Case Study
Case Study Scenario:
You are an employee of the tax agent services firm Plan2Go Services. Your firm has obtained a new client Wilma and Barney Rabble trading as WB Physiotherapy Clinic. Wilma and Barney require their 2020 partnership income tax return and their individual tax returns to be prepared. (Note You will need to calculate the individual taxable incomes of the partners in this Case study but not the complete actual income tax return. Individual tax returns are completed in the unit FNSACC512). You have been assigned to this task by your task partner.
Following an initial meeting with Wilma and Barney, you have been sent a letter and source documents containing the information required to complete the tax returns and working papers. You will be required to review the documentation to determine what is relevant for the preparation of the final tax returns. In line with the guidelines provided by the ATO’s lodgement program, you are required to complete and lodge partnership tax returns progressively so there is sufficient time to allow lodgement of the partners’ tax returns by their lodgement due date.
Task 1 –Plan workload for efficient, effective outcomes
Your first task is to establish a work plan to complete the above tasks in a timely manner and which complies with organisational policy and procedures. Complete the table below for this purpose. You can assume that in order to comply with the ATO lodgement program, the income tax returns must be lodged by 15 December and your initial meeting with Wilma and Barney took place on 28 October.
Date Task Expected completion
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Task 2 Review source documentation to establish recording and reporting requirements
Analyse data received from the client and identify any discrepancies. Conduct research to identify any updates to compliance requirements and prepare client working papers in accordance with accounting principles and practices. The source documentation received from Wilma and Barney is attached as Appendix 1.
Complete the working papers
•in accordance with the compliance requirements relevant to the client’s circumstances, and
•adhering to the organisational policy and procedures contained in FNSACC601_CS_2of3_SR_2of2.docx, and
•using the organisational spreadsheet contained in
FNSACC601_AE_CS_2of3_SR_1of2.xlsx.
The working papers contained in FNSACC601_AE_CS_2of3_SR_1of2.xlsx consist of four worksheets –
Worksheet 1. Partnership Net Income;
Worksheet 2. Distribution Statement;
Worksheet 3. Individual Tax Calculations; and
Worksheet 4. Further Advice.
Each worksheet must be completed and the data entered in the source worksheet, must be integrated across Worksheets 1, 2 and 3. When entering data, formulas should be created for worksheet cells to allow calculation of the partners’ individual taxable income.
The client working papers should include the following tax documentation:
a)Calculation of partnership net income.
b)Partnership distribution statement.
c)Taxable income and tax payable for Wilma and Barney.
d)The sources from which the information to prepare the above was gathered.
e)Issues in which you require further advice or guidance to moderate the decision processes.
f)Summarise the principles and practices of accounting you applied to these tasks.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Task 3 Role-plays
You are required to participate in two role plays to establish the recording and reporting requirements, as detailed in Scenario 1 and 2 below.
Scenario 1
The first role-play is to seek guidance and assistance from the tax partner of Plan2Go taxation services on issues and discrepancies raised in preparing the working papers of Wilma and Barney Rabble in Task 2.
Understanding the requirements of the ITAA as well as relevant policies and procedures, some of the issues you may wish to raise are:
•Deductibility of payment of $20,000 salary paid to Milo.
•Application of SBE concessions.
•Treatment of capital gain
You will need to request the assistance of your assessor or another person, and they will play the role of the tax partner.
You will be marked based on the criteria in the Observation checklist of this assessment. Your assessor will complete the Observation Checklist.
The role-play should take five minutes.
As this assessment is a growing Case Study, you should record the responses you received from the tax partner as they may be required as data for further queries in future.
Your assessor will not be assessing your documented responses but will be assessing you on all criteria listed in the Observation Checklist.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Observation Checklist – Scenario 1 – Tax Partner
Use this Checklist to understand what skills you need to demonstrate in the role-play scenarios. A separate Checklist will be used for each scenario. The Checklist details the assessment criteria used to determine whether you have successfully completed this assessment event. All the criteria must be met. Your demonstrations will be used as part of the overall evidence requirements of the unit.
OC Task/Activity S U/ Assessor Comments
# Performed S (Describe the student’s ability in demonstrating
the required skills and knowledge)
1Participates in verbal exchanges with a range of personnel.
Meets expectations associated with own role and recognises and responds to requirements of relevant Acts, policies and procedures.
2Uses questioning techniques to convey and clarify information and instructions.
3Uses active listening skills to elicit information and seek guidance from tax partner.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
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STUDENT NAME:
OC Task/Activity S U/ Assessor Comments
# Performed S (Describe the student’s ability in demonstrating
the required skills and knowledge)
4 Obtain advice and
guidance from partner.
