Tax Advice and Compliance for John Smith

This assignment focuses on providing tax advice to John Smith regarding his tax obligations for the financial year. It involves analyzing his income, eligible deductions, and family circumstances (marriage and disabled daughter) to determine his tax liability. The assignment also emphasizes the importance of obtaining proper signatures, substantiating claims with records, and responding appropriately to future ATO inquiries. Finally, it requires researching recent developments in taxation legislation and applying them to John's case.

TAX DOCUMENTATION FOR
INDIVIDUALS
1

Table of Contents
A) Tax liability of John....................................................................................................................3
B (i) Give advice to John re his tax obligation, signature obtaining, substantiation and response
to the ATO’s future enquires..........................................................................................................13
(ii) Conduct research on any new development in legislation, case laws, ATO rulings or taxation
regulations relating to John, and evaluate how it may be applied to his tax return.......................13
2

A) Tax liability of John
Income
1 Salary or wages
Your main salary and wage occupation
Welder Occupation code X
322313
Payer Allowances Lump A Lump B Tax Withheld Gross
ABN:
1,080 24,000.00 97,000
2 Allowances, earnings, tips, director’s fees etc. K 1,080
Allowances from Item 1 1,080
3 Employer lump sum payments Amount A in lump
sum payments box
TYPE
R /
5% of amount B in
lump sum payments box
H
4 Employment termination payments (ETP) Taxable component
CODE
Date of payment 30/11/2015 24,000.00 I 21,000
/ R
Payer's ABN 27 222 266 667
8 Australian superannuation lump sum payments TYPE
3,000.00
Date of payment 30/06/2016 Taxable component Taxed element Q 75,000
Payer's ABN 27 222 266 667 Untaxed element P 50,000
Total tax withheld Add up the boxes. $ 51,000.00
11 Dividends Unfranked amount S 840
Franked amount T 4,060
Tax file number amounts V 0.00 Franking credit U 1,740
withheld from dividends
Company Unfranked Franked Imp Cred TFN
Amt
Fortesque 2,800.00 1,200.00
Coltes 840.00 1,260.00 540.00
Only used by taxpayers completing the supplementary section LOSS
Transfer the amount from TOTAL SUPPLEMENT INCOME OR LOSS (61,123)
/ L
LOSS
TOTAL INCOME OR LOSS Add up the income amounts and deduct any loss amount in the boxes. 189,597
/
Deductions
D1 Work related car expenses A 11,396
CLAIM B
/
Motor vehicle 11,396 B
D5 Other work related expenses E 2,359
3

Three tools 1,259
Safety boots 400
Union fees 700
D6 Low value pool deduction K 598,062
Investments Rental Other
Property 560,000 38,062
D9 Gifts or donations J 156
Smith family 150
Red Nose 6
D10 Cost of managing tax affairs M 2,250
Tax agent 650
Income protection insurance 1,600
TOTAL DEDUCTIONS Items D1 to add up the boxes 614,223
LOSS
SUBTOTAL TOTAL INCOME OR LOSSless TOTAL DEDUCTIONS (424,626)
/ L
Subtract amounts at F and Z item L1 LOSS
TAXABLE INCOME OR LOSS from amount at SUBTOTAL $ (424,626)
/ L
Tax offsets
T1 Seniors and pensioners (includes self-funded retirees) TAX OFFSET
VETERAN
If you had a spouse during 2015-16 you must also complete Spouse details - married N D Y X
or de facto. CODE
CODE
TOTAL TAX OFFSETS Items T2 and —add up the boxes U 0
Medicare levy related items Reduction based on family income
Number of dependent children and students Y 2
M1 Medicare levy reduction or exemption CLAIM
Exemption categories
If you complete this item and you had a spouse Full 2.0% levy exemption - number of days V /
during 2015-16 you must also complete Spouse TYPE
details—married or de facto. Half 2.0% levy exemption - number of days W
M2 Medicare levy surcharge (MLS)
THIS ITEM IS COMPULSORY
If you do not complete this item you may be charged the full Medicare levy surcharge.
For the whole period 1 July 2015 to 30 June 2016, were you and all your dependants E Print Y for yes
(including your spouse) - if you had any - covered by private patient HOSPITAL cover? or N for no.
Number of days NOT A
liable for surcharge
Income tests
You must complete this section.
If you had a spouse during 2015-16 you must also complete Spouse details – married or de facto on page 7.
If the amount is zero, write
0.
IT1 Total reportable fringe benefits amount W 0
IT2 Reportable employer superannuation contributions T 0
IT3 Tax-free government pensions U 7,800
IT4 Target foreign income V 0
4

