LAW2453 Taxation 1: Comprehensive Tax Plan for Olivia Patterson

This report provides tax planning advice for Olivia Patterson, addressing various aspects of her financial situation. It analyzes the tax implications of her employment benefits, including salary, superannuation, discounts, and reimbursements. The report also examines the deductibility of expenses related to her investment property, differentiating between capital expenditures and deductible expenses like rates and interest. Furthermore, it discusses the tax implications of transferring funds and shares, including capital gains tax considerations. The analysis includes references to relevant sections of the ITAA 1997 and FBTAA 1986, as well as case law, to support the advice provided. The report concludes with recommendations for filing tax returns and addressing specific issues with the ATO, while also offering a reflective writing piece on the learning process and challenges encountered.

Running head: TAX PLANNING
TAX PLANNING
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Answer to part A..............................................................................................................................2
Letter of Advice...............................................................................................................................2
Overall Introduction.........................................................................................................................3
Discussion........................................................................................................................................4
Conclusion.......................................................................................................................................8
Part C : Reflective writing...............................................................................................................9
Answer to question 1.......................................................................................................................9
Answer to question 2.......................................................................................................................9
Answer to question 3.....................................................................................................................10
Answer to question 4.....................................................................................................................10
Reference.......................................................................................................................................11

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Answer to part A
Client Name: Olivia
Patterson
Client Number: 75443.001
Date: 25th April 2019
Letter of Advice
Private and confidential
Mrs Olivia Patterson
Knight consultancy Pty ltd
11 Aladdin road
Turkish heights NSW 9999
In respect to the meetings and the conversations that we have made over the telephone we
are hereby ascribing our letter of advice with respect to a number of issues that was requested by
you.
Scope of the advice
In the letter of advice we does not consider your residency status. Only the taxation issues
that are associated with the various transactions that has been reported by you during the
financial year has been taken in to consideration. The objective of the letter is to provide you

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advice in relation to the process that you should follow in order to give respond to the ATO
regarding your taxation position.
Facts
The letter of advice is prepared by taking in to consideration of the appropriate laws
relating to taxation and other applicable cases that are suitable for your situation and the
applicable rulings of tax that will help you to know your tax position for the assessment year
2018/2019.
Summary of advice
The summary of the letter of advice contains each of the matters that you have
mentioned. We are providing you a detailed explanation relating to various matters that are
related to our direction for your examination. We are strongly recommending you to go through
the advice that has been provided by us very prudently. Our advice in relation to every aspects of
areas that is asked by you has been given in this letter of advice.
Overall Introduction
As per the information given by you, we have observed that you moved in to Australia
and you are currently spending a prosperous life style in this country. Having a degree of
environmental science in 2017, you have efficaciously gained a job at the Burnurong
environment centre, which is situated in Inverloch. This organisation has provided you an
employment contract with several other benefits that are related with your employment.

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Discussion
The amount that an employee earns from his or her employment is subject to taxation and
attracts tax liability. If any kid of connection is noticed with the receipts that are coining from the
personal service of the assesse then such income will be considered as ordinary income under the
provision of “ section 6-5, ITAA 1997”. The general items like the salaries and wages or
associated payments that are linked with the work of the employee the connection is established.
The retention payment that was paid as a consideration to the key employees in order to keep
them in employment for 12 months after the takeover is regarded as ordinary income under
“section 6-5,ITAA 1997” read with the decision given in the case of “Dean v FCT (1997)”
(Faccio & Xu 2015).
Olivia after the job with Burnuron Environment Centre your annual compensation
included $45000 along with superannuation of 9.50%. The amount received by you as salary
included in the receipts originated from the personal service. the salary visibly creates the
connection with your personal services.as per the law court decision in the case of “Dean v FCT
(1997)” the salary from employment is considered as ordinary income under “section 6-5,ITAA
1997” this salary will be taken into consideration for assessing your income for the calculation of
tax liability. On the other hand, the 9.50 % contribution by the employer will be treated as fringe
benefit to you (Braverman Marsden & Sadiq 2015). The contribution to the superannuation shall
be considered as the tax free income for you as per the provision of section “23L of the ITAA
1936” whereas your employer will pay the fringe benefit tax on the value of the superannuation
contribution made (Pearce & Hodgson 2015).
As per the section “136(1) of the FBTAA, 1986” the term benefit includes of the right
private services or the advantage that is provided in this arrangement with connection to the

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performance of the work. You also mentioned that you have received 10% discount on all the
camping equipment from the local outdoor stores and the company’s own gift shop. This is to
bring to your knowledge that as per “section 136(1) of the FBTAA 1986” the 10% discount that
you receive from all the shops of the company includes the privileges that are provided to you
under the arrangement with relation to the work performed by you (Kouparitsas Prihardini &
Beames 2016).
At the time of your employment, you spend $870 in order to buy wet weather gear and
other protective dress. The company later gives the amount back to you. Generally,
reimbursement may be defined as any action that creates a direct or indirect effect. The court in
the case of “FCT v roads and traffic authority of new south wales (1993)” states that
reimbursement means the payment that is made in connection to the actual expenses (Ingles &
Stewart 2018).
As per “section 20, FBTAA 1986” an expenses if reimbursed by the employer will be
considered as fringe benefit for the employee. The reimbursement of $870 that is expended by
you for the purchase of protective clothing and weather gear is considered as an expense
payment fringe benefit as per the “section 20, FBTAA 1986” (Huibregtse & Sood 2016). The
benefit is given to you in relation to the work performed by you. Therefore, in this case, you will
not be taxed for the reimbursed amount but your employer will be liable to pay the fringe benefit
tax on the value of fringe benefit given (Shi et al 2016).
The fringe benefit tax exclude certain work related items when it is primarily used in the
employment of the employee. The items usually includes the portable electronic devices,
computer software, cloths used for protection, briefcase or tools that are connected to trade. The

