LAW5230 Assignment
Due date: 24th September 2016
Value: 40%
Word Limit: 4 000 words (excluding calculations, examples, footnotes and references)
This assignment consists of two (2) parts. Part A consists of a problem solving scenario (1,000 words) and Part B is a research assignment (3,000 words). You must complete both Part A and Part B. Pay careful attention to the marking criteria at the end of each Part.
Part A – 25 Marks
Ragco Ltd is a major importer of clothing which it retails through its clothing outlets in Australia. It holds a number of import quotas which enable it to import clothing from the Indian sub-continent. Ragco Ltd is going through a major business restructure and in the process has sold three of its import quotas, making a substantial profit. More funding is needed for the restructure so Ragco enters into a contractual arrangement whereby shares in Ragco’s subsidiaries are sold to an associated company Bomba Ltd for $40,000,000. Ragco then decides to on lend this money to another subsidiary Dixie Ltd, which agrees to pay interest to Ragco. Later on Ragco assigns the right to receive these interest payments to a finance company (Bonzacash Ltd) in return for a lump sum payment of $25,000,000.
Ragco and Bonzacash are not connected either through shareholding, directors or through prior business dealings. In other words the foregoing transaction is at arm’s length and not interlocked or interrelated in any way. So Bonzacash’s agreement to take the assignment of the unpaid interest instalments was done purely on a commercial arm’s length basis.
The ATO has assessed Ragco under s6-5 of ITAA 1997 on the basis that the lump sum payment of $25,000,000 is income according to ordinary concepts.
Advise Ragco whether the ATO’s action is warranted. In your answer you are to ignore any capital gains tax consequences. Please address relevant case law in your answer.
LAW5230 – Taxation Law
Semester 1, 2016
Assignment Marking Criteria Sheet
Part A – Problem Solving Little attempt F C B A HD
Identification of legal issues, legislation and case law
Overall the student has identified the relevant assessable income issues, legislation and where appropriate case law and rulings. 0 0.5 2 3 3.5 4
Application
Demonstrated level of understanding of the specific derivation, business and ordinary income issues in relation to Luke and Linda through the application of the identified law. 2 5 8.5 11 13 17
Conclusions
Overall, the student has drawn appropriate and valid conclusions after applying the law. 0 0.5 2 3 3.5 4
Total out of 25
Description of Performance Standards;
HD – the student has shown a very high level of demonstrated ability in relation to the stated criteria by covering all valid points in a clear and succinct manner. The student may have also demonstrated an ability to think beyond the facts and recognise the broader implications of the facts, missing facts or alternate arguments.
A – The student has shown a high level of demonstrated ability in relation to the stated criteria by either covering all valid points or by covering the majority of valid points in a clear and succinct manner. The student may have very briefly or occasionally shown ability at the HD level.
B - The student has shown a good level of demonstrated ability in relation to the stated criteria by covering most of the valid points. The student may have made some minor incorrect statements or missed some minor points.
C - The student has shown a satisfactory level of demonstrated ability in relation to the stated criteria by covering the main valid points. The student may have made a number of minor incorrect statements but did not make incorrect statements in relation to major points.
F - The student has not shown a satisfactory level of demonstrated ability in relation to the stated criteria by missing some main points or by making incorrect statements in relation to major points.
Little Attempt – The student has not addressed or attempted to address this criterion.
Part B – 75 Marks (3,000 wds)
You are required to prepare a written research assignment that addresses one of the provided topics below. The purpose of the task is for you to demonstrate high level critical reflection and analytical reasoning skills in the context of the application of Australian taxation law and taxation law policy. You must undertake academic research which demonstrates the following:
• An in-depth your understanding of how the specific tax law applies,
• The policy context of the law and if relevant how other jurisdictions deal with similar issues,
• Critical reflection as to whether the law achieves its stated purpose, aligns with principles of good tax policy or could be improved/amended. These critical reflections should be supported by the research you have undertaken as well as your own independent thought.
Topic Choices
1. CGT Discount for Foreign Residents – discuss and critically evaluate the policy reasons for the removal of the CGT discount for foreign tax residents. You should include a discussion of the policy objectives and your evaluation of whether the removal will achieve these policy objectives.
2. Negative Gearing – discuss and critically evaluate the extent to which tax deductible negative gearing impacts upon savings and investment decisions. Your paper should clearly outline what is meant by negative gearing from a tax perspective and how the Australian tax system treats negatively geared investments. You should include an evaluation of whether negative gearing from a tax perspective should be removed. (Please ensure that you concentrate on this issue from a tax perspective and do not get side-tracked on a discussion of the property market.)
3. Deductions – discuss and critically evaluate the extent to which Australia’s deduction regime satisfies the principles of a good tax system (specifically simplicity and fairness). You may like to compare and contrast this with the deduction system in New Zealand.
4. CGT Small Business Concessions – discuss and critically evaluate the Small Business CGT Concession regime in Australia. You should include a discussion of the overall policy objectives and your evaluation of whether regime currently meets these objectives or whether further amendments are necessary.
5. Division 7A (treatment of private company loans) - discuss and critically evaluate Division 7A as a specific anti-avoidance provision. You should include a discussion of the overall policy objectives and your evaluation of whether the Division currently meets these objectives or whether further amendments are necessary.