Considers whether
others should be
involved in making
decisions using
collaborative processes
to evaluate and
moderate as
appropriate.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
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STUDENT NAME:
Scenario 2
Conduct a conversation between the tax agent employee (yourself) and Wilma Rabble (the client). The conversation should be around five minutes long.
Following your meeting with the tax partner (Scenario 1), you will receive feedback from your assessor. You then need to verbally advise Wilma that you wish to apply to the ATO for a ruling in respect of the payment to Milo.
In your role-play, you need to discuss with Wilma the following:
•The purpose of obtaining a private ruling Including:
odeductibility of these payments depends on facts of the situation
oprotects against possible penalties
•Advise Wilma of the firm’s fee for preparing the ruling.
•Seek authorisation from Wilma to proceed with preparing and lodging the ruling.
Your role play will be used as part of the overall evidence requirements of the unit.
You should refer to the list of criteria provided in the Observation Checklist to understand what skills you need to demonstrate in this section of the assessment. This Checklist outlines the Performance Criteria, Performance Evidence and Assessment Conditions your assessor will be marking you on.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Observation Checklist – Scenario 2 – Tax agent and client
Use this Checklist to understand what skills you need to demonstrate in the role-play scenarios. A separate Checklist will be used for each scenario. The Checklist details the assessment criteria used to determine whether you have successfully completed this assessment event. All the criteria must be met. Your demonstrations will be used as part of the overall evidence requirements of the unit.
OC Task/Activity S U/ Assessor Comments
# Performed S (Describe the student’s ability in demonstrating
the required skills and knowledge)
1Participates in verbal exchanges with a range of personnel.
2Uses questioning techniques to convey and clarify information and instructions.
3Uses active listening skills to elicit information and authorisation from the client.
4Considers whether others should be involved in making decisions using collaborative processes.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Task 4 Preparation of Partnership tax return
4(a) Prepare the partnership’s 2020 tax return in accordance with organisational policy and procedures. You will need to download a pdf version from the ATO website. For the purposes of preparing the final tax returns, assume that the ATO private ruling has been received advising that the $20,000 paid to Milo is deductible in full. Also, assume that SBE Decline in value provisions will be applied in calculating partnership net income.
You have also ascertained from the client’s Business Activity statements that $40,000 PAYG instalments have to be remitted in respect of the 2020 year of Wilma and $30,000 in respect of Barney.
To prepare the partnership income tax return may use the data from the Excel worksheets you prepared in FNSACC601_AE_CS_2of3_SR_1of2.xlsx
The partnership return for the financial year ending 2020 can be downloaded from the ATO’s website: https://www.ato.gov.au/uploadedFiles/Content/IND/ Downloads/Partnership-tax-return-2020.pdf
Once completed, the return should be saved as an electronic file in PDF format and named FNSACC601_Family name_First name_Tax return.pdf. Submitted to your assessor for marking.
4(b) Describe the key sources of information and taxable transactions data required to calculate the partnership net income for each of the following components (200 – 300 words)
(i) Allowable
deductions
(ii)Capital gains
(iii)Financial adjustments, including write-offs and revaluations
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
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STUDENT NAME:
(iv)Income
(v)Payments to associated persons
(vi)
Superannuation
payments
Task 5 Letter to client
Prepare a letter to Wilma and Barney to present their tax returns. Your assessor will be assessing your Report using the Assessment Checklist at Appendix 2. Prepare the letter as a word document. Include in the letter the following:
•Request for authorisation and endorsement for lodgement via declaration statements which meets legislative requirements for the client(s) to sign.
•Instructions for review and lodgement date ensuring ATO timelines are met.
•Information about any tax payment/obligations required to be made and applicable dates.
•Instructions about the steps required to lodge the income tax return.
•Responses to questions presented in client’s letter.
•Additional expenses that have been claimed.
•The outcome of ruling request.
Assume, for the purposes of this letter, that you have prepared the Individual tax returns for William and Barney.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
APPENDIX 1
Letter from Wilma and Barney Rabble
(Source Documentation Wilma and Barney Rabble)
Dear Tax Agent,
It was great meeting you last week. Please find enclosed the partnership profit and loss statement and Balance sheet and other information you requested relating to our 2020 partnership and individual income tax returns.
Partnership
•We do not use small business concessions but would like to minimise our tax liability.
•Our home address is a 220 Yellow Street Willoughby 2068.
•Wilma’s TFN is 666 555 000.
