Assessment Coversheet
| Student Name | CIT Number | |||||
| Competency Title, Code and Banner Code CRN | Prepare and administer tax documentation for legal entities, FNSACC601, ACCT406, ACCT268 80861, 80777 | |||||
| Assessment Type | ☒ Written ☐ Case Study ☒ Project ☐ Presentation ☐ Other | |||||
| Assessment Name | Assessment task 2: Assignment | |||||
| Assessment Date | Due Friday 3/11/2017 | |||||
| Student Statement: This assessment is my own work. Any ideas and comments made by other people have been acknowledged. I understand that by emailing or submitting this assessment electronically, I agree to this statement. | ||||||
| Student Signature | Date | |||||
| PRIVACY DISCLAIMER: CIT is collecting your personal information for assessment purposes. The information will only be used in accordance with the CIT Privacy Policy. | ||||||
| Assessor Feedback
To be provided on eLearn.
q Student provided with feedback | ||||||
| Attempt 1 | ☐ Satisfactory | ☐ Not Yet Satisfactory | Date | / / | ||
| Attempt 2 | ☐ Satisfactory | ☐ Not Yet Satisfactory | Date | / / | ||
| Assessor Name | Philip McGuire | Assessor Signature | ||||
| Note to Assessor: Please record any reasonable adjustment that has occurred for this assessment.
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| Instructions to Assessor Work, Health and Safety: A work health and safety check of the assessment environment is to be conducted prior to the assessment and any hazards addressed appropriately. List the time, materials provided and assessment range and conditions on the next page | ||||||
Information for Students: You may have two (2) attempts for this assessment.
- If your first attempt is not successful, your teacher will discuss your results with you and will arrange a second attempt.
- If your second attempt is not successful, you will be required to re-enrol in this unit.
Only one re-assessment attempt will be granted for each assessment item.
Time Allowed: Take-home assignment
Materials Provided: Case scenario is provided in this Word document which can be downloaded from eLearn under this unit.
Assessment Range and Conditions: This is an open book assessment. Access to the ATO’s website and the required two textbooks is allowed.
Assessment Criteria: To achieve a Satisfactory result, your assessor will be looking for your ability to demonstrate the key skills/tasks/knowledge detailed in the Assessment Task to industry standard.
- Competency achieved where a professional presentation and correct tax liability is determined (or close to correct tax liability)
- Refer to the Subject Guide for Grading Rubric.
Assessment Task Instructions for Students
Read the following pages and complete the tasks as required.
Sapphire Stables Pty Ltd 30.06.2017
Sapphire Stables Pty Ltd operates a chain of horse riding training centres. The directors are
Mr & Mrs Equine and they have been the same directors since the company was incorporated in the A.C.T. on 1.7.2008. The cashbooks are prepared by the bookkeeper Miss Joy Ryder and she provides you with the following information for the year ended 30.06.17
Receipts : $
Fees 660000
Subscriptions 32000
($8000 paid in advance for July/Aug 2017)
Sale of riding gear 77000
Seminars 16500
Show jumping events 55000
Vetcare subsidy 15000
Tax refund (amendment 30.06.16) 8000
Exempt income 7360
Advertising 5500
Net dividend; Sapphire Pty (Perth) Subsidiary 1400
Net dividend from U.K. Horse Centre Plc 6000
Total income 883760
Payments: $
Net wages 220000
PAYGW withheld 80000
Superannuation 28900
Rent 88000
Purchases of stock 66000
Veterinary fees 22000
Donations (Registered charities) 4440
Asset purchases 5500
Advertising 9900
Legal – re 3 year lease (No GST) 990
Entertaining staff from Perth at A.C.T.
restaurants in December 2016 (no alcohol). 9900
Airfares – bring Perth staff to A.C.T. 8800
Accommodation – Perth staff in A.C.T. 11000
Fully franked dividend paid 20th May 2017 80000
PAYG instalments 50000
Fringe benefits tax paid for 31.3.17 14700
Refund of fees 6600
Tax advice provided to staff 1650
HELP paid for employee 4500
Hire of car for employee when his private
car was being repaired 880
Supply uniforms to staff 3960
Total 707720
Sapphire Stables Pty Ltd 30.06.2017
Additional information ;
- The company is registered for the GST.
- The company has an aggregate turnover of less than $10 million
- Sapphire Stables Pty Ltd (Perth) is a wholly-owned subsidiary. The dividend of $1400 was received on 1.4.17 and was 50% franked.
- The dividend from U.K. Horse Centre Plc is a portfolio investment and withholding tax of $4000 has been deducted at source.
- The company bookkeeper Miss Joy Ryder advises that at 30.6.17:
- liability for wages is $9000
- liability for annual leave is $1500
- $2000 of the advertising expense was prepaid for August 2017
- GST input tax credit on purchases of stock $4900
- Open stock 1.7.16 $8000 / Closing stock 30.6.17 $10000
- The depreciation schedule had a 1.7.16 balance of $5000 in the general pool. New assets this year: (1.) Weighing machine $3300 dated 1.6.17. (2.) Facsimile $ 1100 dated 1.6.17 (3) Four saddles costing $275 each dated 1.6.17
- The lease agreement for rental of the premises was dated 1.7.16
- The Vetcare campaign subsidy is repayable if any company personnel harms any animals in their care. You are advised that, at an inspection on 2.6.17, the inspector sighted severe scarring on one of the horses. By 15.7.17 he had filed a report stating his professional view that the company was in breach of the subsidy provisions.
- The franking account has a zero balance at 1.7.16.
- Payments of company PAYG tax during 30.6.17 were as follows;
* 1.09.16 $ 9000 * 1.12.16 $ 9000
* 1.03.17 $ 16000 * 1.06.17 $ 16000
- The bookkeeper also advised that the quarterly business activity statements were never lodged and no GST has been paid.
- Tax loss carried over from last year amounted to $32000.
From the above information you are required to;
- Prepare a statement of taxable income; also record in HandiTax
- Determine the tax payable/refundable, using 27.5% tax rate
- Complete a company tax return
- Prepare the franking account
- Complete the annual business activity statement
- List the payments that would be liable for fringe benefits tax
- Determine any penalties applicable to the franking account and late lodgment of the BAS
- Minimise the clients tax burden
- A professional presentation is required. Show all workings.
Sapphire Stables Pty Ltd 30.06.2017
- Additional Requirement:
The Deputy Commissioner of taxation has issued the company an amended assessment on 1.10.17 for the 30.6.17 company tax assessment. The Commissioner has reduced the deduction for the rent of $88,000 down to $44,000. The Commissioner is arguing that the rent paid is a non-arm’s length transaction. This has resulted in an adjustment as follows:
- Extra company tax of $11000.
- Extra GST of $4000
- Interest charge of $1000.
The Deputy Commissioner of Taxation is in fact incorrect. The landlord charging the company $88,000 has no personal connection with the company directors and transacts business at arm’s length on a commercial basis.
You are therefore required to prepare a Notice of Objection Against Assessment within the appropriate time frame. You should refer to the professional format for notices of objection as presented in the Master Tax Guide. (Ref 28-050).