THE TAX PLAN AND COMPLIANCE

This unit requires the application of skills and knowledge required to implement tax plans and to evaluate organisation's taxation compliance. The unit encompasses assessing taxation liabilities, optimising tax position, establishing processes and plans, evaluating tax policies and reviewing taxation compliance. The unit can be applied across the financial services sector, and is appropriate for a person with suitable qualifications and experience such as an accountant and taxation specialist that is responsible for implementing tax plans and evaluating compliance with taxation requirements

Running head: TAX PLAN AND COMPLIANCE
Tax Plan and Compliance
Name of the Student
Name of the University
Authors Note
Course ID

1TAX PLAN AND COMPLIANCE
Table of Contents
Part a: Scenario 1:......................................................................................................................3
Answer to question A:................................................................................................................3
Answer to question B:................................................................................................................4
Answer to question II:................................................................................................................4
Answer to question III:...............................................................................................................4
Answer to question IV:..............................................................................................................5
Answer to question V:................................................................................................................5
Answer to question VI:..............................................................................................................5
Answer to question VII:.............................................................................................................6
Answer to VIII:..........................................................................................................................6
Answer to question IX:..............................................................................................................7
Part B: Scenario 2:.....................................................................................................................8
Answer to requirement A:..........................................................................................................8
Answer to question II:................................................................................................................9
Answer to A:..............................................................................................................................9
Answer to B:............................................................................................................................10
Answer to C:............................................................................................................................10
Answer to D:............................................................................................................................10
Answer to requirement III:.......................................................................................................10
Part C: Scenario 3:...................................................................................................................11

2TAX PLAN AND COMPLIANCE
Answer to question I:...............................................................................................................11
Answer to question II:..............................................................................................................11
Bibliographies:.........................................................................................................................13

3TAX PLAN AND COMPLIANCE
Part a: Scenario 1:
Answer to question A:
Particulars Amount ($) Amount ($)
Assessable Receipts 1300000
Fully Franked Dividend (Net) 70000
Gross Up Franking Credits 30000 100000
Interest received 120000
Total Assessable Income 1520000
Allowable Deductions
Cost of Sales 490000
Wages 300000
PAYG Instalments 50000
Depreciation for Tax Purpose 130000
General Expenses 78000
Bad Debts 4000
Rent Paid 90000
Total Allowable Deductions 1142000
Total Taxable Income 378000
Computation of Taxable Income
In the books of Chrystal View Ltd
For the year ended 30th June 2015

4TAX PLAN AND COMPLIANCE
Answer to question B:
Particulars Amount ($) Amount ($)
Assessable Receipts 1300000
Fully Franked Dividend (Net) 70000
Gross Up Franking Credits 30000 100000
Interest received 120000
Total Assessable Income 1520000
Allowable Deductions
Cost of Sales 490000
Wages 300000
PAYG Instalments 50000
Depreciation for Tax Purpose 130000
General Expenses 78000
Bad Debts 4000
Rent Paid 90000
Total Allowable Deductions 1142000
Total Taxable Income 378000
Tax on Taxable Income 113400
Less: Franking Credits 30000
Total Tax Payable 83400
Computation of Taxable Income
In the books of Chrystal View Ltd
For the year ended 30th June 2015
Answer to question II:
The financial management strategies that should be adopted by business to reduce tax
liabilities is by making a smart tax elections. This includes the cost incurred by business in
purchasing business equipment is usually allowed for deduction by claiming a depreciation
allowance over the five or seven years or for the longer periods.
Answer to question III:
Optimal Structure: The structure of Chrystal View Pty Ltd can affect the tax outcome and
personal liability if any unpaid debt is existent. As an accountant it is important to provide an
invaluable advice during the early stages of business. This will help in restructuring the
business in best possible tax and risk management outcomes.

