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HA3042 Taxation Law Tutorial Questions Assignment 2 Answer

Assessment Task  Tutorial Questions Assignment 2

Unit Code: HA3042

Unit Name: Taxation Law

Assignment: Tutorial Questions Assignment 2

Weighting: 25%

Total Assignment Marks: 50 marks


This assignment is designed to assess your level of knowledge of the key topics covered in this unit.

Unit Learning Outcomes Assessed:

  1. Gain a broad understanding of tax law
  2. Demonstrate ability to analyse and synthesise complex tax law issues
  3. Demonstrate ability to apply principles of tax law to complex legal problems


Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for weeks 6 to 10 inclusive and submit these answers in a single document.

The questions to be answered are:

Week 6  Question 1 (10 Marks)

John is a sole trader working in his small business as a carpenter. His brother Paul is mentally disabled, who lives with John and is receiving disability support pension.


Work out John’s invalid tax offset for his brother Paul who is an invalid under the following three scenarios:

Scenario 1 - John has $120,000 taxable income in the 2018-2019 financial year from his small business. Paul has $4,000 as an adjusted taxable income.

Scenario 2 - John has adjusted taxable income of $63,000. Paul has adjusted taxable income of $900.

Scenario 3 - John has an adjusted taxable income of $41,000. Paul was severely sick this year and had zero adjusted taxable income.(Maximum 200 words)

Week 7  Question 2 (10 Marks)

Oliver wanted to repay his loan of $12,000, which he borrowed from National Australia Bank (NAB). He approached his employer on 4th October 2019 and received $12,000 from him at no interest. On 15th February 2020, Oliver had a performance review with his employer when they told him that he was only required to repay half of the loan as he is a good performing employee.


With reference to the relevant laws, advise Oliver and his employer of the tax consequences of this transaction.(Maximum 300 words)

Week 8  Question 3 (10 Marks)

David and Emma are married and have some investment properties jointly in Sydney. To structurally manage their investment properties, they signed a formal partnership agreement, and agreed that the net profits from their rental properties would be distributed 95% to Emma and 5% to David. They also agreed that David bear the total losses from the investments.


With reference to the relevant laws, critically discuss whether David and Emma are in a partnership as investors? Also, discuss whether they are required to lodge a partnership tax return?

(Maximum 200 words)

Week 9  Question 4 (10 Marks)

Anna works for the Eastern Medical Centre as admin officer with a marginal tax rate of 47%. She has just turned 48 in June 2020. Eastern Medical Centre contributed $13,000 under the Superannuation Guarantee Charge. Anna entered into a salary sacrifice agreement with Eastern Medical Centre to sacrifice 10% of her salary into her Superannuation fund. This extra contribution has resulted in an additional contribution of $17,000 for the current income year.


With reference to the relevant laws, discuss the effect of these arrangements for both Anna and the Eastern Medical Centre. Determine the total tax levied on the contributions to Anna's superannuation fund and the tax effect on Anna's employer.(Maximum 200 words)

Week 10  Question 5 (10 Marks)

Darryl Kerrigan is the director of DK Pty Ltd, which is a property investment company in Sydney and the company is registered for Goods and Services Tax (GST). Due to the COVID-19 impact, DK Pty Ltd has decided to rent out their twenty (20) existing office units that they finished in a building project in February 2020.

To negotiate rental contracts, DK Pty Ltd employs a property lawyer, Mr. Dennis Denuto. Dennis is a busy lawyer and his practice income is $300,000 per year. DK Pty Ltd offered Dennis a rent-free office in the city of Sydney in exchange for his service to DK Pty Ltd. The market rental value of the office provided to Dennis is $38,000 per year.


Advise of the GST obligations and the input tax credit of this arrangements to DK Pty Ltd and Mr. Dennis Denuto.(Maximum 400 words)


Week 6

As from the provision of the ITAA 1997, the Government has exempted the income of the disabled person who is receiving the disability support pension from the government authority. The relevant authority has provided the pension to the person who is suffering from financial crises and disabling (Australian taxation office, 2020).

Scenario – 1

In the given case John and Paul are the brothers and John is trying to offset the income of Paul through an invalid offset process. In the first case, John is having an income of $ 120000 which he cannot offset with the income of Paul as he is not liable to pay the tax due to his disability. Hence John need to pay tax on $ 120000 (Australian taxation office, 2020).

Scenario – 2

In the second case, John has adjusted $ 63000 which will not be considered legal, as per the ITAA, John has to pay tax on $ 63000 and Paul is not liable to pay any tax. As Paul has adjusted taxable income of $ 900. It is analysed that considering the income of Paul below $ 1000, his income would not be added in his brother’s income. In the given case, total income of John would be $ 63000and will not be clubbed with the income of the Paul. 