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items that are given to you by your employer are radio transceiver, tablet computer and case for
visiting sites. You will get the benefit of exemption for receiving all these items as all these items
that are provided to you are in relation to your work (Chardon Freudenberg & Brimble 2016).
In the month of August, you purchased an investment property in Inverloch and you
started to stay there in September. You decided to give away your Philip island property on rent.
As soon as you rented out the property, the tenants started to stay there. All the informations
related to the expenses like the settlement fees rates interest and insurance amount that you have
paid for the investment property in Inverloch has been furnished by you (Barrett & Veal 2016).
It is to bring to your knowledge that to avail the deductions of rental expenses you are
required to fill certain forms. These deductions are available until you rented out the property.
The capital expenditures cannot be claimed for deduction (Braithwaite & Reinhart 2019).
There are some acquisition and disposal costs, which cannot be claimed for deduction.
The expenditures that are not eligible for deduction are, conveyance cost stamp duty or
settlement fees. For calculating the CGT these costs are treated as the base cost of the property
(Chen & Taib 2017).
In between the financial year you reported that the purchase price of the investment
property of Inverloch is $ 450000 and th expense related to the partial settlement of the property
is $4732.these expenses are treated as capital expenditure as these are related with the purchase
of the investment property and for that reason these cannot be claimed for deduction. These
expenses can be treated as the part of the cost base of your property at the time of selling the
property (Graetz & Warren 2016). Further, it is observed that you started to stay in the property
in September 2018 and the expenses such as rates interest incurred by you from that period. It is

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recommended that the expenses such as rates for 1st august 2017 to 1st august 2018 will be
eligible for deduction as the property was rented during that time before you make your mind to
move in September 2018 (Blunden 2016).
The interest paid for the assessment year 2017-18 amounting to $258541 and the amount
paid during July to August will also be allowed for deduction. similarly the interest expenses that
has been paid for the period of September 2018 to march 2019 will not be allowed for deduction
as at that time the property is not rented and it was mainly used for private purpose as per
“section 8-1, ITAA 1997” (Altshuler Shay & Toder 2015).
In case of the Philip island property, you purchased the property for $650000 and the
settlement fees is $6350 form in the month of November 2011. It is to inform you that you will
not be able to claim it as deduction as these expenses will be treated as the base for the cost of
property for computing the capital gain tax (Graetz & Warren 2016).
As per the information given by, you it is observed that you have closed the interest
bearing account that was held by you jointly with Dave and you transfer the amount in the
interest bearing account in your own name. In addition to that, you have transferred the shares of
ANZ worth $10684 in to the interest bearing account (Krever & Mellor 2016).
According to the Australian taxation office an individual are required to declare all the
incomes that are generated from any kind of interest. The income from interest includes the
income that is earned from the funds in the account that belongs to the taxpayer (Evans Minas &
Lim 2015).
In this case as you transferred the remaining balance of the interest bearing account into
your own name so, it will be required to declare the amount of interest that is transferred to your

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account in the income tax return filed by you. The interest income will be subject to tax liability
(Tanzi 2017).
You also wanted to know whether you could transfer the ANZ shares in the name of
Dave. You can do so by showing the transfer of shares as gift to Dave. If you do so, you will not
be liable to pay capital gain tax (Richardson 2016).
As a final point, the real estate agent has projected the value of Phillip Island
Home and Inverloch Property. This suggests that when you sale the property the cost base of
property will comprise the clearing price to decide the net amount of capital gains. As both the
houses are used for making income. You are also entitled for partial main residence deduction
from the capital gains tax (Evans Minas & Lim2015).
Conclusion
Consequently, once you have read the letter of advice and you are happy to continue
further we would be arranging the tax files to the ATO with respect to the issues that are
conversed above. If you wanted to talk over further concerning any problem that is explained
above, give pleasure to reach us at our office.
Your Sincerely
Associate taxation
Knight consultancy Pty ltd

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Part C: Reflective writing
Answer to question 1
During the time of countering to the information that is provided by the client I go through a
elaborated analysis of the various points and facts that will affect the tax liability of the client. A
broad assessment has been made relating to the effect of the capital gain tax, the provisions
related with the fringe benefit tax and the tax burden that the client has to pay for the income that
he has earned from the personal services rendered by him. Therefore, the analysis provide
sufficient support to the information that is given in the case study.
Answer to question 2
Yes, I am optimistic and contented adequate to deliver the report to my employer. The reason for
given the report to my employer is that it conveys the maximum eminence of presentation that
will be supportive in accomplishment of an informal indulgent of the present condition of client
and the matters which is pertinent with the Australian tax laws. The report conveys a complete
explanation of all the tax concerns for dealings and go with a profundity research for the
solicitation of suitable law cases to back the analysis.
Answer to question 3
As a tax advisor, it turn out to be problematic to wholly depend on the confrontations of clients
as there may be some transactions that may not be mentioned by the client. This will not support
in stimulating compliance due to the non-disclosure of information. This may stimulate a conflict
of interest between the clients and the tax advisor. Such conflict of interest may damage the
connection among the client and the tax advisor. Non-disclosure of significant information may

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consequence improper tax recommendation and this may upset the tax position of the client by
causing vagueness and indistinctness.
Answer to question 4
On the basis of the information provided by client a tax consultancy fees of around $10,350 will
be charged by the tax agent for rendering recommendation to clients. The amount however is not
regarded to be adequate as apart from executing research and enlisting the reports there are extra
time given in the form of arranging meeting and sessions, which enhances the total amount of
time that is devoted on the analysis of case facts.

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