•Barney’s TFN is 777 666 222.
•Total Loan Repayments made to Wilma $80,000 including $63,000 interest.
•The opening balance of accounts receivable was $30,000.
We would also like you to consider the following as we believe they may affect our tax returns.
Included in the salary and wages is $20,000 paid to our daughter Milo (age 17), Milo works on reception for us 3 afternoons a week after school. She worked for 48 weeks of the year Can we claim all of this?
As discussed with you we sold the premises in which we were operating the business and decided to lease the premises. You mentioned that we might have to pay capital gains tax on this. How do we do that?
We received $835,000 from the disposal on 1/7/19 after $15,000 agent fees. We purchased the property in 2013 for $495,000.
During the year, we spent $20,000 on new massage tables. We have included these in our plant and equipment in our balance sheet
During the year, we took out the following amounts for personal expenses:
•Wilma-100,000.
•Barney-140,000.
A receipt has also been obtained for a donation of $3,000 made by Wilma to the Red Cross.
As discussed, we authorise you to prepare our 2020 partnership and individual tax returns. Please let us know if you have any further questions.
Kind regards,
Wilma and Barney.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
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STUDENT NAME:
A
WB Physiotherapy Clinic
Profit and loss statement
for the year ending 30 June 2020
Income
Cash sales $615,000
Less Expenses
Salaries paid to employees $186,000
Rent of premises after sale of freehold $90,000
Bad debts 2,500
Interest paid to Wilma 63,000
Superannuation contributions on behalf of $15,000
Wilma
Superannuation contributions on behalf of $5,000
Barney
Supplies and overheads $27,300
Depreciation $25,000 $413,800
Net profit $201,200
WB Physiotherapy Clinic
Balance sheet as at 30 June 2020
Current Assets 272,600
Cash at Bank 162,600
Deposits at call 70,000
Debtors 40,000
Non-Current assets 487,400
Plant and Equipment 507,400
Less accumulated depreciation 20,000
Total assets 760,000
Current Liabilities 160,000
Loan—Wilma 150,000
Document title: FNSACC601_AE_CS_2of3 Page 1 of 8
Resource ID: TBS_18_008_FNSACC601_CS_2of3 STUDENT NAME:
Creditors 10,000
Total Liabilities
NET ASSETS 600,000
Partners equity 600,000
Capital—Wilma 350,000
Capital—Barney 250,000
You have previously reviewed the partnership agreement that you have received at the initial meeting and extracted the following:
•All profit and losses are to be distributed equally after allowing for interest on capital at 6% and interest on drawings at 9%. It also states that Partnership income is equally spilt after considering salaries.
•Partnership TFN 123 123 123.
•Partnership ABN 84765555.
•Post address PO BOX 555 Willoughby 2068.
•Main business physiotherapy clinic.
•The physiotherapy clinic has been operating since 1 July 2007.
•The business does not sell on the internet.
•Main business address 12 Green Willoughby.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
APPENDIX 2
Assessment Checklist for Client letter required in Task 5
The Criteria checklist will aid the student to ensure they have completed relevant criteria in all correspondence to the client. Your assessor will be marking your submission using the Criteria in this checklist.
AC# Assessment Checklist S US Assessor Comments
Uses clear language, correct
1 terminology and conventions
for the audience and
purpose.
Student has presented tax
2 documentation to the client
for verification and approval.
Student advises client of
current tax obligation
encompassing all income and
3 deductions including capital
gains, SBE concessions,
partners superannuation
contributions and payments
to associated persons
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
Assessment Feedback
This section is to be completed by the assessor. Once feedback has been provided by the assessor you will be given the opportunity to respond.
Additional evidence for verification of assessments
Additional questions asked by the assessor
Assessors may ask additional questions to clarify student understanding. List here any additional questions that were asked during this assessment event.
Student responses to additional questions
Record the student responses to any additional questions that were asked during this assessment event.
Document title: FNSACC601_AE_CS_2of3
Resource ID: TBS_18_008_FNSACC601_CS_2of3
Page 1 of 8
STUDENT NAME:
NOTE: This section must have the assessor signature and student signature to complete the feedback.
Assessment outcome
☐Satisfactory
☐Unsatisfactory
Assessor Feedback
☐Has the Assessment Declaration on page 1 of the assessment been signed and dated by the student?
☐Are you assured that the evidence presented for assessment is the student’s own work?
☐Was the assessment event successfully completed?
☐If no, was the resubmission/re-assessment successfully completed?
☐Was reasonable adjustment in place for this assessment event?
If yes, ensure it is detailed on the assessment document.
