Save your work with the filename <Name_StudentID_SubjectName_AsstNumber>,

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Family Name: Given Name:

Garzon Vargas Wilson Andres

Student ID:                                                                   Course:

S40064628 Advance diploma of accounting

Subject:                                                                        Trainer’s name:

Tax documentation

Declaration: I certify that this assignment is entirely my own work. I have provided full
referencing to the work of others. The material in this paper has not been submitted
before.

IMPORTANT – READ THIS FIRST

PLAGIARISM:  You must compose your answers in your own words.  Simply pasting
text from the Internet OR the APC workbook may result in a failing grade.  It is better
to write your own thoughts in your own words – even if your English is not perfect –
rather than copy word-for-word the thoughts of someone else.

SUBMITTING IDENTICAL ANSWERS: You may discuss your assessments with other
students, but submitting identical answers to other students may result in a failing
grade.  Your answers must be yours alone.

TUTORIALS:  Tutorials are run every week to help you answer the assessments.  The
schedule for tutorials will be announced during the first week of term.  You are urged
to attend the tutorial that pertains to your online subject.

Assessment 1
Part A – Written or Oral Questions
1. List ALL the steps (including the formulas) about the calculation of net tax
payable for an individual taxpayer. (5 marks)

NET TAX PAYABLE

Taxable income = assessable income – allowable deductions.

Net tax payable= (taxable income * applicable tax rate) – tax offsets

1. we need to determine the taxpayer taxable income for an individual person

depending if its resident or not for tax purposes.
2. calculate the income tax liability according to applicable tax rates give it for the
ATO.
3. Calculate taxpayer tax offsets to reduce the amount of tax payable from
income and it can be name as deductions and those depending of work activity
and money earned during the financial year.
4. Obtain the tax offset from tax liabilities
5. Can be necessary to find levies and surcharges. It can be Medicare levy and it
can be deducted depending the earnings.

Resident individuals
EXHIBIT 1-6: Tax rates for resident individual taxpayers 2014-15 and 2015-16
Source: ATO website <https://www.ato.gov.au/Rates/Individual-income-tax-rates/>

Taxable income Tax on this income

0 - $18,200 Nil
$18,201 - $37,000 19c for each $1 over $18,200
$37,001 - $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000

Notes:
The above rates do not include the:
 Medicare levy of 2%; and
 Temporary Budget Repair Levy which is payable at a rate of 2% for taxable incomes over
$180,000.

WORKBOOK | © 2019 YOUNG RABBIT PTY LTD, AUSTRALIAN PACIFIC COLLEGE

FNS60215 & FNS60217 ADVANCED DIPLOMA OF ACCOUNTING | TAX
DOCUMENTATION_V1.5

2. You have prepared the tax return for one of your clients Peter. He, single, is
an Australian resident for tax purposes. His taxable income is $92,000. There
are not any reportable fringe benefits, total net investment losses, reportable?
super contributions and exempt foreign employment income applicable to
his case. You sent a copy of documentation to Peter for his approval, and in
turn, he sent you an email to ask why he would need to pay $920 as Medicare
levy surcharge apart from the Medicare levy of $1,840. In his email, he also
asked you to advise the options he can adopt to exempt from Medicare levy or
Medicare levy surcharge. What will you reply to Peter? (5 marks)

Income $ 92000
Medicare need to pay $920
Medicare levy $ 1840

92000 x 2% = 1840 MEDICARE LEVY

92000 x 1% = 920 MEDICARE SURCHARGE

In this case peter will need to pay Medicare levy but if he wants to get exempt from
Medicare surcharge he will need to get private health insure. To get exempt he will
need to get the private hospital cover provide for health insure for more than 500
dollars.