IT5 Net financial investment loss X 553,360
Net dividends - Items 11, D8 6,640
Net investment income or loss - Item 13 0
Income or loss from Investment Business - Item 15 0
Income from Investment Business - Item 16 0
Foreign income or loss from foreign investments - Item 20 0
Net Forestry Managed Scheme Investment - Items 23, D14 0
Investment Income - Item 24 0
Less: Low Value Pool Investment deductions - Item D6 560,000
Less: Investment Deductions - Item D15 0
TOTAL (transfers to Label X - LOSS amounts only) 553,360 L
IT6 Net rental property loss Y 76,124
Net rent from partnerships - Item 13 0
Net rent - Item 15 0
Net rent from partnerships/sole trader activities - Item 16 0
Total foreign rental income or loss - Items 20R, 24Y less D15J 0
Net rent - Item 21 38,062 L
Less: Deduction - Item D6 38,062
TOTAL (transfers to Label Y - LOSS amounts only) 76,124 L
IT7 Child support you paid Z 0
(For ATO validation only)
Adjusted taxable income 637,284
/
Estimated total income 319,880
/
Estimated eligible income 137,580
Spouse details—married or de facto Use related ref details? Y
If you had a spouse during 2015-16, you must complete Spouse details - married or de facto.
We need the information included in this section to assess your tax accurately.
If you did not have a spouse, go to page 8.
Your spouse's name
If you had more than one spouse during 2015-16 print the name of your spouse on 30 June 2016 or your last spouse.
Surname or family name Smith
First given name Fran Other given names
Day Month Year
Your spouse's K 07/04/1960
date of birth
Your spouse's gender Male Female X Indeterminate
Period you had a spouse - married or de facto
Did you have a spouse for the full year L X
- 1 July 2015 to 30 June 2016? No Yes
From
If you did not have a spouse for the M
full year, write the dates you had a to
spouse between 1 July 2015 and N
30 June 2016.
Did your spouse die during the year? No X Yes
This information relates to your spouse's income
You must complete all labels
5

Pre-fill using related ref return details? (Related ref for spouse details above must be answered Y)
Y Your spouse’s 2015-16 taxable income O 13,500
Your spouse’s share of trust income on which the trustee is assessed under T
section 98 and which has not been included in spouse’s taxable income
Distributions to your spouse on which family trust distribution tax has been paid and which U
your spouse would have had to show as assessable income if the tax had not been paid
Your spouse's total reportable fringe benefits amounts S
Amount of Australian Government pensions and allowances (see Q6 Australian Government
pensions and allowances in the tax return instructions) that your spouse received in 2015-16 P
(exclude exempt pension income)
Amount of exempt pension income (see Spouse details - married or de facto in the instructions) Q
that your spouse received in 2015-16. Do not include any amount paid under the
Military Rehabilitation and Compensation Act 2004
Amount of your spouse’s reportable superannuation contributions (which is the total of reportable A
employer superannuation contributions and deductible personal superannuation contributions)
Other specified exempt payments that your spouse received B
(see Spouse details – married or de facto in the instructions)
Your spouse’s target foreign income C
Your spouse’s total net investment loss (total of net financial D
investment loss and net rental property loss)
Child support your spouse paid E 7,800
Your spouse’s taxed element of a superannuation lump sum for which the tax rate F
is zero (see M2 Medicare levy surcharge in the tax return instructions)
Spouse’s total ATI 5,700
/
(ATO validation purpose only)
15 Net income or loss from business Primary production - transferred LOSS
B 44,221
/ L
from Y item P8.
Net income or loss from carrying LOSS
/ Non-primary production - transferred C /
on a business of investing from Z item P8.
Net income or loss from carrying /
on a rental property business If you show a loss at B
or C you
Other income or loss relating / must complete item P9 .
must complete item P9 on page 14.
to item 15
Tax withheld - voluntary agreement D
Tax withheld where Australian W
business number not quoted
Tax withheld - foreign resident E
withholding
Tax withheld - labour hire F 0.00
or other specified payments
18 Capital gains Did you have a capital gains G Y Print Y for yes You must print Y at G if you
tax event during the year? or N for no.
CODE had an amount of a capital gain
6

