BUSINESS TAXATION ASSIGNMENT INSTRUCTIONS

Read all instructions before completing and submitting the assignment.

1.    You are required to submit an answer to the attached assignment question by the due date and time for lodgment.  Any requests for extension must be made prior to the due date via e-mail to the lecturer-in-charge.

2.    Your assignment must be submitted both in ‘hard copy’ and ‘soft copy’ via the link that will be made available on Moodle.

3.    All hard copy assignments must include a completed copy of the assignment coversheet that will be made available on Moodle.  Provided that you agree with the terms of the declaration, you must sign the declaration regarding plagiarism on the assignment coversheet.

4.    Staple all pages (including the cover sheet) once in the top left hand corner.  Do not use plastic sleeves; comb binding; other forms of binding or paper clips.

5.    The word limit will be strictly enforced. Words in excess of the word limit will not be marked.

6.    Your answer must be typed. You must use one and a half (1.5) spacing and a font size of 12.  You must leave at least a 2.54 cm margin from both sides of the A4 page (note that this is the ‘normal’ margin setting in Microsoft Word).  Single sided printing is preferred.

7.    Ensure each page of your answer contains your student number and a page number as a ‘header’ or ‘footer’.

8.    You can either use in-text referencing (Harvard) or footnotes (Australian Guide to Legal Citation).  The important thing is to ensure your referencing style is consistent.  If you use Harvard referencing, you must also attach a separate reference list to your assignment.

9.    Footnotes are not generally counted in the word count.  However, you must not place substantive parts or central parts of your answer or argument in footnotes.

10.    Calculations are not included in the word count.

11.    In preparing an answer, you will inevitably discuss issues raised by the assignment with other students. There is nothing in the UNSW rules prohibiting such discussions. Indeed, you are encouraged to discuss issues arising from the assignment with other students. However, in the end, you must be able to state that the work that you have submitted is your work. Importantly, you should ensure that you have not committed (either deliberately, or without intent) an act of plagiarism (e.g. presenting another’s work or ideas as your own, failing to acknowledge the source of a quotation, submitting the same or similar version of work to that of another student). Due to the potential for damage to reputation, plagiarism is taken very seriously by the university and the Australian School of Business.

12.    Although the broad topics raised in the assignment will be topics covered in the course, the assignment will raise issues that will not necessarily have been discussed in lectures or tutorials.  This means that you may have to go beyond the prescribed materials for the course in relation to some issues.  Whilst you will not be given a separate mark for research, reading beyond the textbook / required readings may assist you in writing your answer.

13.    Given that this assignment is a problem type question that may require you to undertake research, no staff member working on this course, or any staff member in the School of Taxation & Business Law, will provide assistance to you in writing and researching your answer. Accordingly, please do not ask a staff member questions related to the assignment.  If you require clarity in relation to any facts contained in the assignment question, these should be directed to the lecturer-in-charge.

14.    You shouldcarefully proof-read your answer (a number of times) before submission. Things like incorrect spelling and incomplete sentences will be reflected in the grade for your answer.

15.    If you are dissatisfied with your grade, you should first collect your assignment and review the feedback given.  Discussions regarding grades will not be entered into until you have reviewed your marked assignment.  You should then discuss your grade with the lecturer-in-charge.  If you are still dissatisfied with your grade, you are allowed to request a formal re-mark.  Please note that such a re-mark can result in your grade either (i) staying the same; (ii) being increased; (iii) being reduced.

Marking criteria

Markers will be evaluating you assignments based on the following criteria:

•    Knowledge/Critical thinking and problem solving: For each transaction, have you:
­    correctly identified the issue;
­    correctly identified appropriate law (legislation and/or cases as appropriate);
­    correctly applied the law to the facts;
­    clearly argued points that may be in doubt;
­    reached a conclusion as to the taxation treatment.

•    Written communication/Presentation:
­    Does your assignment have a clear structure?
­    Is it free of errors (such as spelling, grammatical or typographical errors)?
­    Have presentation guidelines provided in the assignment instructions been followed?
­    Have you used a consistent referencing style?

ASSIGNMENT QUESTION

NOTE: You are to ignore GST for the purposes of this question.

Robert (an Australian resident taxpayer) signed a contract to purchase a house for $500,000 in Sydney on 1 July 2003.  At the time of signing the contract, he paid a deposit of $50,000.  He obtained a mortgage from Aus Bank for $450,000 to purchase the house.  Settlement (i.e. transfer of ownership) occurred on 1 August 2003 (at which time the remaining $450,000 was paid).  Robert moved into the house on this date.