3. List 14 principles about Code of Professional Conduct that will apply to all
registered tax agents and BAS agents. (7 marks)

 act honestly and with integrity

 comply with the taxation laws about personal affairs
 if you receive money or other property from or on behalf of a client and you
hold the money or other property on trust you must account to your client for
the money or other property
 act lawfully in the best interest of your client
 adequate arrangements to manage conflicts of interest that affect the activities
and capacity of a registered tax agent or BAS agent
 you most not disclose any information relating to a client’s affairs to a third
party, unless you have a legal duty to do so.
 The service provide on your behalf is provided competently
 Maintain knowledge and skills relevant to the tax agent services.
 Take reasonable care in ascertaining a client’s state of affairs, to the extent that
ascertaining the state of those affairs is relevant to a statement you are making
 Reasonable care to ensure that taxation laws are applied correctly to the
circumstances in relation to which you are providing advice to a client
 Not knowingly obstruct the proper administration of the taxation laws
 Advice your client of the rights and obligations under the taxation laws.
 Maintain the professional indemnity insurance that the board requires you to
maintain
 Respond to request and directions from the board in a timely, responsible and
reasonable manner.
4. What are the major rules in relation to record keeping prescribed by ATO?
(3 marks)

by law taxpayers are required to keep certain taxation record.

 Section 262A TAA 1936 requires those carrying on a business to keep records
that record and explain all transactions that may be relevant for the purposes
of the taxation act.
 Must have to be in English and have to be kept in writing or computer output.
 Usually this records have to be keep for five years after the records were
prepared.
 Penalties will apply for failure to keeping the records.

WORKBOOK | © 2019 YOUNG RABBIT PTY LTD, AUSTRALIAN PACIFIC COLLEGE

FNS60215 & FNS60217 ADVANCED DIPLOMA OF ACCOUNTING | TAX DOCUMENTATION_V1.5

5. What are the features in taxation for the following types of entities?

a. Sole trader; is owned and controlled by an individual and has unlimited liability
for the debts of the business. As a sole trader it’s the simple structure where
the operator work under his own register name.
 Do not need separate TFN
 Business income include as a personal income
 Apply for ABN to use it for business dealings
 Apply for GST if turnover of 75000 dollars
There are some disadvantages and it includes the high taxes that the person will need
to pay if the taxable income exceeds certain level. Also as a sole trader you wont be
allow to claim deductions for money drawn from the business.

b. Partnership; it works when associate people who carry on a business as

partners and distribute income or losses between themselves. In this case for
law have to be a document to represent the partnership agreement where
profits and losses are equally amongst the partners

 A partnership is not a separate taxable entity and is not assessed on its taxable
income and a partnership does not pay income tax on the profit it earns.
 Have its own TFN
 Own ABN
 Apply for GST if turnover of 75000 dollars
 The partnership net income is split between partners
 Cannot claim deductions for money drawn from the business.

c. Trust; it’s a relationship between the trustee and beneficiary where the trustee
holds property or assets for the benefit of the beneficiary.
  Its not a separate legal entity
 Must have its own TFN
 Own ABN
 Apply for GST if turnover of 75000 dollars
 Any losses are trapped within the trust and cannot be distribute to
beneficiaries.

A trustee is legally responsible for the operation of the trust.

d. Company; A company is a distinct legal entity which is regulated by the

Australian Securities & Investments Commission (ASIC). The features of a
company business are:
 Apply for TFN company register under the corporations ACT 2001 is
entitle to an ABN
 The money a business earns belongs to the company, not individuals.
 A company is a taxpayer for tax purposes
 A company pays income tax on its assessable income at the rate of 30%
 Company pay a minimum of 9.5% of their ordinary time earnings as
superannuation’s guarantee contributions.

e. Superannuation fund.
Features
 Rules governing fund
 Singe investment option or stage investment strategies
 Basic levels of insurance cover

6. How will you identify and collect client data relevant to tax documentation
requirements? Discuss how the Privacy laws may impact how you manage
documentation and record. (10 marks)

data collection instruments its very important and essential to get the information
relevant about the client related to the taxes that’s why is very important to stablish a
good relationship the the costumers and demonstrate good interpersonal skills. God
communications between both parts is essential to guarantee a good process with the
taxes.

