Faculty of Business and Law

Swinburne Business School

ACC30005 Taxation
Semester One 2019

Group Assignment

DETAILS

DUE DATE MONDAY 20H MAY 2019

Required: Case Study/Partnership Tax Return

Length: 2000 to 2500 words Maximum. Any assignment exceeding

this by greater than 10% (i.e. 250 words) will receive a zero
grade.
Weighting:
The assignment marks total 20 and it is worth 20% of the
unit’s total assessment

Submission:
On-line via Canvas site (Late assignments –penalty 10%
per day)

INSTRUCTIONS

1. The Assignment must be prepared in groups of three students. Keep a copy.

2. Candidates must attach a standard assessment cover sheet with their assignment signed
by all group members which is available from the current student’s web site.

3. Assignments are to be written in the candidates own words. The use of unacknowledged
directly copied material may result in zero marks. See Page 8 of the Unit Outline re
Plagiarism.

4. Marks will be awarded to the candidate based on the detail provided and correctness of
their response.

5. Candidates must apply the IRAC principle when addressing the relevant issues (i.e. I=
Identify the key issues, R= Cite the relevant legislative provisions and case law (rules)
where appropriate, A = apply the relevant rules to the facts presenting arguments for and
against and C = form a conclusion based on your stronger argument).

6. If candidates need to make assumptions when responding to any question, the assumption
and the reason for the assumption must be clearly specified in their response.

GOOD LUCK

1
Business Overview

Joe and Mary Wilson own an office furniture retail business in partnership called “Bush
Furniture,” which operates in Malvern, Victoria. The business has operated from these
premises for 20 years. The Wilson’s decided to expand their business and have recently
opened a new store on the 1 March 2019, in Glen Waverley.

Each year the Wilson’s go overseas to an “Office Fair,” to become aware of new developments
in the office furniture business. This financial year the fair was in London where they were
fortunate to sign a franchise agreement to distribute “Nortle” a new range of office equipment.
The cost of the franchise included a “sign on” payment of $25,000 plus a payment of 7 ½ %
of sales revenue on this merchandise.

While Joe and Mary own the shop in Malvern they decided to lease the premises in Glen
Waverley. One of the reasons for doing this was because of the offer of a lease incentive by
way of a six month rent free period and a free fit out, valued at $25,000.

In December 2018, the Wilson’s became aware that a developer had sought approval to
redevelop the Glen Waverley site. As a result they spent $5,000 in legal costs in successfully
opposing the development.

Results of the Business Operations for the year ended 30/6/19 were:

Cash receipts $
Sales to Customers 1,056,625
Sales Bonus 25, 000

Cash expenditure $
Purchase of Stock 506,315
Salaries 235,000
Set up costs 13,500
Rental payments 120, 000
Telephone 2 585
Electricity 2,560
Overseas travel expenses 14,750
Franchise: Cost 25,000
Royalty 15,000
Car expenses(Running costs) 22,500
Legal costs 5,875
Advertising 12, 500
GST 30, 000
Furniture 24, 600
Entertainment 8,350
Gas 2,100
Miscellaneous 1,750

Notes:
$
(i) Outstanding creditors 30/06/19 12,300
Outstanding debtors 30/06/19 76,000

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At the year ending 30/6/19 a provision for doubtful debts has been raised equal to 1.5% of
sales. During the year $12,750 of outstanding debts were written off as bad.

(ii) Opening stock:

Cost 451,750
+Purchases 506,315
-closing stock at cost 523,650

Closing stock values: 30/6/19

Cost 523,650
Replacement Cost 602,312
Market Selling Value 830,000

At the end of the year a stocktake reveals that some of the stock is obsolete.
Consequently, a write down of stock (at cost of $12,000) has been made to $8,000.

(iii) Office Furniture:

Opening adjusted value 200 000

Acquisition of furniture during 2018/19: Cost Acquis date

Desks and Chairs 1,750 01/07/18
Computers 15,600 08/07/18
Partitions 7,250 10/07/18

(iv) Car Expenses related to the following vehicles: Cost Acquis date
Toyota Hi Ace 21,500 21/08/11
Toyota Delivery van 30,000 11/10/12
Holden Statesman* 45,000 07/11/13
Volvo * 65,000 04/03/14

* The two cars are used by Mary and Joe Wilson and it is estimated that they are used 45%
for Business.

