BULAW 5916 Taxation Law And Practice :
BULAW 5916 Taxation Law And Practice– Assignment- Semester 1, 2023
Purpose
The purpose of the assignment is to enable you to explore and communicate your understanding of relevant aspects of taxation law.
There are two questions: Question 1 (worth 20 marks) and Question 2 (worth 10 marks). You must answer both questions in a single word document.
The assignment requires you to do independent research. In this regard, you may find the library’s databases useful. You should appropriately reference your assignment and provide a reference list at the end of your assignment.
This is not a group assessment task. Your assignment must be your own work.
Word limit
The length of the assignment is to be approximately 1,200 words. Given the differing weighting of marks between questions, students should use their discretion in allocating the number of words when answering each question.
Referencing
The referencing method used in your assignment must be in accordance with the APA referencing system. Details for this style can be found via the Fed Uni Library weblink: https://federation.edu.au/library/study/fedcite
Due date
Your assignment is due by 23:59 on Sunday 7th May 2023 (week 9). Penalties apply for late submission of work. Please submit your assignment as a word document (not pdf) via the Turnitin enabled assignment link through the BULAW 5916 Moodle shell.
Note all Federation University Australia rules relating to assessments apply.
Marks
Your lecturer will mark your assignment. Your marks will reflect the extent to which you have demonstrated an understanding of the material examined. The assignment carries a 30% weighting. Feedback and grades will be communicated via Moodle within three weeks of submission of your assignment.
Please note the information about late penalties in your Course Description. Information about applying for Discretionary Assessment Extensions and Special Consideration is available here: https://federation.edu.au/current-students/essential-info/administration/special-consideration
Presentation
All written answers should be presented as complete sentences. Where relevant, answers should be supported by reference to appropriate case law, statutory provisions and ATO rulings. Please do not refer to legislation other than the Income Tax Assessment Acts. For example, please do not refer to legislation governing taxation in other countries. Also, please do not consider residency and source issues. State any assumptions you make, and if your answer requires further information from the hypothetical client, please state precisely what information that is and why it is required. Providing irrelevant detail and lengthy references to facts without attempting to analyse the scenario from a tax law perspective will not be looked at favourably.
The scenario
Zestful Ventures Pty. Ltd. has a mixed grazing business. It’s aggregated turnover in the 2021/22 financial year was $2.5 million. Zestful owns 670 acres of land in New South Wales. Its livestock are rotated through different paddocks. The region where this land is located has a rapidly expanding population.
Mid-way through 2022, Zestful’s neighbours advertised some adjoining land for sale, and Zestful sees this as a good business opportunity. In July 2022, Zestful sold some shares which it had purchased five years earlier. The original cost of the shares was $2 million and Zestful sold these shares for $3.5 million. In August 2022, Zestful uses the funds from this sale to partially fund the purchase of the adjoining land (10 acres). Zestful intends on using this land to construct a supermarket, five other retail stores and a commercial office precinct, including high-rise towers. It begins constructing the supermarket, retail stores and part of the intended commercial office precinct. However, due to zoning restrictions Zestful is not able to build the high-rise towers.
As a result, in January 2023 Zestful decided to sell half an acre of the land. Before advertising the land, to try to make it attractive to potential purchasers, Zestful paid many expenses to subdivide the land, so that it was made up of 4 parcels. The expenses included application fees to the local council and the costs of installing infrastructure including roads, drainage and water and sewerage systems. One of these parcels was sold in March 2023 for $495,000. The other parcels are currently unsold.
Required:
- Advise Zestful Pty. Ltd. as to the tax consequences of each transaction which is mentioned in the scenario above. Please refer to relevant Australian tax legislation, as well as case law in your answer. 20 marks
- Despite deciding to sell the half an acre of land in January 2023, Zestful again changes its intentions and now wants to build residential townhouses on the remaining 3 parcels of land. It would then rent out the town houses. It would incur various expenses in building the town houses and renting them out. Please advise Zestful of the tax and accounting consequences of doing this, including whether expenses relating to building the town houses and renting them out may be deductible. Refer to Australian tax law and relevant accounting standards (AASBs) in your answer. In relation to the accounting standards, please look at this website: https://aasb.gov.au/pronouncements/accounting-standards
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