eligible to rollover any of part of the capital gain relating to any of the assets. AYN438 Taxation Law and Practice Page | 22 © Queensland University of Technology Important Tips Relating to the Capital Gain Calculations in HandiTax 1. Please ensure that you enter data and complete the “Capital Gains Worksheet” in HandiTax. You will need to enter each CGT transaction (where relevant) into this worksheet. Please note that HandiTax does not use the term “personal use asset”. Instead, it refers to these assets as “other CGT assets” – using the code “O”. Land is referred to as “real estate” – using the code “R”. 2. After you have completed the Capital Gains Worksheets, you will also need to complete the “CGT Schedule” in HandiTax. If you want the figures in the CGT Worksheet to automatically populate and prefill this schedule, then you will need to enter “Y” to the question “Transfer from Capital Gains Worksheet”? This is illustrated in the print screen extract below. 3. After completing the Capital Gains Worksheet, students may see an error and/or warning message saying “Multiple acquisition/disposal dates are present. Situations of both “less than” and “greater than” 12 months exist – should do separate worksheets”. This Warning Code is a Check. All this warning means is that for each individual CGT transaction in this assignment, students should enter each transaction into a separate CGT worksheet. If this error/warning message keeps coming up, please ignore it. AYN438 Taxation Law and Practice Page | 23 © Queensland University of Technology 8. Sportsbet Winnings Robyn is a keen football follower. Each weekend she loves nothing better than watching the National Rugby League (NRL) games, especially the Newcastle Knights. Every Friday afternoon before the Friday evening games, Robyn places a bet of $50 on the NRL games for the weekend. During the 2023 income year, Robyn won a total of 7 times. However, the winnings were reasonably small that they barely covered the amount she bet. However, in the last week of the 2022 season (before the finals), Robyn took a multibet that ended up proving to be a massive winner for her. She ended up winning $31,185 for that particular bet. Her overall winnings for the 2023 income year (including the $31,185 bet) totalled $34,584. AYN438 Taxation Law and Practice Page | 24 © Queensland University of Technology DETAILS RELATING TO DEDUCTIONS 9. Car Expenses As previously mentioned in Item 2 of this assignment, Robyn is frequently called upon to use her own motor vehicle to visit students on WIL (work integrated learning) assignments. For this, she received a car allowance. Robyn owns a Mazda 5 Sedan, which she purchased on 23 January 2016 for $31,000. The registration number is AYN438. Robyn informs you that she has maintained a logbook for a consecutive twelve-week period during the 2022 income year. At the end of the twelve weeks, the logbook revealed that Robyn had travelled a total of 16,200 kilometres, of which 4,420 were work-related. Robyn tells you that this pattern of use is still relevant for the current year. At her interview, Robyn advises you that she travelled 54,863 kilometres in the current income year and that there was no significant or material change in business usage during the 2023 financial year from the prior year. Robyn personally paid the following expenses in relation to her car for the 2023 income year: $ ▪ Registration 840 ▪ Insurance 670 ▪ RACQ Roadside Assistance membership fee 120 ▪ Petrol and oil 3,740 ▪ Car washing (being $20 per month) 240 ▪ Minor repairs and general maintenance (all tax-deductible) 1435 ▪ Bridge tolls and parking fees (all work-related) – refer note below 457 Robyn has kept receipts for all of the above expenses. Robyn was fully reimbursed by TUQ for the bridge tolls and parking fees totaling $457 relating to trips to visit students on WIL (work integrated learning) assignments. Assume that Robyn wishes to maximise any car deduction claimed. Hint: For the above item, please complete the “Other Vehicles & Travel” worksheet in HandiTax so that the markers can clearly see which expenses your group has/has not included as part of the overall motor vehicle expense figure. As HandiTax may not automatically transfer the eventual claim to Label D1 in the tax return, students may need to retype the total amount claimed at Label D1 in Robyn’s tax return. AYN438 Taxation Law and Practice Page | 25 © Queensland University of Technology 10. Travel Expenses On 2 September 2022, Robyn travelled to Exeter