The mortgage was for 25-years and had an interest rate of 7% per annum.  Interest is payable on the first day of each month.  (Note: For ease of any required calculations, you can assume this is an interest only loan – this means only the interest paid each month and the principle remains fixed.  You can also assume that the interest is not compounded).

In addition to the cost of the property, Robert incurred the following costs at the time of purchase:
•    Stamp duty: $18,000
•    Legal (conveyancing) fees: $1,000
•    Mortgage broker commission: $2,000
•    Application fee for mortgage: $500

On 1 June 2005, Robert was offered a new job in Melbourne and decided to move.  Rather than sell his Sydney property, he decided to rent it out.  (He did not acquire a new property in Melbourne).  On the advice of a real estate agent, before renting out the property, Robert has the house repainted at a cost of $8,000( (paid for on 15 June 2005).  The first tenants move into the property on 1 July 2005 (the market value of the property at this time is $600,000).  The tenants stay for a number of years and pay rent of $500 per week (moving out on 1 July 2012).

For each year these tenants rented the property, you can assume Robert incurred the following expenses (note that this does not include any interest on his mortgage, discussed above):
•    Real estate fees:         $2,000
•    Council and water rates:    $2,300
1)    S8-1(1): positive limb
2)    S8-1(2): negative limb
3)    Specific deductions: repairs etc
4)    Div 40,43
In addition to these expenses, Robert also incurred the following expenses in relation to the property:
•    On 1 July 2009, Robert paid $400 to a plumber (to fix some dripping taps).
•    On 25 August 2010, there was a bad storm and the tile roof of the house was damaged.  Due to the extent of the damage, Robert had no choice but to replace the entire roof.  To replace the entire roof with tiles would cost $8,000.  However, Robert decides to use “Colorbond steel”, which will resist chipping, peeling, cracking, and is also termite and weather resistant.  This costs $14,000, ($11,000 in materials and $3,000 in labour).  The new roof is installed on 1 September 2010.

On 1 July 2012, once the tenants move out, Robert pays $8,000 to have the carpets replaced as they are fairly worn.  The installation of the new carpet is completed on 15 July 2012.

New tenants move in on 1 August 2012, paying $650 a week in rent.

On 1 March 2013, one of the tenants falls down the front steps of the house.  The tenant sues Robert and he incurs $10,000 in legal fees.  Although Robert does not believe he is at fault, on the advice of his lawyer, he settles the action and pays $20,000 in damages to the tenant.  Both the legal fees and damages are paid on 30 June 2013.  The tenants move out on 1 August 2013.

Other costs associated with the property during the rental by the new tenants were as follows:
Period    Real estate fees    Council / water rates
1 July 2012 – 30 June 2013    $2,500    $2,400
1 July 2013 – 1 August 2013    $200    $2,600
Note: Council and water rates were paid on 1 July of each year for the following 12 months

Robert (through his real estate agent), advertises the property for rental on 1 August 2013.  However, due to a downturn in the rental market, Robert has trouble finding new tenants.  On 1 October 2013, Robert is given the option through his employer to move back to Sydney.  He tells the real estate agent to stop advertising the property as he would only be able to rent it for a few months.  (Robert had already paid the real estate agency $900 in advertising fees for advertising the property from 1 August 2013 to 1 October 2013).  (The market value of the property on both 1 August 2013 and 1 October 2013 was $760,000).

Robert moves back into the property on 1 January 2014.  The market value of the property at this time was $770,000,

Early in 2016, Robert decides to sell the property.  He advertises the property for sale (via a real estate agent) on 1 February 2016 for $900,000.  On 1 March 2016, a buyer offers Robert $870,000 for the property and a contract of sale is signed on that date.  On the same day, a deposit of $90,000 is paid.  Settlement (i.e. transfer of ownership) occurs on 1 April 2016, at which time the remaining $780,000 for the house is paid.

Costs associated with sale include:
•    Advertising: $1,500
•    Real estate commission: $26,000
•    Stamp duty: $30,000
•    Legal fees: $1,800
•    Mortgage discharge fee: $1,000

Required:

Advise Robert on the tax consequences for each of the above transactions.  This includes calculating any capital gain/loss on the sale of the property.

If relevant, you should assume that Robert has used the ‘diminishing value’ method to calculate any deductions for depreciating assets.In relation to the calculation of the capital gain or loss, Robert wants to make use of any available elections/choices to minimise his capital gain (or maximise his capital loss).

