INCOME TAXATION LAW & PRACTICE ASSIGNMENT custom essay

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INSTRUCTIONS
1. See the Instructions and Assessment Criteria in the Course Description and
make sure you follow them!
2. Please answer all parts of the question
3. Attached to this document is a Checklist to be filled in by you and attached
to your essay/assignment. Read this now before you start your research. If
you have followed this checklist, there is a good chance you will do well.
4. All work presented for assessment in this Unit must comply with the
format outlined in the University’s Presentation of Academic Work
publication, available from the bookshop or on-line at
www.ballarat.edu.au/generalguide.
5. All assignments must be accompanied by a signed official cover sheet
(‘Plagiarism Declaration Form’), available at
www.ballarat.edu.au/ard/business/student_info_webct.shtml and lodged as
appropriate for your campus.
6. You MUST reference in the body of the essay every time you use information
from other people. This requires you to keep a track of where you are taking
information from and then writing the reference up. You should use the
Harvard/APA style; and use the University’s new Presentation of Academic
Work. The Library’s website also has a citation style guide site. If you
plagiarise (intentionally OR unintentionally) you will be given zero: see
Regulation 6.1.1 for more details.
7. Assignments must be 1,500 to 2,000 words. You will probably write more
initially but you should then look to see if you are making your points directly
and clearly.
8. LAST DUE DATE: Friday 11 May 2012. If you need an extension you must
ask for one BEFORE the due date (unless this is impossible).
9. The essay/assignment is worth 25% (ie 25 marks).
ASSIGNMENT
Chesterfield Pty Ltd is a resident private company established in 2005 to manufacture
quality leather lounge suites. The company’s products are well regarded and sales are
around 60 to 70 suites per year.
Production is carried out at a workshop built by the company in 2005 at a cost of
$375,000. Extensions costing $180,000 were completed in February 2012 [Note 9].
For cash flow reasons in the early years of production all plant and equipment is
leased. [Disregard GST and Small Business Entity related matters.]
Relevant financial information for the year ended 30 June 2012 is as follows:
Income Notes
Sales – 64 units @ $5,500 352,000 1
Sale of leased lathe 3,400 2
355,400
Expenses
Raw materials used 48,000
Direct labour 60,000
Light & power – manufacturing 9,000
Security 5,500 3
Doubtful debts 16,500 4
Administration wages 53,000
Legal fees 1,500 5
Equipment lease 36,000
Residual on leased lathe 1,200 2
Feasibility study 26,000 6
General administration 25,000 7
Directors fees 30,000 8
311,700
Notes
1. Trading
At 30/6/11, three finished and two half-finished lounge suites were ‘on hand’.
These had been valued at cost: $6,800.
During 2011/12 65 similar lounge suites were manufactured. This left a stock
of four finished and two half-finished units on hand at 30 June 2012. The
directors advise that closing stock at 30/6/12 be valued at cost.
The directors request advice on the valuation of closing stock.
2. Sale of leased lathe
On September 8, 2011 the lease on a lathe expired and the finance company
agreed to sell the item for its residual value of $1,200. Chesterfield continued
to use the lathe until a new lease was arranged and then sold the old lathe (2
March 2012) for $3,400.
3. Security
The services of a security firm are used to patrol the workshop after hours to
protect the property against damage or theft of valuable materials.
4. Doubtful debts
The company’s accounts show a provision for doubtful debts of $16,500.
Credit collections had been a particular problem throughout the year but it is
hoped to recover $8,000. An amount of $8,500 is owed by a retailer who
cannot be contacted and is rumoured to have left the country.
5. Legal fees
During the year it came to the directors’ attention that a rival firm was
marketing a lounge suite that appeared identical to Chesterfield’s best selling
line. An action to recover damages was commenced. The matter is yet to be
finalised but the company’s legal advisors are confident. At June 30 only
$1,500 had been paid in legal fees but estimated additional costs of $24,000
had accrued although no account had been received.
6. Feasibility study
The directors commissioned consultants to assess the feasibility of
Chesterfield Pty Ltd opening a retail outlet and supplying lounge suites to the
public. The consultants forecast losses in the first years of operation but
concluded the venture was commercially viable in the medium term.
7. General administration
General expenses include the following:
– Farewell dinner for a retiring employee 1,850
– Audit fees 5,000
– Taxation advice 2,500
– Directors club membership fees 6,000
– Discharge of mortgage on repaid loan 1,000
– Sundries (deductible) 8,650
8. Directors’ fees
The three directors are paid $10,000 each. One of the directors has been ill for
the whole year and his duties were performed by the other directors.
9. Extension to workshop
Timber used in the production of lounge suites is first cut and formed into
required shapes. It is then treated to prevent infestation, polished, painted and
finished in desired stains. The process involves the use of some toxic and
corrosive chemicals and in the past was carried out in conditions far from ideal.
To overcome the problems a special treatment and finishing room was built
onto the existing factory workshop. The following costs were incurred:
– Frame and exterior cladding 81,000 [3/10/11]
– Corrosive resistant lining 30,000[15/12/11]
– Foundations 15,000 [1/8/11]
– Fume exhaust system 30,000 [4/2/12]
– Hanging racks for drying 9,000 [10/2/12]
– Painting and treatment equipment 15,000 [10/2/12]
180,000
The construction was completed and ready for use on 29/2/12.
Required
1. Advise the directors on the assessability and deductibility for income tax
purposes of each of the separate items of income and expenses [as well as
matters raised in Notes]. Reference should be made to relevant case law, ATO
Rulings and sections of the Income Tax Acts.
2. Calculate the company’s taxable income.
University of Ballarat – The Business School
CHECKLIST TO BE ATTACHED TO ESSAY/ASSIGMENT IN BULAW 5916
Name: ……………………………………………………………..
Student No. ………………………………..
Please check that you have done the following. Tick the boxes to show you have!
? Submitted an assignment that is your own work. (You may discuss the issues with others
but you cannot copy another’s work, give your work to someone else to copy, or work closely
with another student on how to structure or answer the questions.)
? The assignment is between 1500 and 2000 words long (excluding abstract, references,
bibliography).
? Read and tried to address the criteria in the Course Description.
? Read and addressed the issues raised in the University’s Presentation of Academic Work
? Read Regulation 6.1.1, Plagiarism and asked questions if you are unsure about what it means.
? Referenced direct quotes (use quotation marks or indent) AND summarising from another
person’s work in the body of the essay. (This includes internet sources).
? Indicated what referencing style you have chosen Harvard/APA and USED IT.
? Answered all parts to the question.
? Proof read the assignment for spelling, punctuation and grammar errors.
? Where required, used relevant sections of legislation, legal rules/principles
? Where required, used cases to support your points or arguments. These cases can be obtained
from textbooks, or the CCH online libraries, articles found via AGIS PLUS TEXT database
etc.
? Put case citations in the body of the work as well as listing the case in the List of References.
? Discussed the issues as required and put arguments and gave your view.
? Used a range of resources.
? Included a title page with your name, student number, course code and name, lecturer’s name
? Have a margin so comments can be added; put page numbers and your name and student
number on each page.
Signed by student: ____________________________________________

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