During the year on 1/4/19, the engine in the Delivery van broke down. As a result a new
engine was put in the van at a cost of $4,500. The engine was a more powerful engine
modified to run on gas.

(v) Set- Up Costs - New Premises:

Stock removal and relocation 3,750
Staff Training 5,180
Special cabinets and office set up 4,570

(vi) Salaries:
General Staff 135,000
Wages – Joe 50,000
– Mary 50,000

(vii) Overseas Travel

Airfare 8,000
Accommodation 4,000
Fare Registration 500
Meals and incidentals 2,250

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(viii) Entertainment
Christmas Parties-staff 850
Clients 7,500

(ix) Sales Bonus

The sales Bonus of $25,000 was received from Centurion Office Manufactures for
“Bush Furniture” achieving the highest sales for their products in the June Quarter.

(x) Legal Costs

Redevelopment Action 5,000
General 375
Lease Agreement 500

REQUIRED:

You have been approached by Joe and Mary Wilson in your capacity as their tax agent. They
have asked you to prepare the necessary documentation to meet the tax compliance
obligations for “Bush Furniture,” for the income year ending 30 June 2019.

Prepare a letter of advice which identifies all relevant tax issues, critically analyses and
applies the taxation treatment to the issues, i.e., you will need to argue and support your view
and consider differing views (if applicable), and finally, indicate your recommended action
based on your better view, i.e., your conclusion (IRAC principle).

You must ensure that your analysis used to determine your recommended action is fully
supported with relevant authority, for example, tax legislation and case law.

In addition, you must prepare a Partnership Tax Return (2018 OK) for “Bushfurniture” for the
year ending 30/06/19 based on the information you have, including notes and supporting
schedules where appropriate. In this regard the assignment will require you to undertake your
own research, since it will cover some areas which will not be dealt with explicitly in lectures.
(Tip See https://www.ato.gov.au/Forms/Partnership-tax-return-instructions-2018/)

The letter must not exceed 2,500 words, excluding footnotes, the reference list and
Partnership return. Assignments exceeding 2,750 words (10%) will not be assessed and you
will receive zero marks (fail grade). You must indicate your word count on the cover sheet.

[Total 20 marks]

* * * * * *
Please note in the interests of equity to all students, academic staff will not be able to
provide any assistance with this assignment.

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 Your work will be assessed using the following marking guide:

No pass Pass Credit Distinction High Distinction

Criteria:
50- 60‐69% 70‐79% 80‐
59% 100%
Presentation Did not Satisfactory format Good format and Very good format and Excellent format
(5%) meet and layout, layout, grammar, layout, grammar, and layout,
criterion grammar, spelling spelling and footnoting grammar,
spelling and
. and footing and referencing. spelling and
referencing. footnoting and footnoting and
referencing. referencing.
Identification Did not Identified some Identified some issues Identified most issues Identified all
of key issues meet issues. although gave and gave both correct issues and gave
(15%) criterion and incorrect weight to correct weight to
incorrect weight to
. minor and major issues. minor and major
minor and major issues.
issues.
Correct Did not Cited some Cited some relevant Cited most relevant Cited all relevant
citation of meet incorrect legislation and case legislation and case law legislation and
relevant criterion legislation and case case law and
law
legislation and law rulings where
case law appropriate
(20%)

Appropriate Did not Satisfactory Good application of Very good application Excellent
application of meet application of the the law to the facts of the law to the facts application of the
the relevant criterion law to the facts and presented both law to the facts
and presented only
law to the sides of the argument and presented
facts one sided arguments with sound analysis both sides of the
presenting argument with
opposing through analysis
arguments
and analysis
(40%)
Summary and Did not Satisfactory Good conclusion Very Good summary Excellent
conclusion meet conclusion but was based on one side of and conclusion based on summary and
based on the vague did not the argument the stronger argument conclusion based
criterion
stronger follow analysis on the stronger
argument argument
(10%)

Preparation of No figures or Figures and Figures and information Figures and information Figures and
Partnership Tax information information provided provided partly correct provided mostly correct information
Return although generally (attempted support (attempted support provided correct
(10%) incorrect no (support schedules) schedules) (support schedules
schedules) correct)