Australian Law Answers

Australian taxation law
Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1
September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and
the cost of construction was $100,000. Immediately, after the construction finished, the property
has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000.
Required:
With reference to relevant legislation/case law, determine:
a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount
method and Indexation method.
b) How would your answer to a) differ if the owner of the property was a company instead of Alex?

Due to COVID-19 impact, Watson Co becomes insolvent and placed into voluntary liquidation by its directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up of the Watson Co, Dissolve liquidators have started distributions and Paul as ex-shareholder of Watson Co received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant to the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from his $4,000 investment in the shares of Watson Co on 2nd February 2019.
Required: With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences of the above scenario for Paul

A is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1
September 1986, A built a house on the land. At the time, the land was valued at $110,000 and
the cost of construction was $100,000. Immediately, after the construction finished, the property
has been rented out. On 1 March 2019, A sold the property at auction for $1,400,000.
Required:
With reference to relevant legislation/case law, determine:
a) A’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount
method and Indexation method.
b) How would your answer to a) differ if the owner of the property was a company instead of A?

Due to COVID‐19 impact, HI Co becomes insolvent and placed into voluntary liquidation by its
directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up
of the HI Co, Dissolve liquidators have started distributions and Paul as ex‐shareholder of HI Co
received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant to
the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from
his $4,000 investment in the shares of HI Co on 2nd February 2019.
Required:
With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences
of the above scenario for Paul. (10 marks, maximum 300 words).

Bowens Pty Ltd is a building materials supplier in Victoria. Bowens Pty Ltd has an annual turnover of
$24 million, and works under the accrual method of accounting. Bowens Pty Ltd purchases concrete
mixer for $660 each from Builder’s Choice Pty Ltd, a company in Geelong with an annual turnover of
around $21 million, and works under the accrual method of accounting. Bowens Pty Ltd plans to sell
the concrete mixers at a 200% mark‐up to its customers. In October last year it purchased 110
concrete mixers but in December they discovered that 12 of the concrete mixers were faulty and
subsequently returned these faulty concrete mixers to the manufacturer, obtaining a full refund.
Assume both apply the accrual method of accounting.
Required:
With reference to relevant laws, discuss the GST consequences of this arrangement for both Bowens
Pty Ltd and Builder’s Choice Pty Ltd. (10 marks, maximum 400 words).

Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1
September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and
the cost of construction was $100,000. Immediately, after the construction finished, the property
has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000.
Required:
With reference to relevant legislation/case law, determine:
a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount
method and Indexation method. (8 marks)
b) How would your answer to a) differ if the owner of the property was a company instead of Alex?
(2 marks, maximum 100 words)

Ray and Louie are partners in an online business. According to their partnership agreement, the two men must share profits on a 30% / 70% basis after any partners salary. Losses are shared on a 30% / 70% basis.
The agreement also allows for salary payments of $5,000 each. At the end of the financial year, their partnership profit and loss show that Ray and Louie have been paid a salary of $5,000 each and the business made an accounting net loss of $26,000 (after paying the above-mentioned salaries).

Calculate the partnership distribution for each partner.

The following two paragraphs are taken from an article dated 27 December 2018 by Grace
Ormsby, published in the online edition of Lawyers Weekly.

Hint: refer to media reports for articles concerning behaviour that constitutes modern
slavery.
Required - Part B
1. Referring to the Explanatory Memoranda, explain in your own words the purpose of
each of the Acts.
2. To which entities does the Cth Act apply? What are these entities required to do?
What are the consequences for non-compliance?
3. To which entities does the NSW Act apply? What are these entities required to do?
What are the consequences for non-compliance?
4. Identify key differences between the NSW Act and the Cth Act.
5. Are each of the Acts currently in force? If so, on which dates did the operative
provisions commence. If not, why not?

The Canadian Resource Centre for Victims of Crime (2011) states that victims display four psychological reactions to crime. Which option below refers to the victim’s third psychological reaction to crime?

Misinformation with regard to human trafficking is often fuelled by unreported, significant elements. These are