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T-1.8.

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Details of Assessment
Term and Year T3 2016 Time allowed Week 8
Assessment No 2 Assessment 50%
Weighting
Assessment Assignment
Type
Due Date Week 8 Room E: 711 / D: 609

Details of Subject
Qualification FNS60215 Advanced Diploma of Accounting
Subject Name Tax Plans and Compliance
Details of Unit(s) of competency
Unit Code and FNSACC603 Implement Tax Plans & Evaluate Tax obligations
Title

Details of Student
Student Name

Student ID College

Student Declaration: I declare that the work Signature: ___________________________


submitted is my own, and has not been copied
or plagiarised from any person or source. Date: _______/________/_______________

Details of Assessor
Assessors Name Saif Uddin Ahmed / Ashraful Minhaz

Assessment Outcome

Satisfactory Not
Results Marks / 50
Satisfactory

FEEDBACK TO STUDENT
Progressive feedback to students, identifying gaps in competency and comments on positive
improvements:
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________
Student Declaration: I declare that I have Assessor Declaration: I declare that I have
been assessed in this unit, and I have been conducted a fair, valid, reliable and flexible
advised of my result. I also am aware of my assessment with this student, and I have
appeal rights and reassessment procedure. provided appropriate feedback

Student did not attend the feedback session.


Feedback provided on assessment.

Signature: ____________________________ Signature: ____________________________

Date: ____/_____/_____ Date: ____/_____/_____

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Purpose of the Assessment

The purpose of this assessment is to Assessment Compet Not Yet


assess the student in the following 2: ent (C) Compete
learning elements and performance
criteria of the unit :
nt
(NYC)
Element 1: [Assess legal entity's tax
obligations]
1.1 Quantify history and trends of legal
entity's tax obligations arising from its
historical taxable transactions, using
standard accounting techniques
1.2 Analyse data from current transactions
to resolve
discrepancies and ambiguities and confirm
suitability of legal entity
1.3 Conduct research to identify updates or
additions to compliance requirements
relevant to maximising client's benefit and
establish recording and reporting
requirements
1.4 Identify legal entity's tax obligations by Part a, Qi
analysing data on taxable transactions

1.5 Schedule payments of tax obligations Part a, Q iv, vi


by applying
methods of determinations and tax bases
Element 2: [Develop tax plans]

2.1 Assess implications of schedule on tax Part a, Q iv, vi


entity's operations and structure
2.2 Develop financial management Part a, Qii
strategies to ensure alignment of cash flow Part a, Q vii
with incidence and schedules of tax
obligations
2.3 Develop management process and Part a, Qiii
record-keeping systems to implement Part a, Q viii, ix
financial management strategies and
ensure maintenance of audit trail
2.4 Document management processes that Part a, Qv
include application of compliance
requirements
2.5 Estimate future taxation obligations Part b
from income and expenditure forecasts
using standard accounting techniques

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Element 3: [Evaluate and advise on tax


plan]
3.1 Prepare budgets in accordance with Part b
income and expenditure forecasts, and
periodically review to ensure accuracy of
tax obligation estimates
3.2 Analyse variances between actual Part b
tax obligations and tax plan to identify
errors or adjustment required to financial
management strategies or management
process
3.3 Monitor and evaluate performance of Part b
tax plans and advise accordingly
3.4 Monitor and review tax documentation Part c
to ensure it complies with legislative and
professional requirements

3.5 Analyse evidence of non-compliance to Part c


diagnose origin and develop resolution

Assessment/evidence gathering conditions


Each assessment component is recorded as either Satisfactory (S) or Not Satisfactory (NS). A
student can only achieve competence when all assessment components listed under Purpose of
the assessment section are Satisfactory. Your trainer will give you feedback after the completion
of each assessment. A student who is assessed as NS (Not Satisfactory) is eligible for re-
assessment.
Resources required for this Assessment
All documents must be created in Microsoft Word
Upon completion, submit the assessment printed copy to your trainer along with
assessment coversheet.
Refer to the notes on eLearning to answer the tasks
Any additional material will be provided by Trainer
Instructions for Students
Please read the following instructions carefully
This assessment is to be completed according to the instructions given by your assessor.
Students are not allowed to take this assessment home.
Feedback on each task will be provided to enable you to determine how your work could be
improved. You will be provided with feedback on your work within 2 weeks of the
assessment due date. All other feedbacks will be provided by the end of the term.
Should you not answer the questions correctly, you will be given feedback on the results and
your gaps in knowledge. You will be given another opportunity to demonstrate your
knowledge and skills to be deemed competent for this unit of competency.
If you are not sure about any aspects of this assessment, please ask for clarification from
your assessor.
Please refer to the College re-assessment and re-sit policy for more information.

