University : Laureate International University UniLearnO is not sponsored or endorsed by this college or university.
Subject Code : LAW6001
Assignment Task :

Learning Outcomes : (LAW 6001)
a) Recognise and effectively apply ethical and professional responsibilities placed on tax agents and financial advisers providing taxation advice under the Tax Agent Services Act (TASA) and associated regulations. 

b) Critically assess differences between the tax treatment of individuals, partnerships, companies and trusts and evaluate the effectiveness of each structure in meeting various client needs. 

c) Analyse, evaluate and recommend taxation strategies to develop comprehensive solutions in order to maximise client financial outcomes. 

d) Research, interpret and effectively communicate complex taxation concepts and recommended taxation strategies to clients in an industry compliant format. 

 

PART A: CASE 1 – Married young couple 

Matt and Miranda Murphy are an Australian married couple, living in Gold Coast, Queensland with their 3 children and Matt’s father. Matt and Miranda plan to purchase some assets and wonder which way is the best in order to optimise their tax obligations on various investments. 

They have visited your office to seek advice to optimise their tax obligation in relation to the following investment situation. 

 

1) Regarding Share Investment

Matt and Miranda jointly purchased shares in Citybank Ltd on the 20th of June 2016 at a cost of $110,000. The shares have a market value on the 1st of June 2019 of $120,000. The shares have returned fully franked dividends of $28,000 each year over the past 3 years. When Matt and Miranda purchased the shares, they were both employed full-time. Miranda now works part-time and is occupied with caring for the child and father in law. Matt is an engineer who earns $150,000 per annum (net of all allowable deductions) from his sole trading work and Miranda is a part time teacher, earning $10,000 per annum (net of all allowable deductions) from her teaching job. They are considering selling the shares and re-acquiring them in Miranda’s name only. 

 

Required 

Assuming the share price is stable in June at a market value of $120,000 and with an increase to $121,000 in July, which of the following options would you recommend for them to minimise their tax obligations? Justify your answers. 

a) Not to sell shares at all

b) Sell the shares on the 30th of June 2019 and re-acquire them on the 30th of June 2019

c) Sell the shares on the 1st of July 2019 and re-acquire them on the 1st of July 2019. 

Determine which one of the above options would minimise total net tax payable for both options above for the tax year ended the 30th of June 2019 and 2020 (after medicare levy/surcharge and eligible tax offsets). Calculate how much tax would be saved. 

 

 

2) Regarding Business structure (LAW 6001)

Matt Murphy is considering a change of his business structure from the sole trader to another structure commencing on the 1st of July 2019 (starting from a new financial year). He has provided you with the following financial and other family details. 

Matt is earning $150,000 (net of deductions) per annum from his engineering business. Miranda earns $10,000 (net of deductions) from her teaching job. They have the following family members living with them. 

• Robert Murphy: Matt’s father who is 70 years old. He has retired from his job as chief executive officer of Suncorp Ltd on the 15th of July 2019 (gross income was $2,000) and has not been earning any income since retirement. Miranda takes care of him as his health has deteriorated recently. 

• Jean Murphy: 19-year-old son. He is a full time university student, currently no income. 

• Xavier Murphy: 15-year-old son, full time high school student 

Megan Murphy: 2-year-old daughter. 

Matt is considering the following options. 

• Continue as a Sole Trader 

• Partnership with Miranda in equal profit sharing ratio 

• Australian registered private company 

• Discretionary Family Trust 

 

 

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  • Posted on : July 23rd, 2018

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