LAWS7031 Principles of Taxation Law

Task: Provide advice to your client. Your answers must include relevant legislation, cases and Rulings. You must clearly reference your answers with footnotes in compliance with AGLC4

Refer to the Learning Guide for details about Criteria and Standards for marking processes, including word the citation standards and ways to structure your argument in answer to the question.

Length: 1500 words.

Value: 25% (25 marks)

Due Date: Sunday, Feb 13, 2022, by 23:59 AEST – submission is online via Turnitin

Background Facts:

Malik arrived in Australia on a student visa on 1 January 2019 and completed a three-year IT Degree at WSU which he completed in December 2021.

In 2022 Malik became a permanent resident visa holder.

Due to the pandemic, Malik has never returned to Bangladesh. Each year since he arrived in Australia, he earnt AU$15,000 from rent on rental properties owned by him alone in Bangladesh.

While he studied, Malik worked at Hungry Jacks. Earning $10,000 per annum.

Malik liked working on computers and in 2019, began repairing computers in his spare time at home. He did this mostly for friends and fellow students. At first, he just charged people for parts, but then he began charging people $20 for each hour he worked. In 2020 he earnt $3,500 above costs? from this activity.

In January 2022 he became so busy repairing computer; that he quit his job at Hungry Jacks (his final pay slip shows his YTD income as $8,000). After he finished at Hungry Jacks, Malik also began assembling and selling custom gaming computers. He stored dozens of computers in his spare room. To June 2022 he earnt $35,000 above cost, from fixing and selling computers from his home. 

In July 2022 Malik came to you and explains that:

1. He had never reported his Bangladesh income from the rental properties in his Australian tax returns because he considered this had nothing to do with Australia. Advise Malik on if this is correct.
2. In 2020 and 2021, he did not report any profit from his computer repair activity because he considered this to be a hobby. He wants to know if this is still classified as a hobby. Advise Malik, by reference to tax cases, legislation and or rulings whether this is correct. In your answer you should discuss at what point if any this becomes a business. 
3. Advise Malik on his estimated tax payable for this 2022. Your answer should refer to the tax rates for 2022 and explain the taxation calculation with reference to case law, legislation and applicable rulings.

Rubric Marking Criteria

These are the five marking criteria on Turnitin:

1. Identify the key elements of the Australian Income Tax system: Legal Issues: Identification (ULO1). [5 Marks]
2. Apply the relevance of tax law information in decided taxation cases, effectively and appropriately, displaying clear understanding of how the case law and legislation are applied in solving tax law problems: (ULO2) (ULO3) [5 Marks]
3. Explain the key elements of the Australian Income Tax system: by understanding of classification and application of Tax law in a practical sense. (ULO1) [5 Marks]
4. Coherence and persuasiveness of arguments and examination of opposing views: Structure and form of essay; and in a concise form. (Grammar, spelling and Style). (ULO2) (ULO3) Citation used in accordance with the Guidelines. (ULO2) (ULO3). [5 Marks]
5. Correct tax calculations and application of marginal rates [5 Marks]