Scenario – 3

In the third case, John is having the $ 41000 as adjustable income and require to offer the full income to the income authority for taxation purposes. While Paul is already having zero income hence not require to have any tax implication and his liability of tax will be zero (Australian taxation office, 2020).

Week 7

As per the provision mansion in ITAA 36 and 97 fringe benefits provided by the employer to the employee will be liable to consider as income of the employee and require to offer as taxable income to compute the tax liability in an income tax return (Australian taxation office, 2020).

The employee received the salary for the services he has provided in the employer and employee relationship and if the employer pays any expenses on behalf of the employee then the amount will be considered as taxable income of employee after deducting the amount repaid by the employee to the employer on behalf of such expenses paid by the employer. (Australian taxation office, 2020).

In the given case problem, Oliver is having the loan liability from the National Australian Bank. To pay this liability he has taken a loan from his employer with zero interest rate. This amount of loan has been waived off by the employer as part of his services consideration extent to 50% of the loan amount on 15 of February (Giesecke, & Tran, 2018).

The amount of interest has to be considered by Oliver as his taxable income which has been taken interest-free from 4th October to 15th February and after that half of the amount which has been waived off will also be considered as the part of his income (Australian Taxation office, 2020).

Following are the taxable income classification for the Oliver:-

Details4 October to 15 February16 February to 30 June 2020
Interest income to be taxed   $ 214.80 $ 107.40
Loan Waived off income$ 60000
Total Income taxable$ 6214.80$ 107.40

Week 8

As per the Division 5 Part 3 ITAA 36 Contractual relationship between the two or more person who is willing to conduct business together to earn profit will be considered as General law partnership. While as per section 995-1 ITAA 97 if there is an association of person other than a company to carry on business or earn money or statutory income jointly then it will be considered as a partnership at tax law (Australian Taxation office, 2020).

In the given case Emma and David are husband-wife who have entered into a partnership to invest in the property and Emma will have 95% of the profit while David will have 5 % of the profit and if loss incurred then David will have 100% f the loss (Australian Taxation office, 2020).

As per the Division 5 Part 3 ITAA 36 (Case law FCT v/s McDonald 1987) Contractual relationship, the above case will not be considered as general law partnership as they are not carrying any business. They both are sharing profit and loss in their ownership interest hence it will be considered as a tax law partnership firm (Murphy, 2019).  As per section 91 partnership firm does not need to pay tax but the tax file number is provided for each partnership firm. Hence they have to file an income tax return of partnership firm (Australian Taxation office, 2020).

Week 9

The contribution made to superannuation funds will be considered as a concessional and non-concessional fund for tax purposes. If the individual made concessional contribution then it will be taxed at the rate of 15% for the income of the fund. As per the Section, 290-60 and 290-80 contribution done by the employer are deductible (Australian Taxation office, 2020). From the 1 July, 2017 eligible taxpayer can make the concessional contribution if his age is below 75. The individual has the concessional cap $ 25000 per year if the contribution exceeds the amount then the tax rate will be 47% for the excess amount (Giesecke, & Tran, 2018).

In the given case Anna is the legal employee of Eastern Medical Centre and it has contributed to a superannuation fund for Anna and she has also contributed from the salary amount to the same fund. As per the above mansion provision, the contribution made on the superannuation fund up to the provided limit will be taxed at the rate 15% and if the contribution limit exceeds then the excess amount will be taxed at 47% hence following tax implication will be done for Anna (GST, 2020).

DetailsAmountTax RateTax liability
Contribution did$ 1300015% $ 1950
Excess contribution $ 1700047%$ 7990

Week 10

As per Section 23-5 if any business entity is conducting the business and having the turnover more than $ 75000 then it has to register themself under the GST law. GST register entity has to pay GST on the value of taxable supplies as defined under section 9-70 (Australian Taxation office, 2020).

In the given case DK Pty limited is the GST register company  and Dennis Denuto is also providing the legal services and liable to get register under GST law. As in the given problem, it can be observed that DK PTY Limited has taken the services from Dennis Denuto to give their apartment on rent, and for his services, they have offered the rent-free apartment to Dennis Denuto for the consideration of his services (Maji, & Kumar, 2017).

It will be considered that DK Pty limited has taken barter transaction which means they have not paid money for the services they have taken but they have provided other service in exchange for service received. Following are the tax implication as per the GST law (Australian Taxation office, 2020).

The fair value of the consideration of service taken from Dennis Denuto $  33,636.36 
GST separation ( 37000*10/110)  $ 3363 
Total value inclusive GST$ 37000

Input tax credit which can be utilized by DK Limited$ 3363

From the above result, it can be concluded that DK Pty limited can utilize the input tax credit in respect of the services taken from Dennis Denuto because it has been taken in the courses or furtherance of business (Taxation methods and rules 2020). Dennis Denuto was having the turnover $ 300000 hence it has been considering as the GST register party and liable to pay GST over the services he has provided (Australian Taxation office, 2020).

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