Luke and Sarah lived in a house in Albury where they both had permanent jobs. In July 2012 they purchased a rural block of 30 acres for $160,000 with the intention of building a house and moving out of town. In September 2012 they listed their house in Albury for sale at $570,000, however given a downturn in the market the house remained unsold until March 2014 when they finally accepted an offer of $460,000. Settlement took place in April 2014 and they commenced construction on the new house in May 2014. Whilst the house was being built Luke and Sarah rented the Albury house back from the new owners at an amount of $480 per week.
In November 2014 the new house was completed at a cost of $410,000 and Luke and Sarah moved in. Additional costs incurred by them included construction of a road for $15,000, sinking a dam at a cost of $30,000 and connection of electricity at a cost of $40,000. They financed the new property with a home loan of $450,000 payable over 30 years at a rate of 4.20%.
Luke and Sarah began a horse agistment business in January 2015 to which they allocated 20 acres of their property. They constructed fencing to create smaller paddocks, built shade shelters and installed water troughs at a total cost of $80,000. To fund the cost of the improvements they took out a small business loan for $80,000 payable over 10 years at a rate of 5.30%.
In October 2019, Luke was offered a promotion in his job which required them to re-locate to Queensland. They listed the rural property for sale and in December 2019 it sold for an amount of $850,000 with settlement occurring in January 2020 at which time Luke and Sarah moved to Queensland.
Advise Luke and Sarah of the taxation consequences of selling the rural property including whether any taxation exemptions or concessions may apply. You do not need to calculate the amount of any resulting capital gain or loss (25 marks).
Melissa, an Australian resident, is a perioperative nurse employed full-time in the operating theatre at her local public hospital. In addition to this she also works at the local private hospital assisting orthopaedic surgeon Dr Harris on a contract basis. Dr Harris pays Melissa directly for her services.
In September 2019, Dr Harris asked Melissa to accompany her to Chicago in the United States to attend a week-long conference to learn new techniques for use during orthopaedic surgery. Dr Harris paid for Melissa’s conference registration fees, return airfares from Sydney to the United States and her accommodation and meals for the week.
At the conclusion of the conference, Melissa travelled from Chicago to New York where she stayed for an additional three weeks at her own expense. She stayed in a hotel which included breakfast and she ate out for lunch and dinner.
During the first two weeks she worked at the New York-Presbyterian Hospital, one of the largest teaching hospitals in the United States as part of an exchange program. Her employer, the public hospital in Australia, paid her usual wages for these two weeks. During this time she was able to assist with a number of surgeries working alongside some of the world’s top surgeons where she gained invaluable experience. Melissa took a cab from her hotel to the hospital each day to perform the work.
Melissa spent the last week of her two-week stay in New York sightseeing and catching up with friends. She flew back to Australia from New York using the ticket that had been paid for by Dr Harris.
Advise Melissa of any amounts she may be able to claim as income tax deductions in relation to her trip to the United States (10 marks).
MARKING CRITERIA AND STANDARDS
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In assessing your assignment the marker will expect you to:
present an essay that is readable and coherent;
use appropriate language, correct spelling and grammar;
identify and analyse relevant issues;
explain and apply relevant cases, rulings and legislation;
reach a sound and well-reasoned conclusion;
use appropriate referencing; and
demonstrate time management skills.
The following criteria will form the basis of assignment of marks for the problem solving question.
Criteria High Distinction Distinction Credit Pass Fail
Students are required to answer problem type questions in order to demonstrate: To meet this level you will achieve a cumulative mark of 85-100%. A mark in this range indicates that a student: To meet this level you will achieve a cumulative mark of 75-84%. A mark in this range indicates that a student: To meet this level you will achieve a cumulative mark of 65-74%. A mark in this range indicates that a student: To meet this level you will achieve a cumulative mark of 50-64%. A mark in this range indicates that a student: At this level you will obtain a mark of 0-49%. A mark in this range indicates that a student:
Identification of relevant legal issues Correctly identifies all legal issues and formulates them clearly with consideration of all links to relevant law, with no errors. Correctly identifies all the tax law issues and formulates them with consideration of links to relevant law, with only minor errors. Identifies and correctly formulates most major tax law issues and supported by relevant law. Identifies some tax law issues. May or may not formulate them correctly. Considers and links to relevant law, Identifies no relevant issues or only a few of them. Some of these may not be unclearly formulated. Considers few contextual factors of relevant law.
