BLO2206 TAXATION LAW AND PRACTICE
Summer Semester – 2015
ASSIGNMENT
INSTRUCTIONS
Length: Total word length should be approximately 2,500 � 3000 words.
BLO2206 � Taxation Law & Practice
Instructions : The following facts are provided to students to take home as a research question. Students are required to fully answer the question using legislative reference and case law where required.
Facts
You are an accountant working for Dodgy Accounting Services
Your client Mr Mick Motor is a retired motor mechanic who enjoys playing golf and has a keen interest in importing parts for cars from America. He imports these cars parts in his own name.
Mick also advises that he works on a casual basis cleaning windows and gets paid a small amount of money.
� For the 2014 financial year the only income Mick declares is wages from his employment as a window cleaner of $18,200. Please note that Mick cleaning employer did not withhold any tax from his wages.
Mick advises that with respect to the importation of parts the following facts are provided to Dodge Accounting Services :
� He has been selling parts as a hobby for 6 years. His hobby activity is known as �Hot Rod Parts�
� Mick was so proud of the name that he registered it with the relevant authorities so no one else can take the name.
� Mr Mick advises that he regularly sells parts to the public through his home made website and ordering system.
� He has well over 15,000 customers in his database
� He regularly keeps account of his sales and purchases and how much profit he is making.
� Due to the volume of transactions, in 2014 he began using an accounting software package called MYOB to record all his transactions. The accounting package even produces a report advising him of his yearly profits and financial statements.
� A lot of people know Mick as he is a member of a number of car associations/car clubs. These memberships assist him in meeting new and potential clients for his parts sales.
� Mick advises that for the 2014 financial year he made the following transactions :
a. Gross Sales of $355,000
b. Cost of Goods Sold of $156,000
c. Membership Expenses of $20,000
d. Advertising of $32,000
e. Website management expenses of $15,000
� Mick�s wife (Laura) doesn�t work but helps him with the bookkeeping and setting up appointments for potential buyers of cars. She is not paid any wages
� Mick also has 3 children aged 17 (Sofia), 19 (Jim) and 24 (Lucky). All children are at university but also assist with Micks hobby as they also have a keen interest in cars.
Part A
Please calculate tax if any for the 2014 financial year based on the information provided above.
Mick also asks you to briefly provide him with some advice as to whether he may potentially have a tax issue.
Part B
Mick also asks you to provide him with some quality tax advice if there are alternative ways on minimising tax for the future.
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