ACCG3020 Taxation Law and Practice

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DEPARTMENT OF ACCOUNTING AND CORPORATE GOVERNANCEACCG3020 Taxation Law and Practice Session 2 2021- Take-homeAssignment Information and Instructions• Weighting of this assessment task: 20%• Format of submission: Microsoft Word document, 12- point Times New Romantype, double spaced.• Method of submission: on-line, uploaded to iLearn via TurnitinReleased date and time: Thursday 30 September 2021 at 12 noonDue date: Tuesday 5 October 2021 at 5 pm• Your written response to this assignment must be presented in a reportformat. Bullet points are not acceptable.1. In problem-type question, remember to:1. clearly understand the facts and the question.2. state the tax issue(s) you have identified from the facts.3. identify the relevant law, tax rulings, legislation, and cases.4. apply the law to the facts.5. form your conclusion based on your discussion of the law and state additionalinformation that may be needed to clarify your conclusion. When answering aquestion, it may be useful to implement the following approach: MAIN HEADINGIdentify the relevant parties (e.g., in a taxation law exam, this may be the taxpayer)– This may be a main heading.SUBHEADINGIdentify the transaction/subject-matter (e.g., an item, service or scenario) – Thiswill establish a relevant subheading.YOUR ANSWER should be under each subheading• Issue – Identify the issue.• Rule – Identify the relevant law(s).• Application – Discuss the relevant rule(s)/law(s) by applying them to thefacts. • Conclusion – Round-off your discussion by forming a conclusion.• Responses to this assessment task must not exceed 1,500 words.• No extensions will be granted. There will be a deduction of 10% of the totalavailable marks made from the total awarded mark for each 24-hour period or partthereof that the submission is late (for example, 25 hours late in submission – 20%penalty). This penalty does not apply for cases in which an application for specialconsideration is made and approved. No submission will be accepted after solutionshave been posted.IMPORTANT:➢ You must cite relevant cases, ATO rulings, and legislative references tosupport your answers.➢ Your response must also provide reasons that explain and supportyour answers.Case StudyYou are a chartered tax accountant working in Epping, NSW. A client by the name of Mr.Doolittle walked into your office for tax accounting advice concerning travel expenses andlegal expenses he personally incurred whilst holding a Chief Executive Officer (CEO) positionin a public listed Company titled ‘Blue Sphere Pty Ltd’.Given his position as a CEO of Blue Sphere Pty Ltd, Mr. Doolittle also had to travel topromote his company, at least 1 month in a year, to countries such as the United Statesof America and the United Kingdom.For example, in August 2021, he obtained a general covid clearance from the AustralianGovernment to travel to the United Kingdom to set up a subsidiary business entity in thatregion. He stayed in London at the Bloomsbury Hotel. The Hotel stay for three weeks wasA$13,314 including GST. His return flight fare on Qantas from Sydney to London, businessclass (Flexible Fare) was A$25,000 including GST. He incurred meals and travel expenses inLondon for A$10,000 including GST. In his fourth week of his stay in London, he travelled toManchester to visit his relatives, Uncle and Auntie Rob. When he was in Manchester whilstvisiting them, he stayed at the Edwardian Manchester for 1 week, which cost him A$3,318including GST. Mr. Doolittle informed you that he incurred these expenses for an incomeproducing activity.When he returned to Sydney, he was informed by his secretary about an article that RolphNews published in the newspaper regarding Mr. Doolittle. Mr. Doolittle engaged his lawyersto bring an action in defamation against Rolph News for publishing an untrue statementabout him. Mr. Doolittle alleged Rolph News caused harm and emotional distress to himbecause of the publication in the newspaper. Essentially, Mr. Doolittle sued the mediabroadcaster, Rolph News over an article published in the newspaper that alleged him as aperpetrator in a historical sexual assault case committed against a former female businesscolleague in 2010 at Blue Sphere Pty Ltd. The legal proceedings were commenced in theSupreme Court of NSW, however, was settled at Mediation for an undisclosed amount. Mr.Doolittle was invoiced by his legal firm, $750,000 including GST for defending the claimagainst Rolph News. Subsequently, Rolph News withdrew the article published in thenewspaper which included a public apology to Mr. Doolittle. Mr Doolittle informed you thathe incurred these legal expenses as part of his income producing structure and not incomeproducing processes.Required:(a) Discuss residency and source issues in relation to Mr. Doolittle? (5 marks)(b) Advise Mr. Doolittle as to whether the expenses incurred in the United Kingdomwould be deductible for income tax purposes? (5 marks)(c) Advise Mr. Doolittle as to the deductibility of legal expenses? (10 marks)

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