Referencing and assignment format: Given this assignment is a report style format, there is no requirement to advise the source of any materials

Assessment criteria: Assignments will be assessed against the SILOs for the assessment. In particular, assignments will be assessed based on objective demonstration of the following:

• Engagement of critical thinking and interpretation skills to correctly identify the issues to be analysed in the case study.
• Application of critical thinking, interpretation and analytical skills to develop a meaningful analysis of the issue(s) previously identified, with detailed and analytical application of tax concepts, tax principles, legislation and case law. Mere citation, transcription or repetition of theory, concepts, legislation and case law without proper application will not attract any marks.
• Correct application of tax concepts and case law principles to calculate tax liability (if required). Calculations must be fully stated and supported by applicable legislation and case law (where case law is required).
• Elaboration of a solution to the issues presented in the case study, referring to the elements analysed and concluding the case.

ACC3TAX Assignment

• This assessment specifically focuses on the overall calculation of tax liability (including derivation of income, income tax equation, application of income, deductions and offsets).
• It is designed to simulate a client-advisor real life scenario, where students are required to apply interpretation of tax law, taxation rulings, and case law, critical analysis and numeracy skills to defend your advice to a tax partner in calculating the tax liability of a client. It is not a letter to the client, but the preliminary research report which will support the basis of such a letter.

Case Study and Questions

Jingjing is a 25 year old employee who worked at Junnings as a Manager in Jeelong. She has engaged you for your services to assist her in preparation of her tax return for 2018/19.

On 20 April 2020, Jingjing sent you the following email:

From Jingjing Jyun <j.jyun@junta.com.au>

Sent : 20 April 2020, 9:00:52 AM

To :  Tax Accountant

Subject : Tax Return 2018/19 – Jingjing JYUN

Dear Tax Accounting Team,

Sorry I have been putting this off – things have been so hectic and uncertain here in China this year. As discussed at our recent Zoom meeting, here are the following matters that should help you with your preparation of my tax return.

1. Earnings from Junnings – I finished up with Junnings on 30 June 2019, but I was a Marketing Manager Graduate appointed from 1 July 2018 and I received net wages ($46,000) and a travel allowance ($10,000). Junnings had deducted PAYG ($20,000). Prior to this position, I worked as a casual in Sales. Oh and don’t forget I also received my unused Annual Leave ($1,000) – HR had made a mistake and overlooked paying me my entitlement, but once I pointed that out they apologised and were very prompt and paid my money owing to me in my bank account on 1 July 2019.  The reason I stopped working for Junnings was that my position was made redundant.  At the end of the income year, I received a redundancy payment from Junnings for $15,000 because of the sudden and significant market changes and restructuring that had occurred. I had hoped that I might have got some other opportunity to work for Junnings in a different capacity, but it was not meant to be, which in one way was a blessing as I returned unexpectedly and permanently to China at the end of August 2019 to assist my sick parents.  (4 marks)

2. Sale of my residence – Settlement has finally come through on the sale of my home. Hooray. You will recall that my parents helped me purchase my apartment in Melbourne in 2012 at a bargain cost of $400,000 and $25,000 for various expenses such as stamp duty and other fees and I sold it for $500,000 and there was another $15,000 expenses on sale for commission and other expenses.. You might remember I spent a year overseas absent, returning to China for a year (1 July 2014 – 30 June 2015) and during that time I had rented out my property, so I heard I need to pay a share of my CGT Gain as I have used my principal place of residence for business purposes  – is that right? (2 marks)

3. Various Rental property matters– I sold my investment property located in Beijing for equivalent AU$200,000 and paid commission of $5,000 and received my funds in July 2019. I had a friend who said to me 3 months earlier that it was a good time to sell, as I had only purchased this property in March 2015 for equivalent AU$150,000, with $10,000 costs of purchase.  So that’s when I engaged the real estate agent, and I signed the contract for sale on 1 May 2019. I also incurred a legal cost of equivalent AU$5,000 in defending my entitlement to this property, which was in August 2018. I rented out the apartment for 10 months for $1,000 per month.   But I don’t have to worry about any of these matters, right? – as I have been a non-resident since my Uni days when I came to Australia in January 2014. (8 marks)

4. Insurance compensation and medical expenses – In July 2018 I was injured in a car accident while driving to one of the regional stores and was in hospital for three weeks. Fortunately, my private health insurance policy covered my medical expenses of $3,000. I also received $5,000 compensation from the insurance company for having lost some mobility from the car accident injury, which was promptly paid to me in September 2018. (2 marks)

5. Work expenses – As a marketing manager, you would appreciate that image is everything when you do the job. I needed to spend a lot of money looking professional as I didn’t wear a uniform like I used to when I was a casual. My Regional Manager encouraged me to improve my image and was very impressed with my deportment. Over the financial year, my grooming expenses totalled $3,000 for hair styling and cutting   (very good really as I was a regular customer every week at my hairdresser), make-up of $1000, and the additional clothing I had to buy as I wore clothes that were not cheap – another $5,000, which my Regional Manager commented was exactly the image Junnings needed.  Of course, I needed to clean my clothes professionally and had them Dry Cleaned and I got a good deal of only $20 per week, so my claim is $960. (3 marks)

6. Car expenses – In addition to my regional flight travel, I had to do a lot of metropolitan car travel going to all of the various metropolitan stores. The running costs on my car as advised by my local petrol station amounted to $15,000 for the year, but these were paid for by Junnings, even though I only used the car 50% for business use.  I bought my new car at the start of the year costing $20,000 and I would like to claim the entire amount as a deduction, as I heard I can claim an ‘instant write off’.  I had a slight accident during the year, and I was at fault, which caused me out of pocket expenses of $2,000 to repair the vehicle, as the insurance company would not pay up any contribution.  (5 marks)

That’s all I can think of for the moment – let me know if you need more information.

But can you please tell me how much tax I owe?

Thanking you in advance.  Stay at home and stay safe

Kind Regards

Jingjing J

Required

• Prepare a report to put into Jingjing’s file which you can use as background in discussion with the Partner, and subsequently when you need to provide further advice to Jingjing.

Format of your report.  You must:

• address the issues as raised using the same numbering system / headings listed above in Jingjing’s email.
• adopt a report style approach using 3 headings like

In your discussion make sure you state,

• the relevant legislative authority and/or case law authority,
• the reasons the law applies to the facts, and
• the final effect on taxable income/tax liability under the Amount heading.

For each of the major points address the sub-issues – for example there are four issues to discuss in Item 1 – Earnings from Junnings.  Accordingly, follow the template below by

• using the following correct HEADER
• addressing the various sub-issues raised in separate boxes
• giving them a label so they are immediately understood by yourself and thepartner.
• Then address the law AND the reasons –  insert BECAUSE, and
• then using an amount, state the impact on taxable income (Part 1), or impact on taxable liability (Part 2)

(20 marks)

• Based on your report, prepare Jingjing’s statement of taxable income and calculate her final tax refund/liability including Medicare Levy for the year ending 30 June 2019, stating the applicable legislation and case law (note: calculation of the private health insurance is not required).                                                                                                                                                                                                (6 marks)

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