5TAX PLAN AND COMPLIANCE
Minimizing tax bill: As an accountant of Chrystal View Pty Ltd it is vital to minimize the
deductions. Since the tax laws and regulations are changing constantly it is important to go
through all the issues which can help in preparation of tax document and minimization of tax
bill as well.
Answer to question IV:
Commonly, the tax return of Chrystal View Pty Ltd is due to be lodge by 15th of the
day with the ATO for the seventh month after the end of applicable income year or dates that
may be allowed by the Commissioner of Taxation.
Answer to question V:
The document management procedure that can be adopted to make sure that the tax
return meets the compliance requirements are as follows;
Payroll reporting: Small business that has employee strength of less than 20 employees is
needed to lodge the reports with the ATO.
Monthly or quarter BAS and instalment activity statements: The ATO needs businesses
to submit a business activity statement on the monthly, quarterly or yearly basis.
Financial year reporting: This can be viewed as another way of maintaining compliance
requirements relating to tax. Business firms are under the obligation of lodging tax returns for
this period. If someone is operating their business as sole trader they can declare the business
income as their personal income tax returns.
Answer to question VI:
For Chrystal View Pty Ltd the due date to lodge BAS and pay their monthly BAS is
given below.

6TAX PLAN AND COMPLIANCE
Quarter Due date
1. July, August and September 28 October
2. October, November and December 28 February
3. January, February and March 28 April
4. April, May and June 28 July
Answer to question VII:
The GST obligations of Chrystal View Pty Ltd are as follows;
a. Making the company registered for ABN & most possibly the GST.
b. Generating a valid tax invoice
c. Getting a valid tax invoice
d. Charging the GST on the correct items
e. Paying GST
f. Claiming only the permitted GST or the input tax credits.
Answer to VIII:
For Chrystal View Pty Ltd good record keeping is regarded important for the business
success. Each business person that are engaged in the business must keep records and should
keep highly organized records which better helps in retrieving the information from those
records. The importance of good record keeping system are as follows;
a. Helps in monitoring the progress of business
b. Helps in preparing financial statements
c. Useful in recognizing the receipt sources

7TAX PLAN AND COMPLIANCE
d. Helps in keeping track of the deductible outgoings
e. Maintaining the lists of assets
f. Helps in preparation of tax returns and supports the items which is reported on the tax
returns.
Answer to question IX:
Name Elements
Receipts Payroll records, income, deduction or credit in tax return.
Cash register tapes Cash books of sales
Information of
deposits Receipts of bank deposits
Invoices Sales and purchase receipts
Bank statement Quarterly bank statement
Petty cash slips for
small cash
payments
Payment of petty cash items
Cancelled cheques Documentary evidence of cancelled cheques
Credit card receipts Receipts showing source of expense transaction.

8TAX PLAN AND COMPLIANCE
Part B: Scenario 2:
Answer to requirement A:
Cash Flow Forecasted Budget for July 20XX to September 20XX
July Aug Sep Qrt total
RECEIPTS
Sales (product 1) 220000 242000 266200 292820
Sales (product 2) 165000 181500 199650 219615
Interest 1515 1530.15 1545.4515 1560.90602
TOTAL RECEIPTS 386515 425030.15 467395.452 513995.906
PAYMENTS
Accounting and legal fees 1010 1020.1 1030.301 1040.60401
Advertising and promotion 77000 84700 93170 102487
Business loan payments 10000 10000 10000 10000
Interest and bank charges 120 120 120 120
Printing, postage, stationery, packaging 792 784 776 768
Rent of business premises 2020 2040.2 2060.602 2081.20802
Telephone [phone] 2049.74
Utilities - electricity, gas 1155 1270.5 1397.55 1537.305
Wages and salaries 7700 8470 13975.5 15373.05
TOTAL PAYMENTS 101337 110098.8 124393.353 135456.907
NET CASH FOR THE PERIOD 285178 314931.35 343002.099 378538.999
Opening Bank Balance 120000 405178 720109.35 1063111.45
CLOSING CASH BALANCE 405178 720109.35 1063111.45 1441650.45
Answer to requirement b:
The company will be able to pay the tax obligation because it has sufficient amount of
closing cash balance.