A check list of questions and issues that the adviser needs to required from the client
and in this way obtain all necessary information about circumstances of the client.
After this determine any deductions or tax offsets available for the client.

Privacy law refers to the core of all tax advice is data gathering and this process must
be competed as professionally and confidentiality as possible to guarantee to the client
that his information is save, also its important that the client know that all the
information collected to show to the ATO have to be recorded for five years and from
the tax agent he will need to return original documents related to the provision to the
clients.
7. You are preparing the company tax return for one of your clients, ABC Pty
Ltd. This company is exporting the woods from Australia to overseas. Paul,
the director of the company provided you all the necessary documents
including the bank statements and tax invoices based on your checklist.
When you sort out the documents, you find Paul gave you an invoice showing
that the company spent $6,000 for a piano. You were told by Paul that this
piano is placed at his home and his daughter will play the piano when
he invites his customers and suppliers to his home for Party in order to
maintain the business relationship with them. Provide the advice to Paul if
the company can claim deduction for this piano purchase.
(5 marks)

NO. the company cannot claim deduction for this piano because it is for private use
and its not use it for business purposes, also he cannot claim it because he got the
money from the business. It means the money that the money produces its from the
company.

8. What are the differences between ordinary income, statutory income, exempt
income and non-assessable, non-exempt income? (5 marks)

Ordinary  Personal earnings Determine the amount

income  Pensions benefits that have been received is
 Business income con considered income
Statutory  Dividend Amounts that the
income  Rents legislations specifies to be
 Trust distribution income
Exempt income  Government co contribution Some social security
 Exempt fringe payment and welfare
 Family tax benefits including rent assistant
 Payments to ASF and maintenance payment
Non assessable  Income from hobbies
 Gambling wins
 Gifts
 Lottery

Non exempt  GST payable Most foreign source

income  Reportable fringe income for temporary
 Non resident income resident and can get
 Government contribution to a superannuation benefits
first home saver account paid from taxed fund

9. Mary, one of your clients, is an Australian resident for tax purposes. She
comes to see you and ask you to prepare her 2015 tax return. In the first
meeting, she told you that she sold 1,000 units of ABC shares at $2.00 during
the year. She purchased these shares at $0.50 on 3 August 2012. What is the
tax implication of this event? How much income in this case will be taxed?
(5 marks)

1000 x 2 = 2000
1000 x 0.50 = 500

it means that Mary have (2000 – 500) = 1500 dollars taxable

for law if she was holding the shares for more than 12 months she is entitle for CGT
discount.

10. You are the registered tax agent, and received an email from Daniel, one of
your clients. He is currently operating a small business of coffee shop with
his wife (50:50 ownership) in the form of partnership. He asked you in the
email that how much tax he will pay for the partnership if the business profit
is expected to be $90,000, and which tax documentation will be required to
prepare and submit to the ATO. How will you reply to his email?

I will respond to his email explain that he the owner of 50 % it means his profit it’s the
half of the money (45000) and it is the income tax.

Resident individuals
EXHIBIT 1-6: Tax rates for resident individual taxpayers 2014-15 and 2015-16
Source: ATO website <https://www.ato.gov.au/Rates/Individual-income-tax-rates/>

Taxable income Tax on this income

0 - $18,200 Nil
$18,201 - $37,000 19c for each $1 over $18,200
$37,001 - $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000

Notes:
The above rates do not include the:
 Medicare levy of 2%; and
 Temporary Budget Repair Levy which is payable at a rate of 2% for taxable incomes over
$180,000.

each partner must declare their individual tax return, whether or not they have
actually received the income.
Because we don’t have more information at the moment we cannot calculate exactly
the tax. We will need first the accessible income.
(5 marks)

