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© TAFE NSW – Higher Education Semester 2, 2021 Page | 1 Bachelor of Applied Commerce Subject Number: ACBUS203A Subject Name: Income Tax Law Assessment 2 – Case Study - Semester 2, 2021 Pages: 3 (including this page) For this assessment, students will be required to prepare two written tax advice letters, one approximately 1,000 words in length, and the other 500 words. The advice letters should be professionally presented, advise the taxpayers of the taxation issues presented in the scenario. The word limit of approximately 1,500 words (plus or minus 10%), excludes any appendixes. The appendix should include any footnotes, calculations, references & citations. Referencing can be Harvard style. When you refer to statues or cases in your assignment, you can provide the abbreviations in the paragraph and the full name in the reference list. In your statement of advice, you are to address the following issues as a minimum: You are to write two letters of advice based on the scenarios in Part 1 and Part 2 Each part should include an Introduction, Body and Conclusion Part 1 should be approximately 1,000 words and Part 2 approximately 500 words. The assessment must be uploaded into Turnitin in by Sunday 10 October at 11.59pm © TAFE NSW – Higher Education Semester 2, 2021 Page | 2 Part 1 You work in the tax division of an accounting firm. Your firm has received a new client, Billy Mason, a resident primary producer. The tax partner has asked you to analyse the information below and prepare a letter of advice on the tax concessions available to Billy. The partner also requires an estimate of Billy’s taxable income in the report. Billy provided the information below to your firm in a meeting with the tax partner on 15 July. The information is for the year ended 30 June 2021 Wool Sales September Clip 70,000 March Clip 75,000 Shearing Expenses September Clip 22,000 March Clip 18,000 Selling Expenses September Clip 12,000 March Clip 7,500 Insurance proceeds of $25,000 received in April 2021 as a result of sheep lost in a fire. Gross profit on sales of sheep during the year $525,000 Included in the above figure were 4,000 sheep sold on 1 March 2021 for $175,000 due to a bushfire destroying part of the paddocks. 3,000 of these sheep has been purchased (average cost $42 per head) and the other were from natural increase. Billy installed telephone lines on his property on 7 June 2015 for $40,000 Billy installed a water pump in 19/20 for $18,000 (effective life 15 years). He also purchased and installed another pump on 31 March 2021 at a cost of $21,000. Due to the drought , part of his farm has been affected by land degradation. Billy put up fencing to keep sheep away from this area. The fencing cost $18,000 on 1 March 2021. Other deductible Expenses $252,100. © TAFE NSW – Higher Education Semester 2, 2021 Page | 3 Part 2 You work in the capital gains tax section of the tax division of an accounting firm. You had a meeting with your client, Brad Ferguson on 4 July 2021, who provided you with the following information. Brad Ferguson sold his gift shop and family home in New South Wales and moved to Queensland on 21 June 2021.Brad had originally acquired the shop on 10 October 1992 for $450,000. He sold the shop on 20 May 2021 for a net consideration of $840,000 of this sum $120,000 was attributed to goodwill. Brad received a further $70,000 for signing a contract not to open another business within 10 km radius for the next five years. Brad sold his principal place of residence in NSW. He had acquired the house for 950,000 on 19 July 1998. The house sold on 10 June 2021 for $1,500,000. Estate agents and solicitors costs associated with the sale were $31,000. Prepare a letter of advice explaining to Brad of the tax consequences regarding the above- mentioned transactions. Your letter should include calculations of Brad’s estimated capital gain.