to attend the Tax Research Network conference. The purpose of this conference is to discuss recent changes in tax law, present academic research and form collaborations with partners in industry. Robyn believes that the conference will prove very useful for keeping up-to-date with recent developments in the area and to network with professional colleagues. Robyn personally paid all of the following costs relating to the conference. The costs of the overseas trip are detailed below (all amounts are expressed in Australian dollars): $ ▪ cost of obtaining a 64-page Australian passport 240 ▪ travel insurance 180 ▪ business class economy airfare from Brisbane to London and back * 6,750 ▪ 5 nights accommodation at the Woodbury Park Hotel and Golf Club 870 ▪ phone calls home to Mike and the kids from hotel phone in room 74 ▪ conference registration fee 1,100 ▪ meals for five days while attending the conference 335 ▪ taxi fares to and from airports 250 ▪ Train fare from London to Exeter (return) 240 ▪ “A” Reserve ticket to Hamilton 250 The dates of Robyn’s flight were departing Brisbane on 2 September 2022 and arriving in London on 3 September 2022, and then departing London on 8 September 2022 and arriving back in Brisbane on 10 September 2022. Robyn advises you that she has kept receipts for all of the above expenses and has kept the appropriate travel diary for taxation purposes. * It comes to your attention that Robyn has chosen to fly business class from Brisbane to London and back. Based on your research, you discover that the Qantas economy airfare from Brisbane to London and back at that time was only $3,520. Note: For the purposes of all of the expenses outlined in Item 10, please claim any deduction (where appropriate) directly into Label D2 Work-Related Travel Expenses in Robyn’s tax return. Do not use the “Other Vehicles & Travel” worksheet in HandiTax. Arguably, some of these expenses could be claimed at Item D5. However, for the purposes of this assignment, if students consider any of the above amounts tax-deductible, please include the relevant amounts at Label D2 of the tax return. In other words, do not include these items at any other label of Robyn’s tax return (for example, Item D4 or D5). AYN438 Taxation Law and Practice Page | 26 © Queensland University of Technology Important Tip Relating to Entering Information for Item 11 into HandiTax HandiTax has a “Work Related Expenses” worksheet. This worksheet asks the preparer to enter more details for any deductions claimed between Labels D1 to D5. However, students are advised NOT to use this worksheet. Instead, please claim any deduction (where appropriate) for information shown at following Items 11(a) to 11 (f) directly into the relevant labels in HandiTax. 11. Other Expenses (a) Mobile Telephone Expenses Robyn owns her own mobile telephone. Her mobile telephone call costs for the 2023 income year totalled $4,520. According to an analysis of Robyn’s mobile telephone statements over a three-month period, Robyn reliably estimates that 68% of these calls were work-related. Assume that Robyn took 4 weeks annual leave during the 2023 income year and was not reimbursed for any of these costs by her employer. (b) Purchase of an Apple iPhone 11 On 24 November 2022, Robyn buys a new Apple iPhone 12 for $1,199 from the Apple shop in the Brisbane CBD. Robyn continues to use her new iPhone in the same ratio as outlined in the prior note (ie. 68% for business purposes). (c) Home Internet Access Fees Robyn pays $99 per month to an internet service provider to connect to the internet at her home in Bardon. This provides her with unlimited data uploads and downloads per month. Based on a three-month diary that Robyn has maintained, Robyn estimates that she uses an average of 70% of this data allowance accessing TUQ’s intranet, downloading student files and research data, and checking her work e-mails. The remaining 30% of internet usage is attributed to Robyn and Mike’s binge watching and her two children who use the internet to play video games, watch YouTube and TikTok, conduct research for school homework and assignments and to send e-mails and messages to their friends. During the 2023 income year, Robyn paid $1,188 to the internet service provider representing 12 monthly payments of $99 each. Assume that Robyn took 4 weeks annual leave during the 2023 income year and was not reimbursed for any of these costs by her employer. AYN438 Taxation Law and Practice Page | 27 © Queensland University of Technology (d) Home