Further information / tips:
•    You are not required to calculate Robert’s taxable income each year as you do not have the information to do so.  Rather, for each transaction described above, you are to advise what amount (if any) will be assessable income or an allowable deduction and for which year.  Appropriate explanations (with reference to relevant legislation, case law, and other sources as appropriate) must be provided.
•    Whilst you need to consider the tax treatment of the transactions that occur for each year Robert owns the property, you do not need to repeat your analysis each year.  (For example, if you determine an expense that occurs more than once is deductible, you only need to provide the explanation once).
•    You can assume that the various taxation laws that apply for the year ended 30 June 2016 also applied for earlier years.  (That is, when considering transactions that occurred in earlier years, you can assume there have been no changes from current law).
•    You can (and are encourage to) use headings / sub-headings in your answer.
•    You can (and are encouraged to) use tables to display calculations / figures.  (As noted in the instructions, calculations do not form part of your word count).

FINANCING ENTERPRISES
200910
AUTUMN 2016
GROUP ASSIGNMENT
GUIDELINES
Copyright © 2016 by Western Sydney University. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying,
recording, or by any information storage and retrieval system, without the prior written permission from the Dean, School of Business. Copyright for
acknowledged materials reproduced herein is retained by the copyright holder.
1
Due date: Turnitin (electronic submission) – 11.45 pm, Friday, 13 May 2016 (Week 12)
Assessment Value: 20%
Topic: Analysis of Financial Performance
Length: 1 000 words maximum
FOLLOW THE STEPS OUTLINED BELOW TO
OBTAIN THE INFORMATION NEEDED FOR
THE ASSIGNEMNT
1. Go to e-resources on WSU Library and from the alphabetical list click on “D” and then pick
DatAnalysis Premium database. Once you are in the database go to the search engine on the top right
and enter your company’s ASX code assigned by your tutor to your group (Note: You can always
obtain the ASX code from the Australian Stock Exchange website).
The displayed page summarises general information about the company including the sector and
industry in which it operates, total market capitalization of the firm, latest closing share price, etc.
2. On the left hand side, click on “Financial Data”. The displayed page shows annual and interim
information for your assigned company (in the view bar, make sure you choose annual and not
interim data). On the page’s control bar at the top, you will see the first three icons are the
company’s summarised annual reports (income statement, balance sheet and cash flow statement).
Additional information, such as the number of shares outstanding at end of period and the adjusted
earnings per share (EPS) in cents, are also given in these statements for different years.
3. On the left hand side, click on “Price History”. The displayed page shows information including
the unadjusted closing ordinary share prices for your assigned company at different dates. Please note;
if one day’s closing price is missing then use the unadjusted closing price for the day before.
2
REQUIRED
This group assignment requires the analysis of the financial position and performance of your
assigned company for the previous three financial years (2015, 2014 and 2013). This involves
answering the following 4 questions in your own words (i.e. do not simply “cut and paste”
information from the Annual Report or any other source). You must applying critical thinking
concepts when explaining and justifying your choices.
BASED ON THE INFORMATION OBTAINED FOR YOUR ASSIGNED COMPANY,
ANSWER ALL OF THE FOLLOWING QUESTIONS (1 TO 4 INCLUSIVE).
QUESTION 1:
Analyse the liquidity position of your company in 2015 compared to 2014 and 2013. Calculate the values for
two liquidity ratios to help support your answer and justify why you have chosen these ratios. Note: ensure
that you analyse in this question, not just describe the ratio values.
(maximum 200 words)
QUESTION 2:
Analyse your company’s capital structure in 2015 compared to 2014 and 2013. Use two capital structure
ratios to support your answer and explain any change in the sources of finance for your enterprise. Note:
ensure that you analyse in this question, not just describe the ratio values.
(maximum 200 words)
QUESTION 3:
Analyse your company’s profitability in 2015 compared to 2014 and 2013. Use two profitability ratios to
support your answer and justify why you have chosen these ratios. Note: ensure that you analyse in this
question, not just describe the ratio values.
Could your firm’s capital structure have an impact on its profitability? Or there might be other reason(s) for
changes in profitability? Explain.
(maximum 400 words)
QUESTION 4:
Calculate your company’s price–earnings ratio and market-to-book ratio as at 30 June 2013, 2014 and
2015. Over the three years, what do these ratios tell you about how investors value your firm’s future
prospects? Explain.
(maximum 200 words)
3
NOTES
1. Ratios must be selected from those identified in your prescribed textbook (Bakry w, 2016). The
use of ratios other than those identified in the textbook and discussed in class will not gain any
marks.
Include all supporting calculations for any values shown in Questions 1 to 4 in the Appendix.