6. Part IVA Amendments – The general anti-avoidance provisions were recently amended. Discuss and critically evaluate the policy reason for these amendments and whether they are likely to meet these objectives or not.

LAW5230
Part B – Research Assignment
Criteria Little attempt F C B A HD
Demonstrated technical understanding of the chosen tax law topic. No/little attempt made in relation to this criterion
1 Very little technical understanding of the legal topic demonstrate and/or many instances of incorrect understanding.
4 Sound technical understanding of the legal topic demonstrated with some instances of incorrect understanding.
7.5 Good technical understanding of the legal topic demonstrated, with few instances of incorrect understanding.
10 High level technical understanding of the legal topic demonstrated, with no/very few instances of incorrect understanding.
12 Very High level technical understanding of the legal topic demonstrated, no instances of incorrect understanding.
15
Ability to analyse and present practical applications of the law in the context of the overall paper, rather than simply describe the law. No attempt made in relation to this criterion.
0 Did not demonstrated an ability to explain tax law concepts in the context of how it is relevant to practical applications.
3 Demonstrated sound ability to explain tax law concepts in the context of how it is relevant to practical applications in some instances. Some insightful and relevant applications made.
6 Demonstrated a good ability to explain tax law concepts in the context of how it is relevant to practical applications in some instances. Practical applications were mostly insightful and relevant.
7.5 Demonstrated a very good ability to explain tax law concepts in the context of how it is relevant to practical applications in many instances. Practical applications were mostly insightful and relevant.
9 Demonstrated an excellent ability to explain tax law concepts in the context of how it is relevant to practical applications in all instances. Practical applications were insightful and relevant.
12
Ability to demonstrate critical reflection on the topic researched incorporating independent thought and ability to critically analyse research presented. No/little attempt made in relation to this criterion
1 Insufficient evidence of effective analysis, balanced evaluation, personal perspectives made.
4 Few instances of careful analysis of the research. Limited ability to balance and evaluate competing arguments in the literature and/or limited articulation of personal perspectives throughout paper.
7.5 Some evidence of careful analysis of the research. Some instances of an ability to balance and evaluate competing arguments in the literature as well as some personal perspectives throughout paper.
10 Evidence and multiple instances of careful analysis of the research. Evidence of an ability to balance and evaluate competing arguments in the literature as well as clearly articulated personal perspectives throughout paper.
12 Strong evidence and multiple instances of careful analysis of the research. Strong evidence of an ability to balance and evaluate competing arguments in the literature as well as clearly articulated personal perspectives throughout paper.
15
Ability to demonstrate independent, high quality research. No/little attempt made in relation to this criterion
1 Little evidence of quality and independent research. Many major sources overlooked. Very few sources from outside course materials.
4 Some evidence of careful, relevant, quality and independent research undertaken. Many major research sources/authors overlooked. A few sources from outside course materials.
7.5 Evidence of careful, relevant, quality and independent research undertaken. Few major research sources/authors overlooked. Some sources from outside course materials.
10 Evidence of careful, relevant, high quality and independent research undertaken. No major research sources/authors overlooked. Many sources from outside course materials.
12
Evidence of careful, relevant, high quality and independent research undertaken. No research sources/authors overlooked. Many sources from outside course materials and all high quality.
15
Overall clarity of expression, use of grammar and appropriateness of the language and terminology for an academic research paper. No/little attempt made in relation to this criterion
1 No instances of sophisticated and academic language used. Many instances of incoherent. Lacks readability.
2 Few instances of sophisticated and academic language used. Somewhat clear and readable expression used throughout. Many instances of unclear expression.
3 Mostly sophisticated, clear and readable expression used throughout. Moderately academic language used throughout. Few instances of unclear expression.
4 Some sophisticated language, but otherwise, very clear and highly readable expression used throughout. Appropriate academic language used throughout.
5 Sophisticated, clear and highly readable expression used throughout. Very appropriate academic language used throughout.
6
Clear and logical structure, development of clear arguments, supported conclusions reached. No/little attempt made in relation to this criterion
1 Very little persuasive argument used in paper. Little structure or flow. Many inconsistent / unsupported conclusions reached.
2 Somewhat persuasive argument built throughout paper. Some structure presented, though paper may have some flow problems, or inconsistent / not well supported conclusions presented. May have some inconsistencies.
3 Moderately persuasive argument built throughout paper. Clear structure resulting in some supported conclusions/ recommendations with few inconsistencies.
4 Persuasive argument built throughout paper. Clear and logical structure resulting in some well supported conclusions/ recommendations.
5 Highly persuasive argument built throughout paper. Very clear and logical structure resulting in well supported conclusions/ recommendations.
6
Ability to use chosen referencing method appropriately and correctly No/little attempt made in relation to this criterion
1 Inability to use chosen referencing method appropriately and correctly. Inconsistent and fundamental errors.
2 Acceptable standard of referencing, citations and bibliography. Some fundamental errors.
3 High standard of referencing, citations and bibliography. Some minor errors.
4 Very high standard of referencing, citations and bibliography. Very few errors.
5 Very high standard of referencing, citations and bibliography. Almost no errors.
6
Total out of 75
TOTAL (out of 100)
END OF ASSIGNMENT