LAW5230
Assignment
Due date: 1st May 2017
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
Marzena is a property developer and operates her business as a sole trader. As at 1 July 2016, Marzena owned 7 blocks of land with a value of $72,000 each. Marzena had purchased these blocks on 1 July 2012 at a cost of $53,000 each. During the income year ended 30 June 2017, Marzena acquired a further 10 blocks of land in Brisbane with the intention of preparing these blocks for sale at a profit. The 10 blocks of land cost $81,000 each. Marzena also incurred $3,700 for each new block in relation to land clearing costs and preparation costs. During the year, Marzena sold 11 blocks of land for $100,000 each. Further, she also sold on of these blocks of land to her brother for $60,000. This was a similar block to one of those sold throughout the year. Additionally, on 1 September 2016 Marzena entered into a contract to sell an entirely separate block of land for $79,000. She had originally purchased this smaller block in Springfield in March 2015 for $81,000. She had intended building an office block on the land to be used as a ‘shop front’ for her business where she could meet with potential clients and conduct her daily activities. However, after submitting plans to council (at a cost of $1,800), Marzena was advised that due to planning restrictions in the area, the building would need underground parking and would therefore cost substantially more. Marzena then decided to sell the land and look for a block in a more suitable area. Advise Marzena as to whether she will have any ‘assessable income’ for the year ended 30 June 2017 as a result of the above transactions regarding her business and also advise whether the sale of the separate block of land would be ‘ordinary income’ for the year ended 30 June 2017.
Toowoomba Drilling is a medium sized business which specialises in large scale surface and underground drilling. The business operates through a private company, Toowoomba Drilling Pty Ltd. The company has a turnover of approximately $1.5 million and employs around 12 tradespersons and 5 administrative staff. The value of the large machinery used in drilling has a market value of approximately $20 million. The business enters into contracts with property developers, private land holders and the QLD State Government. It specialises in large infrastructure projects where drilling for pipework is required.
As part of a major new rail infrastructure project the QLD State Government offered large grants to local businesses for the purchase of new machinery that could be used in building the new railway. Toowoomba Drilling Pty Ltd entered into a contract with the State Government to accept $550,000 in funding for the purchase of new machinery. Toowoomba Drilling received a lump sum of the full amount in June 2017. Part of the terms of the contract were that Toowoomba Drilling would work exclusively on the rail project for a period of three years, otherwise a pro-rata of the financial assistance would have to be repaid.
Required:
• Briefly discuss with reference to appropriate legislation, case law and/or rulings whether Toowoomba Drilling Pty Ltd should account for income on a cash or accruals basis.
• Discuss with reference to appropriate legislation, case law and/or rulings whether the State Government funding would be either ordinary or statutory income and whether it would be derived in the 2017 income year?
LAW5230 – Taxation Law
Semester 1, 2017
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 1 1.5
2
Application
Demonstrated level of understanding of the specific ordinary income and trading stock issues in relation to Marzena through the application of the identified law. 1 3 5 6.5 7.5 10
Demonstrated level of understanding of the specific derivation, business and ordinary income issues in relation to Toowoomba
Drilling through the application of the identified law. 1 3 5 6.5 7.5 10
Conclusions
Overall, the student has drawn appropriate and valid conclusions after applying the law. 0 1 1.5 2 2.5 3
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. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. Another tax technical or tax policy topic of your choice. Must be approved by course examiner.

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/aut hors
overlooked. A few
sources from outside course materials.
7.5
Evidence of careful, relevant, quality and
independent research undertaken. Few major research
sources/aut hors
overlooked. Some
sources from outside course materials.
10
Evidence of careful, relevant, high quality and independent
research undertaken.
No major research sources/aut hors
overlooked. Many
sources from outside course materials.
12
Evidence of careful, relevant, high quality and independent
research undertaken.
No research sources/aut hors
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 Somew hat persuasive argument built
throughout paper.
Some struct ure 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 met hod appropriately and
correctly. Inconsistent and f undamental 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