This is not included in the word count.
Marks will not be awarded if no supporting ratio calculations are shown in the Appendix.
2. In questions 1-4, an analysis is required and not just a description of the ratio. That means you
need to explain how the ratio changed overtime and what are the main reason(s) responsible for
that change and how that will impact your company’s position.
3. Reference List
Includes any references you have used and cited in your report. Make sure all answers are fully
referenced using the Harvard referencing system and include a reference list at the end of your
assignment (for guidelines on using the Harvard referencing system see
http://library.uws.edu.au/citing.php).
(Note: the reference list is not included in the word count).
Group assignments are to be submitted with a group assignment cover sheet. Group assignment
cover sheet can be downloaded from the following link (click on Form Categories – Assessment) :
http://www.uws.edu.au/currentstudents/current_students/forms
4
SUBMISSION INFORMATION
ASSIGNMENT SUBMISSION
This assessment task is to be submitted online via the Turnitin link within the ‘Assessments – Group
report (20%)’ folder in vUWS. This is an online only submission.
The only acceptable file types are word files .doc, .docx. There is no need to hand a hardcopy of
your assignment to your tutor.
The Turnitin link will be open from 10am Friday 29 April, 2016 and close 11:45 pm Friday 13 May,
2016 which is the last day your assignment can be submitted. That is, the closing time and date to
submit your attempt at the ‘Group Assignment’ is 11:45 pm Friday 13 May, 2016. When the
assignment is successfully submitted by your group leader, he/she will receive a copy of the digital
receipt in his/her WSU email account. Keep the digital receipt for your records as it is your proof
of successful submission.
On first submission to the assignment link an originality report will be generated within two
minutes. Subsequent submissions will take up to 24 hours to receive a response. For links to videos
outlining this process please see the Help and Further information section below.
Remember, the closing time and date for your group to submit their attempt at the ‘Group
Assignment’ is 11:45 pm Friday 13 May, 2016 (Week 12 of session).
STUDENT SUBMISSION GUIDE
http://library.uws.edu.au/FILES/turnitin/Turnitin_Student_Instructions.pdf
Note: You must use a desk-top or laptop computer to access grades and feedback (not an iPad or
mobile phone device).
It is very important that only the group leader submits and resubmits the group assignment on
behalf of all group members. Submitting the group assignment by multiple group members will
receive a 100% match on your originality report.
DISCLAIMER
All online submissions via Turnitin are presented with a declaration to students at each upload via
the Turnitin interface. The declaration is:
By submitting your work using this link you are certifying that:
• You hold a copy of this assignment if the original is lost or damaged.
• No part of this assignment or product has been copied from any other student’s work or from any
other source except where due acknowledgement is made in the assignment.
5
• No part of the assignment/product has been written/produced for you by any other person except
where collaboration has been authorised by the subject lecturer/tutor concerned.
• You are aware that this work may be reproduced and submitted to plagiarism detection software
programs for the purpose of detecting possible plagiarism (which may retain a copy on its database
for future plagiarism checking).
MARKS AND FEEDBACK
Your group assignment will be marked online. Once marking is completed, feedback and
commentary on your group assignment will be available from your Turnitin link or the My Grades
section of your vUWS site. Your group leader has the responsibility to download a copy of
your marked group assignment with feedback and redistribute the marked assignment to all
group members for their records. Please see videos from the link in Help and Further information
listed below.
HELP AND FURTHER INFORMATION
Information for students on how to submit an assignment into Turnitin, how to view and interpret
their originality report, accessing assignment feedback via Turnitin/Grademark and FAQs for
students is available here: http://library.uws.edu.au/uws_library/guides/turnitin/resourcesfor-students
FORMAT
A submission of no less than 900 words and no more than 1100 words is expected excluding the
appendix and reference list. Submissions must be word processed in either Times New Roman or
Arial font, 12 point and 1.5 spaced with a footer on each page including your group leader’s name,
student ID and page number.
LATE SUBMISSIONS
Late submissions will be penalised as per the WSU policy document ‘Assessment Policy – Criteria
and Standards – Based Assessment’. In particular please see Clause (51) which states as regards
‘Late Submission of Assessments’:
(51) Except where an extension has been approved for the submission of an assessment task by the unit coordinator,
or in line with the University’s Special Consideration Policy, the following penalties will apply to the late
submission of an assessment task:
1. a student who submits an assessment task after the due date for submission will be penalised by 10% per
calendar day up to 10 days, i.e. marks equal to 10% of the assignment’s worth will be deducted as a ‘flat