Office Expenses Although she spends most of her day working from the office of TUQ, Robyn occasionally works from home because it saves her time commuting to her office. Robyn has a small room in her house at Bardon which she uses as an office to complete work for TUQ. This room occupies one-tenth of the floor area of the house. The home loan on the house was $720 per week. Electricity and water costs for Robyn’s office amounted to $450 and $300 respectively. These were supplied through separate meters. (e) Subscriptions and Memberships Robyn paid the following subscriptions and professional memberships during the 2023 income year: $ ▪ AFAANZ membership 170 ▪ 12-month subscription to The Tax Institute 2,300 ▪ CAANZ membership 375 ▪ Qantas Airport Lounge 12-month annual membership renewal fee 480 Robyn has been a member of The Qantas Club since 2000. On 1 January 2023, Robyn renewed her annual Qantas airport lounge membership because she travels extensively for work purposes and finds it convenient to use the Qantas airport lounge (particularly the business facilities) each time before boarding her flight. Note: For the purposes of the tax return, if students consider that any of the items listed in the four bullet points above in part (e) are tax-deductible, please include the relevant amounts at Label D5 of the tax return (ie. ‘other work-related expenses’). In other words, do not include these items at any other label of Robyn’s tax return. AYN438 Taxation Law and Practice Page | 28 © Queensland University of Technology (f) Gifts to WIL Industry Partners Robyn advises you that during December 2022 she gave several Christmas gifts to industry partners of the WIL program. She does not consider these partners “friends” but in keeping with the Christmas spirit, she purchased these gifts as a “thank you” for participating in the WIL program during the year. The breakdown of her gifts totalling $680 was as follows: $ ▪ Boxes of chocolates 350 ▪ Christmas hampers 240 ▪ Bottle of champagne (for one client) 90 Robyn is not reimbursed for any of these expenses by her employer Important Tip Relating to Entering Information for Item 12 into HandiTax Please enter the details for any claims relating to the following possible deductions (ie. Item 12 below) directly into the relevant label in HandiTax. 12. Insurances (a) Income Protection Insurance Premiums On 1 April 2023, Robyn took out a 12-month sickness and accident insurance policy with NRMA Insurance to insure herself against the loss of income in the event of serious illness or an accident. She paid $1,320 for this policy. The policy was in respect of the period 1 April 2023 (12:00 am) to 31 March 2024 (11:59 pm). (b) Life Insurance Premiums On 1 November 2022, Robyn took out a life insurance policy with Australian Life Insurance. The policy provides that in the event of her death, her spouse and children will receive a lump sum payment of $1.2 million. Robyn paid premiums to Australian Life Insurance totalling $750 in relation to the period 1 November 2022 to 31 October 2023. AYN438 Taxation Law and Practice Page | 29 © Queensland University of Technology (c) Concessional and Non-Concessional Personal Superannuation Contributions Robyn advises you that apart from the compulsory 10.5% superannuation contributions made by her employer TUQ, she also made pre-tax salary sacrifice superannuation contributions of $10,400 into her complying superannuation fund. This amount has correctly been reported by her employer on her 2023 PAYG Payment Summary as a “reportable employer superannuation contribution” (see Item 1). Further, in addition to these pre-tax superannuation contributions, Robyn also advises you that throughout the 2023 income year, she made after-tax superannuation contributions of $4,600 into her superannuation fund. All of the relevant paperwork has been processed by the superannuation fund including acknowledging Robyn’s written intention to the superannuation fund regarding claiming these post-tax superannuation contributions as a tax deduction in her own personal tax return as well as the superannuation fund’s acknowledgement. All of Robyn’s pre-tax and post-tax cash superannuation contributions were received by her superannuation fund prior to 30 June 2023. Robyn’s last superannuation contribution into the fund was on 29 June 2023. Details relating to the superannuation fund are outlined below: Name of Superannuation Fund: UniSuper Fund’s Australian Business Number: 91 385 943 850 001 Robyn’s Super Account Number: 123 456 Important Tip Relating to Entering Information for Item 13 into HandiTax Please enter the details for any claims relating to the following possible deductions (ie. item 13 below) directly into the relevant label in HandiTax. 