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Case Study:

Part a:
(25 marks)
You are working as a tax accountant in a chartered accounting firm. One of
your clients Clear View Pty Ltd (a resident private company) sent you the data
file generated from the integrated financial software. You have now run the
data file in your integrated financial software and generated the P & L
statement and Balance sheet.

Required:

i. Please use the P & L Statement, Balance Sheet and other notes to the
accountant to:
a) Calculate Taxable Income (5 mark)
b) Calculate Tax Payable/Refund (5 mark)

General information
Tax File number 987654321
ABN 123456789101
Postal Address 20 Pitt Street, Sydney NSW 2000
Main business Computer specialists
Tax agent Mr Harry Johns of Harry Johns & Associates
100 George Street, Sydney NSW 2000
Phone 9788-6549
Tax agent number 45678 001
Public Officer Mr John North
Phone 9657-1234
P & L Statement
Income $ $
Gross sales 1,300,000

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Less COGS
Purchases 500,000
Plus opening stock 40,000
540,000
Less closing stock 50,000
490,000 490,000
Gross Profit 810,000 810,000
Fully franked dividend 70,000
Interest received 120,000
Expenses 1,000,000
Wages 300,000
PAYG Instalments 50,000
Accounting depreciation 110,000
General expenses 78,000
Bad debts 4,000
Doubtful debts 17,000
Legal expense (note 2) 40,000
Rent paid 90,000 689,000
Net Profit 311,000

Notes to accounts
(1) Decline in value for taxation purposes is $130,000.

(2) The legal expense of $40,000 was for an unsuccessful takeover of a


competitor.

BALANCE SHEET AT 30 JUNE 2015


$ $
Current Assets 536,000
Cash at bank 451,000
Account receivable 35,000
Closing stock 50,000

Non Current Assets 189,000


Machinery 39,000
Land 150,000

Total Assets 725,000

Current Liabilities 45,000


Account payable 40,000
GST Payable 5,000

Non current liabilities 130,000


Mortgage 130,000

Less Total liabilities 175,000

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Net Assets 550,000

Equity 550,000
Share capital 100,000
Retained earnings 450,000

Note that there was no personal services income, no internet trading, no


international dealings, no overseas interests, no thin capitalisation, no foreign
source income and no transactions with specified countries.

ii) Advise the financial management strategies the business followed that
assisted optimum tax position. (2 mark)

iii) As an accountant what organisational policy and procedures you must


follow in relation to the preparation of tax documents of Clear View Pty
Ltd? (2 mark)

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iv) What is the payment due date of Clear View Pty Ltd? (1 mark)

v) As a part of the document management process what would you do to


ensure that your tax return satisfies the compliance requirements? (2
mark)

vi) Based on your finding above what is the BAS lodgement due dates of
Clear View Pty Ltd? (2 mark)

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vii) Clear View Pty Ltd has provided an extract of their forecasted cash flow
and you have prepared the BAS for the September quarter. (2 mark)

Extracted forecasted cash flow

September October November December

Estimated $30,000 ($70,000) ($50,000) $10,000


Closing
bank
balance

Required:
Clear View Pty Ltd reports and pays GST quarterly. From the above information
what would you bring to the attention of your client regarding the tax (GST)
obligations?

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viii) Keeping good records is essential for people in small business.


Maintaining good records of your transactions and tax invoices will help
you to manage your cash flow and make sound business decisions. It will
also make it easier for you to meet your tax obligations, and potentially
save you time and money in the future.

Why is it important for Clear View Pty Ltd to maintain a good record-
keeping systems? (2 mark)

ix) As a tax planner your ethical responsibility is to advise Clear View Pty Ltd
about the business records they need to keep as it ensure a sound audit
trail. List the business records that you would advise Clear View Pty Ltd to
keep. (2 mark)

Name Elements

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Part b:
(20 marks)

i) You are an external accountant working for your client Authentic Pty Ltd.
The company has provided you the following cash flow budget. (10
marks)

Instruction:
Double click on the spreadsheet below to make the spreadsheet active
and then apply formula to complete the Cash Flow Statement.

