HI5028 TAXATION
T3, 2013 ASSIGNMENT 2
Due date: Friday February 8th Feb. 2014

Instructions:
This assignment is to be submitted by the due date in both soft-copy (Safeassign – Bb) and hard copy.
The assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook
It is the responsibility of the student submitting the work to ensure that the work is in fact his/her own work. Ensure that when incorporating the works of others into your submission that it appropriately acknowledged.

Maximum marks: 20 (20%)

Assignment 2: You should attempt both parts to this assignment
Note: you should/must incorporate all sections of the various Acts/regulations where appropriate. You may well find that some questions have tax implications under more than one

Q1; Lynn has recently purchased a café in Ballarat and the turnover is around $400,000 per annum. There is also an apartment attached to the café but as Lynn lives close-by, she has rented this out.
a) Explain what is Lynn’s responsibility in reference as an entity carrying on an enterprise in regard to GST. (2 marks)
b) For the quarter April to June 2013, Lynn collected GST of $9,000 and from purchases paid out $10,500 in GST; all purchases were made for the business. The enterprise pretty much operates as a cash business. Explain the considerations/entitlements that Lynn has and how? (3 marks)
c) Finally, Lynn had supplied a local business (mechanic) with a line of credit; however the business was declared bankrupt, owing Lynn $935.00 inclusive of GST. How is this bad debt treated, giving consideration to GST, giving consideration to the treatment of the entire amount? (3 marks)

Q2:
Many organisations in Australia look to thank their employees with a Christmas function. Some of these functions are held on premises, where a caterer is brought in, some are held externally. Some functions are held off-site, such as a function centre, a restaurant or even in public areas such as parks. Often companies will also give employees a gift as well.
You are required to discuss all FBT and GST implications for a business looking to hold such a function, giving consideration to the threshold, on/off-site, just employees invited, where associates such as partners are invited and even major clients. You should consider the gift planned is a Christmas hamper valued at $110.00 (inclusive of GST). Ensure all areas of relevant sections of FBTAA are included. You are to consider that the organisation has not elected to use Div 9A. (12 marks)