9TAX PLAN AND COMPLIANCE
Answer to question II:
Answer to A:
a & b (6 marks) Selected Period Budgeted $ Difference
Income
Sales
Retail Sales $5,318.00 $5,000.00 318.00
Wholesale Sales $1,567.50 $1,500.00 67.50
Consignment Sales $2,000.00 $2,500.00 -500.00
Total Income $8,885.50 $9,000.00 -114.50
Cost of Sales 0.00
Retail Cost of Sales $3,419.31 $3,000.00 419.31
Wholesale Cost of Sales $1,001.33 $1,000.00 1.33
Total cost of sales $4,420.64 $4,000.00 420.64
Gross profit $4,464.86 $5,000.00 -535.14
Expenses
Car & Truck Expenses $100.00 $125.00 -25.00
Freight Paid $48.95 $75.00 -26.05
Insurance (other than health) $45.00 $50.00 -5.00
Other Interest $750.00 $750.00 0.00
Legal & Professional Services $178.90 $250.00 -71.10
Lease Expenses
Machinery & Equipment $100.00 $120.00 -20.00
Other Business Property $12.00 $20.00 -8.00
Supplies $150.00 $150.00 0.00
Taxes $50.00 $75.00 -25.00
Meals & Entertainment $1,000.00 $1,500.00 -500.00
Utilities $450.00 $400.00 50.00
Wages Paid $750.00 $700.00 50.00
Total expenses $3,634.85 $4,215.00 -580.15
Operating profit $830.01 $785.00 45.01
Net Profti/(Loss) $830.01 $785.00 45.01

10TAX PLAN AND COMPLIANCE
Answer to B:
As evident from the above given table it is noticed that the retail sales have
represented a rise in sales by 106 while the wholesale have portrayed an increase in sales by
105%. The consignment sales actually stood 80% while the total income declined by 1% to
stand at 99%. The business has also occurred an increase in the retail cost of sales of 114%
while cost of wholesale trade has remained at 100%. Overall gross profit has represented a
decline by 89% and the variance amount standing for the same was 535. The business
reported a decline in car and truck expenses as the expenditure represented 80% of the total
budgeted amount. The overall expenses stood 86% while the business has reported a net
profit of 106%.
Answer to C:
In order to improve the tax obligations Super Cool Pty Ltd is required to improve its
gross profit. This can be improved by increasing the sales price and taking more of a cash
discount from the suppliers.
Answer to D:
For Super Cool Pty Ltd there are numerous areas of tax planning is applicable. The
area of tax planning for budget variance is the choice of accounting and the method of
inventory valuations. This also includes the timing of purchasing equipment, spreading the
business income and involves the selection of tax favoured benefit as well as investment
plans.
Answer to requirement III:
Yes, it can be stated that there is a legislative and professional requirement of
monitoring as well as reviewing the tax document. Regularly reviewing the legislation and
regulation which affects the working environment. The monitoring and reviewing of tax

11TAX PLAN AND COMPLIANCE
document is considered important because it helps in preserving the sensitive information that
are confidential and disclosing these information only to those that need it and when
disclosing the same in a legal manner. It is recommended to avoid those situations that simply
threatens the professional independence.
Part C: Scenario 3:
Answer to question I:
The ATO normally aims to lower the risk of tax crime by making the tax and super
system secure. In context of Benjamin, this implies that a systematic solutions must be
develop which remove the opportunity for people to commit the crime and avoid the
detection. The entire crime treatment procedure should be adopted as this will allow
Benjamin in providing a long-term change in participation by removing the opportunity of
repeating the offence. The review techniques which can be applied to diagnose the fraudulent
and dishonest business operations of Benjamin is given below;
a. Securing systems and procedure: Tax crime can be prevented by designing a
corporate and trusted third party systems to rely on.
b. Sustainable compliance: Compliance strategies must emphasize on attaining the
sustainable improvement in business compliance.
c. Robust law and administration: Benjamin should adopt the legal and administrative
framework in focussing on eliminating the opportunities for tax crime.
Answer to question II:
Normally, the ATO identifies the risk of compliance when it reviews their tax affairs.
The ATO might take the decision of conducting an audit if it is able to recognize the areas of
concerns which requires closer examination. The ATO is normally guided by the facts and
will not necessary adhere with the each step of the typical tax assurance procedure. The ATO

12TAX PLAN AND COMPLIANCE
usually reviews the business based on the level of higher level by using the risk filtering
procedure. The ATO makes the use of cooperative compliance approach to recognize non-
compliance and evaluate the risk as and when they originate. The nature of transaction and
the knowledge of compliance risk signifies that it would proceed directly for audit following
the analysis of risks.

13TAX PLAN AND COMPLIANCE
Bibliographies:
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.