LAW6001 Assessment Brief 3 Case Study
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LAW6001 Assessment Brief 3 Case Study
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Context:
This assessment assesses your research skills, your ability to synthesise an original piece of work to specific
content requirements and your ability to produce a comprehensible piece of advice which addressing the
client’s needs.
It also assesses your written communication skills. The ability to deliver to a brief is an essential skill in the
workplace. Clients may well approach advisors seeking a combination of specific information needs and
advice on the tax implications of a particular arrangement in the Australian tax jurisdiction. It is therefore
important to be able to identify all the issues presented by an arrangement and to think about the
potential consequences of different approaches to addressing the client’s needs.
Instructions:
Your case study needs to identify and discuss the tax implications of the various issues raised. In order to
produce your case study, you will need to review relevant case law and legislation. The subject manual and
set texts are starting points only, you will be expected to use these initial materials to identify potential
useful resources. You will then need to review your selected resources to see if they value add to your
analysis.
Your case study is not just a list of answers. Your reasons for your conclusions and recommendations must
be based on your research into the relevant cases and legislation.
LAW6001 Assessment Brief 3 Case Study
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Question 1 (20 marks)
Yvonne Merrick, the holder of a British passport and a relevant working visa, arrived in Australia from the
UK in January 2009 and started work as an administrator in a Brisbane hospital. On 10 July 2017 she
travelled back to the UK for personal reasons and worked in odd jobs until 1 April 2018 when she returned
to Brisbane and resumed her position at the hospital. While in the UK she continued to maintain the
apartment she had bought in Brisbane and her Australian bank account. She was on “leave without pay”
from her job at the hospital.
During the 2017/18 year Yvonne was paid $25,000 for her work in the UK and $15,000 for her work as an
administrator in Australia. UK tax of $3,000 was deducted from her salary. She was paid a bonus of
$12,000 on 15 February 2018 for her work in 2017. She also received $2,000 interest on the savings in her
Australian bank account and a fully franked dividend of $700 from her share investments in the Australian
company HAL Corporation Ltd. On 1 July 2018 Yvonne left Australia indefinitely to take up a full-time
position as a senior administrator in a UK hospital. In the 2018/19 income year, she was paid a salary of
$70,000 for her work in the UK hospital. Tax amounting to $7,000 was deducted from her UK salary. For
the 2018/19 year Yvonne received interest of $2,400 on her Australian bank account and a fully franked
dividend of $900 on her shares.
Upon leaving Australia, Yvonne sold all of her furniture and leased the apartment she owns for $600 per
week. For the 2018/19 year she received $23,400 rental income.
Required
Advise Yvonne as to her Australian assessable income and tax payable for the 2017/18 and 2018/19 tax
years.
Question 2 (20 marks)
Gordon Haddad is employed by Hardware and Software Technologies Ltd (HSTL) as an information
technology engineer. The company’s head office is in Melbourne City and Gordon’s employment requires
him to travel to regional areas and interstate. Gordon has negotiated a salary package comprising: an
annual salary of $95,000, an entertainment allowance of $7,500, a mobile phone and internet allowance
of $10,000, a living away from home allowance of $12,000, reimbursement of car expenses for use of his
own vehicle (based on kilometers travelled) at $1.20 per kilometer, and a car parking space at the
company’s head office in the city.
Required
Advise Gordon on the tax treatment of each component of the salary package and the items that are
included in Gordon’s assessable income.
Question 3 (20 marks)
Belinda Choy is a doctor previously employed by State Wide Medical (SWM) and currently working in sole
practice. On 25 June 2016, while Belinda was employed by SWM, a bonus was declared for all employees.
Belinda’s bonus was $7,500 which was paid to her bank account on 1 July 2016. For the 2016/17 year of
income Belinda received an annual salary of $75,000 from SWM. She requested that she be paid $50,000
over the course of 2016/17 and the remaining $25,000 in September 2017. On 1 June 2017 Belinda
qualified for long service leave and received a lump sum payment of $18,000. On 1 July 2017 Belinda
resigned from SWM and established her own sole medical practice. Belinda employed a receptionist and a
LAW6001 Assessment Brief 3 Case Study
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nurse. Belinda’s income and expenditure for 2017/18 and 2018/19 were as follows:
2017/18
Cash payments received from patients — $80,000
Unpaid patient accounts and Medicare reimbursements as at 30 June 2018 — $45,000
Medicare reimbursements — $30,000
Salary and wages for receptionist and practice nurse — $65,000
Sundry expenses — $8,500
2018/19
Cash payments received from patients — $120,000
Unpaid patient accounts and Medicare reimbursements as at 30 June 2019 — $34,000
Medicare reimbursements — $48,000
Receipt of unpaid patient accounts and Medicare reimbursements as at 30 June 2018 — $45,000
Salary and wages for receptionist and practice nurse — $72,000
Sundry expenses — $9,800
Required
Advise Belinda Choy on her assessable income for the 2016/17, 2017/18 and 2018/19 income years.
Question 4 (20 marks)
Multimedia Systems Pty Ltd (MSPL) is the manufacturer and supplier/retailer of home media and
entertainment systems. MSPL not only manufactures and sells home media and entertainment systems
but is also available to install the systems in customer’s homes. For the 2017/18 income year MSPL’s
financial position was:

For the 2018/19 income year MSPL’s financial position was:

During 2018/19, MSPL received instalment payments in advance that amounted to $40,000, although
installations completed by the end of the year totaled $25,000. MSPL is required to provide a one-year
guarantee/warranty. Industry experience has shown that guarantee/warranty claims amount to 5% of
sales revenue.
Required
Calculate the assessable income for MSPL for the 2017/18 and 2018/19 income years.
Question 5 (20 marks)
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Ryan Saunders purchased an apartment from Anna Lowe in April 2010 for use as an investment property.
The property was acquired by Anna off-the-plan in 2002 and was used as her main residence. Anna left for
overseas soon after the sale to Ryan. Ryan rented the apartment to tenants until he sold it in March 2019.
As the relevant information was not available to him, Ryan did not claim deductions for capital works
deductions under ITAA97 Div 43 for the income years in which the property was used to produce
assessable income. Ryan also did not obtain a building cost estimate from a quantity surveyor as he did
not want to incur the expense.
Ryan has become aware that broadly, the CGT provisions require a taxpayer to reduce the cost base or
reduced cost base of a CGT asset to the extent that the taxpayer has deducted or can deduct expenditure
in an income year under Div 43.
Required
Advise Ryan if he is still required to reduce the cost base or reduced cost base of the property in working
out his capital gain or loss, even though he is unable to obtain the relevant information to do so?
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Learning Rubrics

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