FNSACC512/FNSACC601: Tax Documentation Preparation and Administration

This document provides a comprehensive solution to an assignment covering FNSACC512 and FNSACC601 units, focusing on preparing tax documentation for individuals and legal entities. It addresses various tasks including identifying tax avoidance schemes, understanding organizational policies and procedures related to tax, calculating superannuation contributions and related tax implications, determining partnership income and its allocation, managing tax administration and penalties, handling foreign source income for entities, dealing with trust income and tax obligations, and performing company reconciliations and franking account management. The solutions include detailed calculations and explanations for each task, providing a clear understanding of the concepts and practical application of tax principles.

FNSACC512 Prepare tax
documentation for individuals
FNSACC601 Prepare and administer tax
documentation for legal entities
Assessment 13
LA023800
Assessment Template

What you have to do
This assessment consists of 9 tasks. Students are required to complete every question in each task in the
assessment. To achieve a satisfactory result in these topics they must achieve the following results for
each task:
Task Topics Satisfactory/Not
satisfactory
1 Tax Avoidance
2 Organisational policies and procedures
3 Superannuation contributions
4 Partnerships
5 Administration of tax
6 Foreign source income
7 Trusts
8 Company Reconciliations
9 Company Franking Accounts
Result Assessment result: Satisfactory (S) / Unsatisfactory (U) -
Note: The number of rows and columns in the tables are indicative only. Students are allowed to add
rows and columns according to their answers.
Task 1 – Tax avoidance
(a) Discuss whether Robert’s tax planning arrangement is a tax avoidance scheme or not.

Tax avoidance is an act of minimising tax liability by adopting legal methods. Although it is legal
method but not advisable because it is an activity of taking unfair advantage of loops which are
present in tax laws. It can be done by finding a different way to avoid the tax payment (within the limit
of law). Robert is implementing tax planning in such a way (within the boundaries of law) that will help
to reduce tax liability of David. As it come under the tax avoidance scheme which is also known as tax
exploitation. Tax avoidance is to be done by adjusting the accounts in such a manner where there is no
violation of tax law. Moreover, on the other hand by reducing the tax liability with the help of tax
avoidance, it is required to pay penalties (as per the law).
(b) Explain Robert how promoter penalty laws operate and the maximum penalties that the Federal Court
can impose on him.
_____Promoter penalties laws is to be made in order to determine the tax avoidance schemes. All those
advisers who take part in design, implementing and marketing of schemes which claim to provide
taxation benefits are to be considered under this law. The main element of this law is to monitor and
control an entity not to engage in prohibited conduct. Moreover, prohibited conduct is an act that
result in entity being (work as a) promoter of tax exploitation or avoidance scheme. The promoter
penalty laws is not formed to obstruct intermediaries and tax advisers in order to give useful advice to
their client. If any entity is caught by being a promoter of tax avoidance scheme then the legislation
enables in order to request the Federal court of Australia for imposing civil penalties. Maximum
penalty which can be imposed by Federal court is 5000 penalty unites for individuals whereas one unit
is equal to $222. Moreover, 25000 penalty units will be lea-vied for body corporate. A scheme can be
said tax avoidance or exploitation of tax, If at the stand point of promotion, has a dominant or sole
purpose of an entity to gain a scheme benefit which is not legally available. So as here, court will
charge 5000 penalty unites from Devid.
Task 2 – Organisational policies and procedures
(a) Decision making processes

The decision making in respect to the good corporate governance practice will be__________
taken based on the need and situation. The aim of the decision making is to maximise the growth of
the business in respective target market. The________________________________________
organisation has planned to adopt a good corporate governance practice ________________
that can favour the business venture to approach all its various business__________________
objectives. The decision making process is for changing the structure is __________________
also involved all the key stakeholders associated with venture.
____________________________________________________________________________
(b) Getting proper advice
The decision of the Antonio is to convert the business into the company is ________________
very effective. This is to advice the organisation to get conversion into the________________
company business so that overall objective of operations can meet. In context_____________
to any business house this become important to convert the business type once___________
the scale of business become broad. The conversion of the business into the______________
company will facilitate the organisation to easily approach the funding.
____________________________________________________________________________
(c) Record keeping and documentation
The records and documentation related to every transaction need to be done _____________
by company. In context to the company this is a mandatory requirement that_____________
business house record every single business transaction. Record keeping is________________
happen with support of bill book and also over the financial statement such_______________

as trading account, profit and loss, balance sheet and also in cash flow statement__________
maintain by company. Record keeping and documentation is mandatory for_______________
the company and its business operations.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

