Objectives The objectives of this assignment are to: •

| April 14, 2018

The objectives of this assignment are to:

•    Expand your knowledge of areas covered in this subject 
•    Develop critical thinking 
•    Develop written communication skills 

The assignment attempts to capture some of the issues addressed by professional advisors.
Assignment question

Part (a)

On 1July, 2014, Jane Jackson, a retired IT specialist and an Australian citizen, left Australia to visit her relatives in England. As she was not expecting to return to Australia for two years, Jane rented out her Melbourne home (on a one-year lease) and sold her car. Jane did not have any family members in Australia. During her stay in England, Jane rented a cottage in Oxford. As it happened, the English weather did not agree with her and she returned to Australia on 1 September, 2015.  She has remained in Australia ever since, living in her Melbourne home.

Your task:

Advise Jane whether she was a resident of Australia for tax purposes for the income years ended (i) 30 June 2015 and (ii) 30 June 2016. Give reasons for your advice. If you need more facts be sure to indicate those that are needed and consider the consequences if those facts apply.
[8 marks]

Part (b)

During each of the income years referred to in Part (a) Jane received interest payments from a United States bank in which she had deposited money several years earlier. 

Your task:

Advise Jane of the tax implications for her arising from the receipt of the interest. Give reasons for your advice. If you need more facts be sure to indicate those that are needed and consider the potential tax consequences if those facts apply.
[4 marks]

Part (c)

In January 2017 Jane decided to renovate her home.  Being short of funds, Jane is considering selling a vacant block of land which she had acquired in December 1997. She always intended to build her family home on the land (which is in Ballarat, Victoria) but this did not happen. She paid $50,000 for the land and believes she can get $150,000 if she sells it. 

Your task:

Advise Jane of the tax implications for her if she goes ahead with the sale. Give reasons for your advice. If you need more facts be sure to indicate those that are needed and consider the potential tax consequences if those facts apply.
[4 marks]

Part (d)

On 1 July 2016, Jane was re-employed by the IT firm where she used to work before she retired. To supplement the income she now receives from this employment, on 1 November 2016 Jane began a venture in which every weekend she took tourists on a guided tour of the most historic buildings in Melbourne. It has become clear to Jane that for the income year ended 30 June 2017 the outgoings on this venture will far exceed the fees she will receive from the tourists. 

Your task:

Advise Jane on how the predicted financial results of her venture will affect her income tax position for the income year ended 30 June 2017. Give reasons for your advice. If you need more facts be sure to indicate those that are needed and consider the potential tax consequences if those facts apply.
[8 marks]
Part (e)

Jane seeks GST advice from you in relation to the following facts which stem from several of the above Parts. 
1)    In the year of income ended 30 June 2015, she received rental income of $11,000 from the lease of her Melbourne home and paid a gardener $440 for maintaining the garden during that period.
2)    She sold the car in Part (a) privately for $8000.
3)    It has been determined that her tour venture’s gross income for the income year ended 30 June 2017 will not exceed $3,000. Her accounts show that in that year for the purposes of the venture she bought a computer, reference books and incurred various set-up costs totalling $5000. She has invoices for some of the costs and not for others. 
Your task:

Advise Jane of the GST implications arising from these circumstances. Give reasons for your advice. If you need more facts be sure to indicate those that are needed and consider the potential GST consequences if those facts apply.

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