CLWM4100 Taxation Law Questions Assessment 3 Answer

Assessment 3 Information

Your Task

• You are required to answer the questions, in a maximum of 1,000 words approximately.
• This assignment must be presented as an individual effort. The assignment requires individual research using a range of tax resources. It is expected that you will survey the relevant literature, including decided cases, and select appropriate additional resources.
• You are expected to identify the facts and issues presented by each question, identify and apply the relevant legislation and/or case law, and reach a conclusion.
• This assessment assesses your research skills, your ability to synthesise an original piece of work to specific content requirements. It also assesses your written communication skills.
• Your reasons for your conclusions and recommendations must be based on your research into the relevant cases and legislation.
• You are also required to prepare a short video presentation (4 to 5 mins) summarising the key issues you have addressed in your answers.
• Please check the marking sheet (included below) for each part to ensure that you have followed all the guidelines for presenting your work.
• Please make sure you follow the guidelines especially those relating to presentation, late policy and academic integrity.

Assessment Description

Written Report (15 marks)

On 1 July 2005 Neil Chen purchased a block of land (1004m2) with a 3 bed-room house on it for

$700,000. The house was rented out immediately since 1 July 2005 till June 2017. As the relevant information was not available to him, Neil did not claim deductions for capital works under ITAA97 Div 43 for the income years in which the property was used to produce assessable income. Neil also did not obtain a building cost estimate from a quantity surveyor as he did not want to incur the expense.

During July 2017, Neil decided to demolish the existing house and the vacant land was subdivided into two equal-sized blocks on 1 November 2017.

Construction of two new dwellings was completed on 1 October 2018 at a total cost of

$1,000,000 ($500,000 for each house). Neil used both dwellings as investment properties and each of them was rented out on 1 October 2018. Neil claimed deductions for capital works under ITAA97 Div 43 for the income years for both dwellings.

Due to Covid19, financial difficulties caused him to sell one of the dwellings. On 30 May 2020 he entered into a contract for sale and the tenants were moved out on 30 June 2020. The sale price was $950,000 with settlement on 31 July 2020. Selling costs, i.e., agent fees amounted to

$10,000.

Required

Part 1) What are the CGT consequences of the subdivision, demolition and construction of two dwellings? Does the market value substitution rule apply to the demolition? You must include relevant section numbers and/or cases in your explanation. (9 marks)

Part 2) Calculate the net capital gain(s) and identify in which year it should be included. Assume Neil had $21,500 capital losses from 30 June 2018 ($20,000 loss from sale of BHP Shares and

$1,500 loss from sale of Stamps). (6 marks)

Assessment Instructions

• The assignment (both the word document and the video file) will need to be submitted electronically through the student portal – use the link under “Assessments”.

Referencing

• Any sources that you use need to be acknowledged in order to avoid plagiarism. Information on referencing can be found in the Guidelines for Referencing and Presentation at the Kaplan website using the following address:

In‐Text Referencing and the Reference List

• Sources of information must be cited both in the body of the text (in‐text referencing) and the end of the assignment (reference list). Failure to do so will result in penalties. Remember that when referencing an Annual Report, it is a corporate document that does not have a particular author but it will still require referencing any time you use information from it. Any other documents or books or other references you use will also require referencing.

Please note

• Any work which has been copied or shared between students will result in a Fail grade for all students concerned. Therefore, please make sure that the answer to this assignment is your work and not copied or bought from any source. In completing this assignment make sure you follow the guidelines for assignments especially those relating to the presentation of written work, late assignment policy and academic integrity

Penalties Regarding Referencing:

• No in‐text referencing – deduct 1 marks
• Some in‐text referencing only – deduct 1 mark
• No reference list – deduct 2 marks
• Incomplete reference list – deduct 1 mark

Policy on Late Submissions:

• Penalties will be imposed on late assignment submissions in accordance with following:
• Number of days late Penalty 1* - 9 days 5% per day for each calendar day late deducted from the total marks available.
• 10 - 14 days 50% deducted from the total marks available.
• After 14 days Assignments that are submitted more than 14 calendar days after the due date will not be accepted and the students will receive a mark of zero for their assignment.
• Note Notwithstanding the above penalty rules, assignments will also be given a mark of zero if they are submitted after assignments have been returned to students.
• *Assignments submitted at any stage within the first 24 hours after the deadline will be considered to be one day late and therefore subject to the associated penalty.