Task 3 - Superannuation Contributions
(a) Calculate the employer’s deduction
Employer’s contribution is equivalent to their contribution towards employee's superannuation fund =
$24000 + $3515 = $27515._______________________________________________________
Calculate the superannuation fund’s assessable amount and identify the type of contribution
Assessable income of Superannuation fund = Contribution from Superannuation Guarantee + Salary sacrificed =
24000 + 3515 = $27515.
Calculate the tax payable on the contribution by the superannuation fund
Tax payable on Contribution by the Superannuation fund = 27515 * 15% (Concessional rate applicable
on the fund) = $4127.25.
____________________________________________________________________________
(b) Calculate Karen’s cap amount and determine how the excess contribution if any, will be taxed and
indicate how Karen can pay her tax liability
Karen's cap amount for the year 2017 – 18 = 25000__________________________________
Excess contribution = 27515 – 25000 = 2515________________________________________
This amount will be added to the assessable income of Karen and taxed at the applicable marginal tax
rate.
Karen taxable income = 37000____________________________________________________
Now 2515 will be added to this amount and taxable amount would be = 39515____________
Tax rate plus 2% medicare levy applicable on Karen = 21%
Additional Tax liability = $528.15__________________________________________________
15% tax offset available to Karen = 528.15 * 15% = $79.22_____________________________
Reduced tax liability = 528.15 – 79.22 = $448.93

____________________________________________________________________________
(c) Explain if Karen’s eligible income for any of the tax offsets available in the superannuation system
Yes, Karen is eligible for the tax offset @ 15% of the additional tax liability that has been arises on the
ground of excess concessional contribution towards the complying superannuation fund. This tax
offset results in the reduction of the additional tax liability of Karen.
____________________________________________________________________________

Task 4 – Partnerships
(a) Calculate the partnership’s net income or loss for the year ended 30 June 2018
ASSESSABLE INCOME $ $
Sales ordinary income (section 6-5) 1780000
Interest on partners loan 5000
1785000
DEDUCTIONS
Operating Expenses 1420000
Interest on bank overdraft 15000
-1435000
PARTNERSHIP NET INCOME/LOSS 350000
$ $
Salary – Ted 90000
Superannuation - Ted 10000
Interest on loan from Ted 35000
Interest on capital -Ted 55000 -190000
Adjusted net income available for equal distribution among
partners
160000
(b) Prepare a worksheet showing the allocation of income or loss between partners
Item Mary Ted Total
$ $ $
Net income available for distribution equally 80000 80000 160000
Income from sale of delivery van (capital assets)
(20000 – 12000)
4000 4000 8000
Income from sale of shares (capital assets)
(11000 - 5000)
3000 3000 6000
Salary, superannuation, interest on loan and
capital from Ted.
0 190000 190000
87000 277000
(c) Calculate Mary’s taxable income for the year ended 30 June 2018
MARY $
Partnership income 80000
Income from sale of delivery van 4000
Income from sale of shares 3000
Less Interest paid on loan -5000
TAXABLE INCOME 82000