Have you applied an M Y / M from a trust.
exemption or rollover?
H 21,160 Net capital gain A 21,160
Total current year capital gains
Net capital losses carried forward V 9,100
to later income years
19 Foreign entities
Did you have either a direct or indirect interest I N PrintY for yes CFC income K
in a controlled foreign company (CFC)? or N for no.
Have you ever , either directly or indirectly, caused W N PrintY for yes Transferor B
the transfer of property—including money—or or N for no. trust income
services to a non-resident trust estate?
20 Foreign source income and foreign assets or property
During the year did you own, or have an interest in, P N PrintY for yes
assets located outside Australia which had or Nfor no.
a total value of AUD$50,000 or more?
21 Rent Gross rent P 8,500
Interest deductions Q 8,900
Capital works deductions F LOSS
Other rental deductions U 37,662 Net rent 38,062
/ L
P less (Q + F + U)
LOSS
TOTAL SUPPLEMENT Items 13 to 24 - add up the boxes for income amounts and deduct (61,123)
/ L
any loss amounts in the boxes
INCOME OR LOSS
Transfer this amount to on page 3
TOTAL SUPPLEMENT DEDUCTIONS
Items D11to D15 —add up the boxes and transfer this amount to
Tax offsets
T3 Superannuation contributions on behalf of your spouse
You must also complete Spouse details— 130,000 A
married or de facto on page 7. Contributions paid
T5 Total net medical expenses for disability X 6,200 IMPORTANT: Eligibility for this
offset has changed
aids, attendant care or aged care
Offset : $85.70
P8 Business income and expenses
Income Primary production Non-primary production Totals
Gross payments where Australian C D
Business Number not quoted
Gross payments subject to B
foreign resident withholding
Gross payments E F
- voluntary agreement
Gross payments - labour hire N 31,000 O 31,000
or other specified payments TYPE TYPE
7

Assessable government G / H /
industry payments
Other business income I 8,500 / J / 8,500
/
Total business income 39,500 / / 39,500
/
Expenses Opening stock K
Purchases and other costs 1,050 L 1,050
TYPE
Closing stock C M 0
/ C
Cost of sales 1,050 / / 1,050
/
(K + L - M)
Foreign resident U
withholding expenses
Contractor, sub-contractor F
and commission expenses
Superannuation expenses 12,000 G 12,000
Bad debts I
Lease expenses 780 J 780
Rent expenses K
Interest expenses 8,900 Q 8,900
within Australia
Interest expenses overseas R
Depreciation expenses 10,875 M 10,875
TYPE
Motor vehicle expenses B N /
Repairs and maintenance 5,170 O 5,170
All other expenses 44,946 P 44,946
Total expenses S 83,721 T 83,721
Add up the boxes for each column. / / /
Reconciliation items
Section 40-880 deduction A
Business deduction for project pool L
Landcare operations and business deduction W
for decline in value of water facility,
fencing asset and fodder storage asset
Income reconciliation adjustments / / X /
Expense reconciliation adjustments / / H /
Net income or loss B 44,221 / L C / 44,221
/ L
from business this year
Deferred non-commercial D E
business losses from
a prior year
Net income or loss Y 44,221 / L Z / 44,221
/ L
8