13. Tax Agent’s Fees and Penalties imposed by the ATO On 15 December 2022, Robyn received and paid the professional services invoice from her previous registered tax agent in Bardon for the preparation and lodgment of her 2022 income tax return. The tax agent’s fee was $870. Robyn then received her 2022 income tax assessment notice on 23 January 2023. The assessment notice showed that Robyn owed income tax of $7,670 for the 2022 income tax year as well as a late lodgement penalty of $210 (being one penalty unit) and the general interest charge (GIC) of $44. Robyn’s previous tax agent was rather tardy in their services and lodged her 2022 income tax return more than four weeks late. Robyn paid the total amount of $7,924 to the ATO via her NAB Mastercard on 24 January 2023. A credit card transaction fee of $15 was also charged by her bank in relation to this payment. AYN438 Taxation Law and Practice Page | 30 © Queensland University of Technology Important Tip Relating to Entering Information for Item 14 into HandiTax Please enter the details for any claims relating to the following possible deductions (ie. from the listing provided in Item 14 below) directly into Label D9 in HandiTax. 14. Gifts and Donations During the 2023 income year, Robyn made the following payments: ▪ Australia Transgender Support Association QLD 50 ▪ Mental Health Australia Limited 150 ▪ RSPCA 50 ▪ Vincent De Paul Society 80 ▪ Royal Life Savings Society Queensland 20 ▪ Purchase of two tickets to a gala charity ball at the Hyatt Regency Brisbane on 30 November 2022 on behalf of Women’s Health Queensland to raise monies for seriously ill and hospitalised children 500 15. Political Donation On 13 March 2023, Robyn made a donation of $200 to the Australian Labor Party (ALP). AYN438 Taxation Law and Practice Page | 31 © Queensland University of Technology DETAILS RELATING TO REBATES AND TAX OFFSETS 16. Spouse Details – Mike McCreary Robyn’s husband, Mike, is enrolled in a Master of Business Administration (MBA) at Queensland University of Technology. Mike also has a part-time job at the local Coles supermarket, working fifteen (15) hours per week. Mike’s assessable income for the 2023 income year consisted of gross wages totalling $24,564 (this amount includes PAYG withholding tax of $1,242 deducted) and interest income of $54. Mike also received a fully franked dividend of $50 from Wesfarmers Ltd during the 2023 income year. Mike has no other assessable or exempt income, no reportable fringe benefits, and no reportable employer superannuation contributions. Mike incurred allowable deductions of $140 in relation to his salary and wage income. 17. Private Health Insurance Policy Details On 6 August 2022, Robyn took out private health insurance with Medibank for her entire family. This covers her and her family from 6 August 2022 to 30 June 2023 inclusive. Her combined policy (“C”) covers all family members and is the most comprehensive health policy available providing both private patient hospital cover and ancillary cover for all members of her immediate family. On 6 th day of each month, Robyn pays her monthly premium for this family policy. Robyn provides you with the private health insurance statement that she receives from Medibank in respect of the 2023 financial year. The key details from Robyn’s private health insurance statement are summarised below. NIB Membership Number Your Premiums eligible for the Australian Government rebate Your Australian Government rebate received Benefit Code Other Adult Beneficiaries included in this Policy 50500024 $2,410 $613 30 Mike McCreary 50500024 $642 $161 31 Mike McCreary Robyn advises you that she wishes to claim her share of the rebate entitlement (which is shown above) in relation to her policy in her income tax return. Her husband, Mike, also received the same statement from Medibank (with the same membership number) and will claim his rebate entitlement (which are the same figures that relate to Robyn, as above) in his own income tax return. Hence, please use the “C” tax claim code at Item M2 in Robyn’s tax return AYN438 Taxation Law and Practice Page | 32 © Queensland University of Technology ADDITIONAL INFORMATION For the purposes of this assignment, students should note the following: ▪ Robyn is not registered for GST. Hence