rate’ from the mark awarded for each calendar day the assignment is late up to 10 calendar days. Saturday
and Sunday each count as one calendar day; and
2. the assessment will not be accepted after the marked assessment task has been returned to students who
submitted the assessment task by the due date.
6
FREQUENTLY ASKED QUESTIONS
What is being asked for? Are we on the right track?
Making sure you understand what is being asked for is the first step! A good answer to a question that has not
been asked is actually a bad answer! Reading Chapter 2 and 7 of the prescribed textbook would be a good
starting point!
How many references do we need?
The reference list should contain only those resources that have actually been referred to (or “cited”) in your
answer. The quantity of references is not as important as the quality of your references, the relevance of your
references and how the references are used in your assignment.
Can we ask people we know and use their views and include it in the assignment?
No. Use published sources only.
Will our tutor (or other staff) read our drafts before we submit?
No. We will give guidance but will not actually read (or proof-read) any reports in advance.
Who should I ask if I have more questions?
You should ask the Unit coordinator Walid Bakry or post your questions on the group assignment discussion
board as there may be other students who have the same questions and there is a need for consistency in
advice.
What if one or more of the group members didn’t contribute to the assignment?
If you face problems with one of the group members, for example he or she didn’t show up to group
meetings or they didn’t do the work assigned to them. First try to communicate with your group members
and give that person another chance. If the student still not contributing to the group assignment, then report
the matter as soon as possible to your tutor or your lecture or the unit coordinator.
How does the assignment contribute to my assessment mark?
This assignment is worth 20% of your total marks in the unit. You will be given a score out of 100 which will
then be converted to a mark out of 20 for this assessment task.
Can I or any of my group members solve or write this assignment in cooperation with other
groups or members from other groups?
No. Collusion between groups and members of groups is strictly prohibited. WSU takes plagiarism and
collusion seriously as these are the most common form of academic misconduct.
WHAT IS COLLUSION?
Collusion is when two or more students, or a student and any other person(s), act together to cheat, plagiarise
or engage in academic misconduct, or incite others to do so.
At Western Sydney University plagiarism and collusion falls within the framework of the Student Misconduct
Rule. Students should familiarise themselves with the Rule and with the associated guidelines.
7
GROUP ASSIGNMENT MARKING GUIDE
CRITERIA FAIL: LESS THAN
50
Unsatisfactory
performance
PASS: 50-64
Satisfactory
performance
CREDIT: 65-74
Good quality
showing more
than satisfactory
performance
DISTINCTION:
75-84
Superior quality.
Difficult to fault
HIGH
DISTINCTION:
85 -100
Excellent quality
in all aspects
Locate, collect,
evaluate and use
relevant
information
appropriately.
Dumps information.
No evidence of
critical
consideration.
Some evidence of
critical
consideration of
relevant
information, but
poorly integrated.
Good evidence of
critical
consideration of
relevant
information, but
may require
better
integration.
Good evidence of
critical
consideration of
relevant
information, and
well integrated.
Critically chooses
information and
clearly integrates
it to support the
points being
made.
Describe the
problem and the
solution path using
correct financial
tools.
Poor selection of
financial tools
Some appropriate
selection of
financial tools.
Appropriate
selection of
financial tools.
Good selection
of financial tools.
Excellent
selection of
financial tools.
Addresses the
requirements of
the questions
Poorly structured
and/or unconvincing
and/or outside the
word limit.
Could be better
structured and/or
the conclusions
reached are not
persuasive
and/or outside
set limits.
Acceptable
structure. The
conclusions
reached are
convincing.
Length is within
the set limits.
Good structure.
The conclusions
reached are
convincing.
Length is within
the set limits.
Well structured.
Conclusions are
argued in a very
persuasive
manner. Length
is within the set
limits.
Presents with
clarity:
Uses a
professional level
of English.
References and
paraphrases
correctly. (Note:
use of the
“Harvard Western
Sydney referencing
style” is required.
See the University
library website.)
In-text citation
and/or paraphrasing
and/or reference list
missing or
substantially
incomplete.
Writing style is poor
and difficult to
follow and/or
marred by many
grammatical and/or
spelling errors.
In-text citation
and/or
paraphrasing
and/or reference
list have a
number of errors.
Writing style is
unclear at times.
There are a
number of
grammatical
and/or spelling
errors.
Satisfactory intext citation,
paraphrasing and
reference list,
possibly with a
few errors.
Writing style is
coherent, with
possibly a few
grammatical
and/or spelling
errors.
Good in-text
citation,
paraphrasing and
reference list,
possibly with a
few minor errors.
Writing style is
coherent, with
possibly a few
grammatical
and/or spelling
errors.
Excellent in-text
citation,
paraphrasing and
reference list.

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