from business Transfer the amounts at labels Y and Z to item 15 on page 9.
Taxpayer’s declaration
Read and sign the declaration after completing your tax return, including the Supplementary section, Business and
professional items section and other schedules if applicable.
I declare that:
• the information provided to my registered tax agent for the preparation of this tax return is true and correct, and
• I authorise my registered tax agent to lodge this tax return.
Taxpayer's Day Month Year
Signature Date
Important: The tax law imposes heavy penalties for giving false or misleading information.
The ATO will issue your assessment based on your tax return. However, the ATO has some time to review
your tax return, and issue an amended assessment if a review shows inaccuracies that change the assessment. The
standard review period is two years but for some taxpayers it is four years.
Privacy:
The ATO is authorised by the Taxation Administration Act 1953 to request your tax file number (TFN). We will use your TFN to identify you
in our records. It is not an offence not to provide your TFN. However if you do not provide your TFN, your assessment may be delayed.
Taxation law authorises the ATO to collect information and to disclose it to other government agencies. For information about your privacy
go to ato.gov.au/privacy
Tax agent’s declaration
I, HANDISOFT SOFTWARE TESTER
declare that this tax return has been prepared in accordance with information supplied by the taxpayer,
that the taxpayer has given me a declaration stating that the information provided to me is true and correct
and that the taxpayer has authorised me to lodge the tax return.
Agent’s signature Date Client’s reference
Day Month Year SMIT0001
Agent’s telephone number
Contact name Area code Telephone number Agent’s reference
number
00013000
Motor Vehicle and Travel Expenses 2016
Car Expenses - Actual Business Expenses Method
Registration YEB456 Transfer to 2 Investment Deductions
Kilometres 21,000
Business 82.00 % Car Y Amount
Interest
Depreciation 6,500
Fuel 2,470
Lease
Registration and Insurance 2,080
Repairs 2,700
Total $ 13,750
Amount claimed $ 11,275
Registration YPP96K Transfer to 2 Investment Deductions
Kilometres 18,000
Business 2.77 % Car Y Amount
Interest
Depreciation 4,375
Fuel
Lease
Registration and Insurance
Repairs
Total $ 4,375
9

Amount claimed $ 121
2016 Rental Property Schedule
Address of Rental Property 7 makeup street
Crace ACT 2911
Date property first earned rental income
01/03/2016
Number of weeks property was rented this year 48
Private Use %
Ownership % owned
John John SMIT0001 100.00
Income Return
Gross rental income 8,500 8,500
Other rental related income
Gross Rent 8,500 8,500
Expenses Total Prv % Return
T Travel expenses 830 830
S Stationery, telephone and postage 22,660 22,660
Q Repairs and maintenance 4,120 4,120
H Council Rates 1,800 1,800
M Land Tax 620 620
K Insurance 960 960
F Borrowing expenses 780 780
P Property agent fees/commission 1,122 1,122
L Interest on loans 8,900 8,900
V Sundry rental expenses 950 950
I Capital allowances (depreciation) 3,820 3,820
Total expenses 46,562 46,562
Net Rent 38,062 / L 38,062
/ L
Capital gains tax (CGT) schedule
2016
For instructions on how to complete this schedule refer to the publication Guide to capital gains tax.
Tax file number (TFN)
Taxpayer's name Mr John Paul Smith
Australian Business 27 222 266 667
Number (ABN)
1 Current year capital gains and capital losses
Capital gain Capital loss
Shares in companies listed on A $ 11,980 K $ 9,100
an Australian securities exchange
Other shares B $ L $
Units in unit trusts listed on C $ M $
an Australian securities exchange
Other units D $ N $
Real estate situated in Australia E $ O $
10