do not adjust any of the figures contained in this assignment for the effects of GST. All figures shown in this assignment are the figures you should use if you determine they should be entered into HandiTax. ▪ Robyn has been lodging tax returns since she was 18 years of aged and expects to continue to lodge future Australian income tax returns. ▪ Robyn does not intend to use the electronic funds transfer (EFT) in HandiTax to receive her tax refund (if applicable). Therefore, ignore the section at the bottom of the front cover screen in HandiTax prompting you to enter Robyn’s financial institution details, including her BSB, account numbers and name of her bank account. ▪ Robyn and Mike are not eligible for any Family Tax Benefit (Part B) payment and neither person received any paid parental leave payments during the 2023 income year. ▪ Robyn does not have any outstanding HECS/HELP debt, nor does she have a financial supplement debt or any post-graduate FEE-HELP debt whatsoever. ▪ Robyn has kept all receipts substantiating all of her expenses. ▪ Robyn did not receive any tax-free government pensions or benefits and did not receive or derive any foreign employment income (also known as target foreign income). ▪ The franking percentage shown in the final column of the table at Item 4 Dividends only relates to franked dividends. An unfranked dividend carries no franking credits. Where there is both a franked and an unfranked dividend, this means that the company has paid two (2) separate dividends to shareholders during the income year – a franked dividend (franked to the relevant franking percentage) and an unfranked dividend. ▪ In the case of depreciating assets, Robyn wants to maximise her deduction at all times ▪ For any depreciable asset contained in this assignment, Robyn wants you to use the effective lives as set out in Table B of Taxation Ruling TR 2022/1 where relevant. ▪ For motor vehicles, the depreciation cost limit is available here: https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-andallowances/Simpler-depreciation-for-small-business/Assets-and-exclusions/#Carcostlimit ▪ Robyn wants to use the diminishing value depreciation method where possible for all depreciating assets under Division 40. ▪ In terms of any Division 43 capital allowances claim relating to the rental property, only the prime cost method is available. ▪ Any Division 43 claim in relation to the rental property is to be entered directly into the rental property schedule. Pressing the function key “F5” will reveal all of the various deduction codes that can be used to enter data into the rental property schedule. The code to enter a claim under Division 43 is “R” for “Capital Works – Special Building Write-off”. ▪ Robyn wishes to minimise her 2023 taxable income wherever legally possible. Hence, your group should calculate all alternatives allowed under the income tax provisions AYN438 Taxation Law and Practice Page | 33 © Queensland University of Technology offering a choice (eg. car expenses, capital gains etc). Your group should therefore choose that option which provides Robyn with the greatest tax benefit (ie. one which results in the lowest amount of assessable income and/or one that results in the highest allowable deduction being claimed). ▪ Enter all amounts into HandiTax based on whether the program allows for inclusion of cents or whole dollars. In some instances (eg. dividends, franking credits, TFN withholding tax, foreign tax credits, etc.), the program requires that cents be included. However, other amounts (eg. assessable income and allowable deductions) require whole dollar amounts be entered. In this case, round all amounts to the nearest whole dollar. ▪ All calculations relating to the decline in the value of depreciating assets and borrowing costs should be made on a daily basis and rounded to the nearest whole dollar. ▪ If you need to calculate the number of days, the ATO has a useful online calculator which performs such calculations, being: https://www.ato.gov.au/Calculators-andtools/Calculate-days/ AYN438 Taxation Law and Practice Page | 34 © Queensland University of Technology AYN438 TAXATION LAW GROUP MEMBER CONTRIBUTION SHEET I, _______________________________________________, am a member of group _____. I assert that each member of the group has made the below outlined contributions to this tax project: Student Number Student Name % Contribution TOTAL CONTRIBUTION: 100% Additional Comments: ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ ____________________________________________________________________________________________ Notes: 1. This form is confidential. Please submit this form individually to the UC: [email protected] 2. It would be hoped, and expected, that an equal contribution would be the norm. For example, if there are 4 members in the group and everybody has made an equal contribution, 25% should be entered beside each person’s name. However, if each person has not made an equal contribution, then differing percentages that reflect each person’s contribution should be entered. Additional comments can be provided above to explain the contribution percentages awarded. AYN438 Taxation Law and Practice Page | 35 © Queensland University of Technology AYN438 TAXATION LAW GROUP INTEGRITY DECLARATION We, the undersigned, hereby declare that we have read, accepted and agree to all of the statements in the Declaration below: 1. We have complied with all the unit coordinator’s instructions for this assessment. 2. We understand that plagiarism involves using another person (or persons) ideas or work as one’s own, as explained in the QUT Manual of Policies and Procedures at C5.3 which is available at: http://www.mopp.qut.edu.au/C/C_05_03.jsp. 3. We understand that it is a breach of academic integrity to assist, or allow another person (or persons) to use and/or copy our work. 4. We declare that this work is entirely our own, and no part of it has been copied from any other person’s (or persons’) words or ideas. 5. We declare that no part of this assessment has been written for us or supplied to us by any other person or persons outside of the below listed group members. 6. We give permission for our assessment to be reproduced (copied), communicated, compared with other sources and stored (including electronically) in order to detect plagiarism and agree that plagiarism detection software can be used. Student Number Student Name Original Student Signature It is not acceptable for any member of the group to sign on behalf of another group member. 42 AYN438 Taxation Law and Practice © Queensland University of Technology Page | 42 AYN 438 TAXATION LAW & PRACTICE GROUP PROJECT CRITERIA SHEET – PART A (20%) and PART B (10%) STUDENTS DO NOT NEED TO PRINT AND/OR SUBMIT THIS PAGE (REFERENCE ONLY) CRITERIA 20 to >16.99 Pts High Distinction 16.99 to >14.99 Pts Distinction 14.99 to >12.99 Pts Credit 12.99 to >9.99 Pts Pass 9.99 to >7.99 Pts Marginal Fail 7.99 to >4.99 Pts Fail 4.99 to >0.0 Pts Low Fail 0 Pts NE Pts Knowledge and Technological Skills (KS1.2) ▪ Ability to accurately complete a tax return using HandiTax. A total of 15 numbers will be marked in Robyn’s income tax return. Part A is worth 20%. ▪ Furthermore, to get the 1 mark, each amount must be entered at the correct label in the tax return. High level of accuracy in calculation of the tax return and entry of items into HandiTax A few mistakes in calculation of the tax return and/or entry of items into HandiTax Some mistakes in calculation of the tax return and/or entry of items into HandiTax Several mistakes in calculation of the tax return and/or entry of items into HandiTax Mistakes in calculation of the tax return and entry of items into HandiTax Work provides minimal evidence of learning in relation to this criterion Work provides little evidence of learning in relation to this criterion No evidence provided / 20 CRITERIA 10 to >8.49 Pts High Distinction 8.49 to >7.49 Pts Distinction 7.49 to >6.49 Pts Credit 6.49 to >4.99 Pts Pass 4.99 to >3.99 Pts Marginal Fail 3.99 to >2.49 Pts Fail 2.49 to >0.0 Pts Low Fail 0 Pts NE Teamwork and Self (TS4.2) ▪ For Part B, each student’s ability to be able to effectively explain the answers to the client’s questions relating to the tax return. Part B is worth 10%. Complete accuracy in the ability to answer the client’s questions relating to the issues contained in the tax return. Mostly accuracy in the ability to answer the client’s questions relating to the issues contained in the tax return. Some accuracy in the ability to answer the client’s questions relating to the issues contained in the tax return. Little accuracy in the ability to answer the client’s questions relating to the issues contained in the tax return. Virtually no accuracy in the ability to answer the client’s questions relating to the issues contained in the tax return. Work provides minimal evidence of learning in relation to this criterion Work provides little evidence of learning in relation to this criterion No evidence provided / 10 TOTAL: / 30