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You , as the accountant, in consultation with management of Authentic Pty Ltd, has
made the following forecasts to assist the group to plan for the coming quarter:
Sales (product 1) is $200,000 in June. This sales is expected to be increased by 10%
each month.
Sales (product 2) is $150,000 in June. This sale is expected to be increased by 5% in
next two months and 10% in the third month
Interest income is in June $1,500. This expected to be increased by 1% each month in
the September quarter.
Accounting and legal fees is $1,000 in June and expected to be increased by 1% in the
each following month.
Advertising and promotion is 20% of each months total sales
Business loan payment is $10,000 each month as the loan was taken on 3 years fixed
rate
Interest and bank charge is $120 each month

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Printing, postage, stationary and packaging cost was $800 in June. Due to following
Green Environment policy, the business is expected to reduce this cost by 1% each
month from July.
Rent of business premise is $2000 each month. This is expected to be increased by 1%
in the third month of the budgeted quarter (Jul-Aug-Sept).
Telephone bill is 2% of each months advertising and promotion expense.
Utility bill is 0.3% of total sales
Wages and salaries are 2% of each month for the first two months of the quarter. But
due to forecasted increased commission in the last month of the quarter, the wages
and salaries are expected to be 3% of that months sales.
Opening cash for the month of July is $120,000.

Requirements:
a) Based on the given information above complete the forecasted Cash Flow
Statement. (8 marks)
b) Review the periodic closingcash balance. Do you think the company can be able
to pay the estimated tax obligations? Justify your answer. (2 marks)

ii) The following data (Next Page) of an actual and budgeted P & L has been
generated from an integrated financial software system of Authentic Pty
Ltd. You continued to work as a tax accountant and tax planner for
Authentic Pty Ltd. (8 marks)

Required:

a) Calculated the budgeted and actual tax obligations


b) Analyse the variance between actual and budgeted tax obligations.
c) Identify which areas need to be addressed to improve the tax
obligations.
d) What tax plans you can advise accordingly after evaluating the
variance analysis?

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Profit & Loss Statement


December 2015

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c) Identify which areas need to be addressed to improve the tax obligations.


(1 mark)

d) What tax plans you can advise accordingly after evaluating the variance
analysis? (1 mark)

iii) It is a legislative and professional requirement to monitor and review the


tax documentations Justify this statement. (2 marks)

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Part c:
(10 marks)

Case Study:

Graham, the owner of a small consultancy in Victoria, thought he could boost


his income by creating false companies and submitting fraudulent activity
statements to the ATO. Thinking that the sheer volume of activity statements
the ATO processes would allow him to slip under the radar undetected, he
created 17 bogus companies and submitted fraudulent activity statements for
each of them.

However, instead of the hefty GST refund he expected, Graham received a


rather sever lesson in the ATOs ability to detect fraud and evasion by working
with other government agencies, on this occasion, the Australia Federal Police.

The QTO quickly identified his claims as suspect. Before GST refunds are
issued, all claims are automatically checked against a set of criteria to detect
incorrect or fraudulent statements.

In this case, the GST Identity Fraud Model picked up some very clear fraud
characteristics in the series of activity statements lodged. Once detected, the
ATO undertook a detailed investigation where it became evident that a serious
offence had occurred.

His home and business premises ere raided and documents and his laptop
computer seized. Computer forensics easily detected the fraudulent drivers
licences, passports and birth certificates used to register the bogus companies
and create bank accounts for the GST refunds.

Graham was charged with obtaining and attempting to obtain a financial


benefit by deception. He was sentenced to five years imprisonment and had to
pay $312,075 reparation.

The judge said that fraud on the Commonwealth revenue was a serious offence
which must be dealt with by way of custodial sentence. He pointed out that it
was not just fraud on the ATO but fraud on the community as a whole.

Requirements:

What review techniques ATO may have applied to analyse evidence of non-
compliance to
diagnose origin of fraudulent and dishonest business operations of Graham? (5
marks)

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What are the evidences of non-compliance which prompted ATO to conduct an


investigation and
develop a resolution? (5 marks)

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