Subject Code : ACC3TAX
Assignment Task:

ACC3TAX Group Assignment 

This group assessment broadly covers the contents of weeks 1-9, and specifically focuses on the overall calculation of tax liability (including derivation of income, income tax equation, application of income, deductions and offsets). 

It is designed to simulate a client-advisor real life scenario, where students are required to apply teamwork, interpretation of tax law, taxation rulings, and case law, critical analysis and numeracy skills to defend your advice to a tax partner in calculating the tax liability of a client.  It is not a letter to the client, but the preliminary research report which will support the basis of such a letter.

Case Study and Questions

Jingjing is a 25 year old employee who worked at Junnings as a Manager in Jeelong. She has engaged you for your services to assist her in preparation of her tax return for 2018/19.  

On 20 April 2020, Jingjing sent you the following email:

Sent : 20 April 2020, 9:00:52 AM

To:  Tax Accountant

Subject: Tax Return 2018/19 – Jingjing JYUN

Dear Tax Accounting Team,

Sorry, I have been putting this off – things have been so hectic and uncertain here in China this year. As discussed at our recent Zoom meeting, here are the following matters that should help you with your preparation of my tax return.

  1. Earnings from Junnings – I finished up with Junnings on 30 June 2019, but I was a Marketing Manager Graduate appointed from 1 July 2018 and I received net wages ($46,000) and a travel allowance4 ($10,000). Junnings had deducted PAYG ($20,000). Prior to this position, I worked as a casual in Sales.  Oh and don’t forget I also received my unused Annual Leave ($1,000) - HR had made a mistake and overlooked paying me my entitlement, but once I pointed that out they apologised and were very prompt and paid my money owing to me in my bank account on 1 July 2019.  The reason I stopped working for Junnings was that my position was made redundant.  At the end of the income year, I received a redundancy payment from Junnings for $15,000 because of the sudden and significant market changes and restructuring that had occurred. I had hoped that I might have got some other opportunity to work for Junnings in a different capacity, but it was not meant to be, which in one way was a blessing as I returned unexpectedly and permanently to China at the end of August 2019 to assist my sick parents.  

  2. Further benefits from Junnings – What was really wonderful, was to receive another $10,000 from Junnings which I wasn’t expecting at all.  I had worked in a senior position for only 1 year. It was explained to me I got this money as a $7,000 one off amount followed up with $3,000 for each year of service.  What a wonderful employer.  With all the regional flight travel I had to do to go to all the stores around regional Victoria, my business flights amassed 90,000 frequent flyer points from Qantas that I used to travel to Thailand in June, and it saved me $1000 in flight and accommodation costs. 

  3. Employer Gifts - On my last day, the regional manager told me he was so very sorry to see me go but circumstances were out of his hands.  He said I had done such a good job that he gave me a brand new i-Pad valued at $1,000 (silly - they left the price on it) This was very unexpected as I had only been working there for 5 years, and 4 of those years were part-time while I was completing my Marketing degree at La Trobe University.  What was even more surprising was the other gift I received from the sister company Jennings, who I occasionally assisted in the Marketing department when their Marketing Manager had fallen ill.  Jennings gave me a travel and accommodation voucher valued at $500, because they knew I was going back to China and could use the voucher -  I am so grateful to have had such a great job that my work contributions were recognised by my employer and the sister company. 

  4. Investment earnings – I received $1,000 from the bank for my high interest term deposit and my partially franked dividends (60%) of $14,500 from Small Co P/L being a very small company, were a real blessing as I was in a tight spot paying for my new car. 

  5. Casino Winnings and TAB Account– I loved going to the Casino on the weekend and was getting to be well known by staff as a bit of a regular playing Roulette - they joked and said I was addicted to gambling and was like a ‘professional gambler’.  Fortune favoured the brave and I made $20,000 over the year with my regular attendances, which I was delighted with.   But what has been really great is that I have won another $50,000 gambling at the horse races in 2018/19 – I just love watching the ponies, it is so exciting. I limit myself to a betting only once each week and I did really well – although some weeks were not so good - I really bombed out. But I received a good tip one week and won $25,000 on a trifecta! 

  6. Sale of my residence - Settlement has finally come through on the sale of my home. Hooray. You will recall that my parents helped me purchase my apartment in Melbourne in 2012 at a bargain cost of $400,000 and $25,000 for various expenses such as stamp duty and other fees and I sold it for $500,000 and there was another $15,000 expenses on sale for commission and other expenses..  You might remember I spent a year overseas absent, returning to China for a year (1 July 2014 – 30 June 2015) and during that time I had rented out my property, so I heard I need to pay a share of my CGT Gain as I have used my principal place of residence for business purposes  – is that right?

  7. Various Rental property matters– I sold my investment property located in Beijing for equivalent AU$200,000 and paid commission of $5,000 and received my funds in July 2019.  I had a friend who said to me 3 months earlier that it was a good time to sell, as I had only purchased this property in March 2015 for equivalent AU$150,000, with $10,000 costs of purchase.  So that’s when I engaged the real estate agent, and I signed the contract for sale on 1 May 2019. I also incurred a legal cost of equivalent AU$5,000 in defending my entitlement to this property, which was in August 2018. I rented out the apartment for 10 months for $1,000 per month.   But I don’t have to worry about any of these matters, right? - as I have been a non-resident since my Uni days when I came to Australia in January 2014.

  8. Insurance compensation and medical expenses - In July 2018 I was injured in a car accident while driving to one of the regional stores and was in hospital for three weeks. Fortunately, my private health insurance policy covered my medical expenses of $3,000.   I also received $5,000 compensation from the insurance company for having lost some mobility from the car accident injury, which was promptly paid to me in September 2018.

  9. Work expenses – As a marketing manager, you would appreciate that image is everything when you do the job. I needed to spend a lot of money looking professional as I didn’t wear a uniform like I used to when I was a casual. My Regional Manager encouraged me to improve my image and was very impressed with my deportment.  Over the financial year, my grooming expenses totalled $3,000 for hair styling and cutting   (very good really as I was a regular customer every week at my hairdresser), make-up of $1000, and the additional clothing I had to buy as I wore clothes that were not cheap – another $5,000, which my Regional Manager commented was exactly the image Junnings needed.  Of course, I needed to clean my clothes professionally and had them Dry Cleaned and I got a good deal of only $20 per week, so my claim is $960.

  10. Car expenses – In addition to my regional flight travel, I had to do a lot of metropolitan car travel going to all of the various metropolitan stores.  The running costs on my car as advised by my local petrol station amounted to $15,000 for the year, but these were paid for by Junnings, even though I only used the car 50% for business use.  I bought my new car at the start of the year costing $20,000 and I would like to claim the entire amount as a deduction, as I heard I can claim an ‘instant write off’.  Regrettably. I had a slight accident during the year, and I was at fault, which caused me out of pocket expenses of $2,000 to repair the vehicle, as the insurance company would not pay up any contribution.  

That’s all I can think of for the moment – let me know if you need more information.  

But can you please tell me how much tax I owe?

 

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