Other real estate F $ P $
Amount of capital gains from a trust G $
(including a managed fund)
Collectables H $ 9,180 Q $
Other CGT assets and any I $ R $
other CGT events
Total current year Add the amounts at labels K to R
and write
capital gains J $ 21,160 the total in item 2 label A - Total
current year
capital losses.
2 Capital losses
Total current year capital losses A $ 9,100
Total current year net capital losses applied B $ 0
Total prior year net capital losses applied C $ 0
Total capital losses transferred in applied
(only for transfers involving a foreign bank branch or permanent D $
establishment of a foreign financial entity)
Total capital losses applied E $
Add amounts at B, C and D.
3 Unapplied net capital losses carried forward
Net capital losses from collectables carried forward to later income years A $ 0
Other net capital losses carried forward to later income years B $ 9,100
Add amounts at A and B and
transfer the total
to label V - Net capital losses carried
forward
to later income years on your tax
return.
4 CGT discount
Total CGT discount applied A $ 0
6 Net capital gain
Net capital gain A $ 21,160
1J less 2E less 4A less 5D (cannot
be less than
zero). Transfer the amount at A to
label A - Net
capital gain on your tax return.
Taxpayer's declaration
If the schedule is not lodged with the income tax return you are required to sign and date the schedule.
Important
Before making this declaration check to ensure that all the information required has been provided on this form and any attachments
to this
form, and that the information provided is true and correct in every detail. If you are in doubt about any aspect of the tax return, place
all the
facts before the ATO. The income tax law imposes heavy penalties for false or misleading statements.
Privacy
The ATO is authorised by the Taxation Administration Act 1953 to request your tax file number (TFN). We will use your TFN to identify
you
in our records. It is not an offence not to provide your TFN. However if you do not provide your TFN, your assessment may be
delayed.
Taxation law authorises the ATO to collect information and disclose it to other government agencies. For information about your
privacy
go to ato.gov.au/privacy
I declare that the information on this form is true and correct.
11

Signature Date
Contact person Daytime contact number (include area code)
B (i) Give advice to John re his tax obligation, signature obtaining, substantiation and response to
the ATO’s future enquires.
John smith’s tax obligation is less than their taxable income is higher but at the same time he
gets large number of deductions from its income. Deductions provided to John from its income
earned by them in a financial year. He is a married person which have two dependent daughters out
of which one is disabled person. Fran smith is also gets taxation benefit as both their husband and
she is not separated during the taxation tenure. Signature of top authority is required to be
mentioned in the tax return summary as heir desired motive is to comply with all the rules and
regulations to be fulfilled by an individual in a particular time period. Australian taxation officer
will intervene in the overall process in order to minimise the taxable obligations imposed on an
individual.
An individual is required to file its taxation return by fulfilling legal requirements as per the
Australian taxation officer that requires in providing client declaration and file their lodgement
online by using the website of ATO. An individual will file its return by using various options
mentioned on the ATO website in order to accomplish all its needs and expectations. Tax agent
declaration is also compulsory in order to file a tax return as the accuracy of return will be verified
by tax agents.
Tax return file by an individual with the help of various worksheets created by them for
travel and car expenses, log book are the records that facilitate an individual in filing their tax
properly. These records are required to be sustained by an individual for a period of 5 years.
(ii) Conduct research on any new development in legislation, case laws, ATO rulings or taxation
regulations relating to John, and evaluate how it may be applied to his tax return.
New pattern in the taxation law are required to be used by an individual in order to minimise
he taxation obligations of an individual that needs to be consider by an entity in order to consider all
external market changes in the taxation returns.
There are various changes occurred in the Australia taxation with the proposition of new
budget for the year 2017-18 of the Australian government. Changes takes places in the tax
legislations related to various aspects such as tax integrity packages that emphasises on anti
avoidance law as strictness is increases in terms of legal rules compliance. In the personal income
tax in Australia the rate of Medicare levy has increases to $47670 along with additional $3356 for
each dependent child of an individual. Double taxation has removed in the digital currency in the
current tax changes lies in the existing regulations.
12

In the present case scenario, increase in the Medicare levy will not applicable in case of John
as its income tax return is filed for the year 2016-2017.
13