HA3042 TAXATION LAW

TRIMESTER 1, 2016
INDIVIDUAL ASSIGNMENT 1
Assessment Value: 20%
Instructions:
This assignment is to be submitted in accordance with
assessment policy stated in the Subject Outline and Student
Handbook.
It is the responsibility of the student who is submitting the work, to
ensure that the work is in fact her/his own work. Incorporating
anothers work or ideas into ones own work without appropriate
acknowledgement is an academic offence. Students should
submit all assignments for plagiarism checking on Blackboard
before final submission in the subject. For further details, please
refer to the Subject Outline and Student Handbook.
Answer all questions.
Maximum marks available: 20 marks.
Due date of submission: Week 7 (Melbourne); Week 6 (Sydney
and Brisbane).

Question 1 (5 Marks)
Hilary

is

well-known

mountain

climber.

The

Daily

Terror

newspaper offers her $10,000 for her life story, if she will write it.
Without the assistance of a ghost writer, she writes a story and
assigns all her right, title and interest in the copyright for $10,000
to the Daily Terror. The story is published and she is paid. She has
never written a story before. She also sells the manuscript to the
Mitchell Library for $5,000 and several photographs that she took
while mountain climbing for which she receives $2,000.

Requirement:
Discuss whether or not the three payments are income from
personal exertion. Would your answer differ if she wrote the
story for her own satisfaction and only decided to sell it later?

Question 2 (5 marks)
Your client is a parent who lent $40,000 to her son to provide a
short-term housing loan. The agreement is that the son will repay
$50,000 at the end of five years.

Reconsider this question in light of the following facts. The loan was
made to the son without any formal agreement and without any
security provided for the sum lent. In addition, the client (the
mother) has informed you that she told her son that he need not
pay interest. However, the son repaid the full amount after two
years and included in his payment an additional amount which was
equal to 5% pa on the amount borrowed. Only one cheque was
presented for the total amount.

Requirement:
Discuss the effect on the assessable income of the parent.

Question 3 (10 Marks)

Scott is an accountant who purchased a vacant block of land in
Brisbane on 1 October 1980. On 1 September 1986, Scott built a
house on the land. At the time, the land was valued at $90,000 and
the cost of construction was $60,000. The property has been rented
out since construction was completed. On 1 March of the current tax
year, Scott sold the property at auction for $800,000.

Requirement:
a) Based on the information above, determine Scotts net
capital gain or net capital loss for the year ended
30 June of the current tax year.

b) How would your answer to (a) differ if Scott sold the

property to his daughter for $200,000?

c) How would your answer to (a) differ if the owner of the

property was a company instead of an individual?