Assessment 1
Part B – Case Study
 Tax Documentation Preparation Requirements

You are the registered tax agent. Gary is your new customer, and comes to see
you for his 2015 tax return preparation. In the first meeting, he provided you the
following information:

 He has a full time job as a customer service manager;

 His employer contributed the superannuation to his super fund with the rate
9.5% on his total salary;
 He has three personal bank accounts;
 He received a dividend from a listing company;
 He is required to use his own car to visit the customers from his workplace
to the customers’ premises;
 He purchased a new laptop;
 He needed to wash, dry and iron his uniform with company logo at home, but
he does not have any written evidence to support his claim;
 He attended a course <Customer Service> at APC;
 He sold several shares during the year;
 He is not married, and does not have a private health fund with hospital
cover;
 He has an investment property and rent it out for income-generating
purposes.
He seeks your advice to the following issues:

1. He normally needs to drive his own car to the workplace, can he claim the
travel from his home to the workplace?

NO, because from the ATO only he can claim when he uses his car for work and in this
case when he uses it to visit the customers from his workplace to the customer’s
premises.

2. He needed to wash, dry and iron his uniform with company logo at home, but
he does not have any written evidence to support his claim, can he still claim
the laundry expenses in his tax return?

Yes, he can, but, he might need to record a diary or may have some evidence to show
how often he wash and iron his uniform.

3. What kind of the expenses can be claimed for investment property if it is used
for income-generating purpose?

For income generating purpose we can use deduction for rental

 Advertising for tenants;
 Body corporate fees.
 Borrowing expenses (i.e. the costs of obtaining finance, if they are over $100,
are deducted over the lesser of five years or the term of the loan);
  Cleaning;
 Council rates;
 Gardening or lawn mowing;
 Insurance;
 Interest on money borrowed to purchase or repair the property;
 Land taxes;
 Legal fees (collection of rental arrears, lease documents);
 Pest control;
 Property agent fees or commission;
 Certain repairs and maintenance;
 Stationery, telephone and postage;
 Travel expenses;
 Water charges; and
 Sundry rental expenses.

4. He asked you to send him a checklist that includes all the information and
documents he is needed to provide for his tax return preparation.

categories Records/ information needed

Work related expenses If its more than $300 you must keep
record of evidence such receipts and
invoices.
Tax file number Number given for the government to be
allow to work and record income.
Bank details BSB and account number
For e-tax Medicare card or number
Income from interest, dividends, Statements or records to demonstrated
managed funds or rental properties the financial situations or the interest
getting from assets or investments.
Income from business Invoices, bank statements, till rolls or
cash book recording the cash receipts,
contract
Government benefits PAYG payment summary or letter from
the agency that pays your allowance.

5. How long should he keep all the documents?

Generally, its very important to keep all the documents used it for taxation
after lodge it for the first time for 5 years

Required: Write an email to Gary to respond to his above queries.

(35 marks)
Notes to students:
 You can use the following template to answer Part 4;
 Your answers have to be directly connected with the scenario;
 You are required to seek the information from ATO website <www.ato.gov.
au> for any areas you are not familiar with in order to provide the appropriate
advice to your client.

Sir Gary

I as your agent advice for your tax claim and after I review all the documents provide
for you I would like to, first, thank you for trust on us and we promise you to be very
clear and professional showing you all the movements and explaining each step with
take for your claim, also we guarantee absolute confidence with all your personal
documents and we will keep them for law for 5 years and just a copy of them any
original document provide for you, will be return it.

From the information collected from you we can advice you that we can generated
deductions from work related where you have been use it own money or transport to
help the business or go from work to others but everything related to work, including
laundry and personal car as you case.
Also you can get deductions from rent property and expenses generated for it.

Also we would like you to see and review all the documents of the checklist to see if
may you want to add something else that help us to do your tax declaration more
consistent and help you out for claim more deductions on base of the law.

Thank you very much for your time and we are here for help you if you have any more
questions, please contact us and we will give the best advice
Have a good afternoon