Explanation of law and citation of relevant legal authority Provides a complete explanation of the law, justified by relevant taxation law, with no errors. Discussion identifies key statute and case law stating relevant principles and shows insight in identification and discussion of potentially hidden issues. Research of relevant legal authority shows a breadth of investigation through detailed analysis, discussion and tax computation. Provides a comprehensive explanation of the taxation law with few errors, substantiated by relevant case and statute law stating relevant principles. Research of relevant legal authority shows a breadth of investigation through detailed analysis, discussion and tax computation. Provides a substantial explanation of taxation law and tax computation but with some errors, substantiated by significant legal authority in the form of statute and case law. Provides a basic explanation of the taxation law and tax computation, but with significant errors, substantiated by some legal authority. Provides incorrect or limited explanation of the taxation law and tax computation using no, or only a limited range of, authority.
Application of legal principles to the facts and tax computation Applies the law to the facts so as to reach a correct conclusion on all issues, with no errors. Argument discusses linkages between facts and the law and considers counter-arguments, completes tax computation correctly if required and evaluates the impacts of applying the law to the situation considering a broad range of factors that may affect the application. Conclusion draws together advice for client. Applies the law correctly to the facts so as to address all issues, with only minor errors. Argument discusses linkages between facts and the law, completes tax computation correctly if required and evaluates the impacts of applying the law to the situation considering factors that may affect the application. Conclusion draws together advice for client. Applies the law correctly to most issues arising from the facts, but with some errors. Argument discusses application of the law and completes tax computation correctly if required with some minor errors. Conclusion summarises advice for client. Makes a basic attempt to apply the law to the facts, but applies wrong law and / or contains significant errors in the application. Argument summarises application of the law, formula for tax computation identified and completed with errors. Advice to client is incomplete. Paper does not correctly apply law to the facts and / or applies incorrect law. May be descriptive, rather than putting forward a reasoned argument. Does not attempt tax computations.
Compliance with the Style Guide, tax computation format and overall structure. Uses Style Guide comprehensively, accurately and consistently. Uses ILAC model and tax computation format. Extremely well structured and organised, with one main argument introduced per paragraph, supported by well-written supporting sentences. Uses Style Guide accurately and with only minimal errors. Uses ILAC model and tax computation format. Well structured, with one main argument introduced per paragraph. Adequate use of Style Guide, with some errors or lapses. Uses ILAC model, tax tax computation format and is clearly structured. Limited or inconsistent use of Style Guide. Some attempt at use of ILAC model, tax computation format and at structuring of answer. Poor, inconsistent or inaccurate use of Style Guide. Poorly structured. Inadequate or no use of paragraphs. May have disregarded the ILAC model and tax computation format.
Written expression, calculation and editing. Uses appropriate academic writing which is formal, impersonal and which contains no spelling, grammar, punctuation and calculation errors. Paper demonstrates careful proofreading. Uses appropriate academic writing which is formal, and impersonal with only very minor spelling, grammar, punctuation and calculation errors. Paper demonstrates careful proofreading. Uses appropriate academic writing which is formal and impersonal, with a few spelling, grammar, punctuation and calculation errors. Paper demonstrates evidence of proofreading. Significant spelling, grammar, punctuation and calculation errors but the paper is readable and demonstrates some attempt at proofreading. Poor grammar, spelling, and /or punctuation. Showing little or no calculation. Paper gives no evidence of having been proof-read.
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General Guidance for Law Assessment Tasks:
• Word-process or type your assignment clearly.
• Clearly show the subject name, your name and the date at the beginning of the assignment.
• Use size A4 paper and leave at least a 3 cm margin on the right-hand side of the page. (This is the best format for both marking and photocopying.)
• Number each page of the assignment.
• The answers should be confined to 3,500 words in total, bibliography excluded. Assignments should be neatly typed in Times New Roman, 12 point font.
• The APA Referencing System is required. Case and statute names should be italicised.
• Answers must be original. They should demonstrate that students not only have read and understood the Study Guide and prescribed readings but also have broadened their knowledge by having read other reference works. Marks will not be awarded for duplication of paragraphs from the Modules or textbooks.
• Answers should have a complete bibliography listing all books and articles consulted. Beware of using the unacknowledged work of others. Plagiarism will result in zero marks and possible failure of the subject. (Refer to handbook rules).
• Students must, in the course of answering questions, refer to and discuss relevant case authorities and appropriate statutory provisions in order to support the propositions and submissions made.
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