Task 5 – Administration of tax – penalties
1)
(a) Explain what the ATO would deem of Paul’s conduct of failing to pay the shortfall amount
In any situation the assessor do not assess the complete tax liability on a given____________
time than the penalty is imposed of the reduced value or amount. All such _______________
income that is not included in income tax assessment imposed for tax ___________________
liability along with penalty in the next year.
(b) Indicate the base penalty rate that would Paul be liable for the shortfall amount
$10,000 or 1% of the tax liability wherever is lower. This is a tax penalty that the Paul will have___
to bear for considering the short falls in the payment of income tax liability._______________
____________________________________________________________________________
2)
(a)Explain what the ATO would deem of company’s conduct of failing to disclose a sales income and calculate
the shortfall amount
Any time the short fall is disclosed in the income tax liability of company than_____________
maximum penalty is imposed in the form of 10 years imprisonment. This is _______________
the condition is imposed when with the action or practice of tax evasion is________________
followed.
(b) Indicate the base penalty rate that the company would be liable for the shortfall amount and calculate the
penalty amount
Base penalty: 1% of tax liability or 10000 whichever is lower. In the current ______________
situation only the income that is excluded for calculating the tax liability is.________________
mentioned. So it is not possible to ejaculate the actually value of penalty in the current cash situation.
____________________________________________________________________________

Task 6 - Foreign Source Income of Entities
(a) Calculate John Pty Ltd.’s taxable income for year ended 30 June 2018
$ $
Net Interest received from Italy 30000 + 10000 40000
Fully franked dividend 14000
Franking credit offset - Fully 14000/70* 30 6000
20% partly franked dividend 7000
Franking credit offset – 20% franked 7000/70×30 3000
Remaining 80% Un franked dividend 7000/20×80 28000
Unfranked dividend 15000
Interest (net) 5300
Taxable Income 118300
(b) Calculate John Pty Ltd.’s net tax payable or refundable for the year ended 30 June 2018
$ $
Tax payable @ 25% 118300* 25/100 29575
Franking credit offset – Fully franked 6000
Franking credit offset – 20% franked 3000
Tax credit offset (Interest received from Italy) 10000
Tax credit offset (TFN tax) 4700
-23700
Tax Payable 5875
Task 7 - Trusts

(a) Prepare a schedule
Beneficiary Presently
entitles
Yes/No
Legal disability
Yes/No/NA
Section(s)
applicable
Who is
assessed?
Distributed
Income
$
Samantha Yes No Section 97 Beneficiary $50000
Fran Yes Yes Section 98 Trustee $14000
Tony Yes Yes Section 98 Trustee $13000
Steve yes Yes Section 98 Trustee $25400
Balance No N/a Section 99A Trustee $7600
Total $120000
(b) Calculate the s95 net trust income and the tax payable by the trustee
Assessable income of the trust = 120000___________________________________________
Allowable deductions = Donation made to registered charity + share of beneficiaries
= 10000 + 102400 = ($15000). So, the net trust income is 120000 – 112400 = $7600.
Tax payable by trustee will be 32.5% of $7600 (32.5% is being used as trust’s taxable income before
deducting beneficiary’s share is 120000 – 10000 = 110000).____________________________
Tax payable would be a sum 32.5% tax rate and 2% medicare levy = 34.5% * 7600 = $2622.___
Tax payable by trustee on behalf of Fran = 14000 (less than 18200 is exempt from taxation).
Tax payable by trustee on behalf of Tony = 13000 * 45% (as per Div 6AA)
= 5850
Add: Medicare levy @2% of 13000 = 260
Tax liability of trustee on behalf of Tony = 5850 + 260 = $6110
Tax payable by trustee on behalf of Steve = 25400

25400 * 45% = 11430___________________________________________________________
Add: medicare levy @2% of 25400 = 508
Tax liability of trustee on behalf of Steve = 11430 + 508 = $11938.
(c) Calculate the tax payable by Tony and Steve
Tax payable by Tony____________________________________________________________
Gross wages received = 30000____________________________________________________
Received from inter vivos trust = 4000_____________________________________________
Share of trust income = 13000____________________________________________________
Assessable income = 30000 + 4000 + 13000 = 47000__________________________________
Tax liability on 47000 = 3572 + 32.5% of (47000 - 37000)_______________________________
Tax payable= 3572 + 3250 = $6822
Add: Medicare levy = 2% of 47000 = $940
Tax liability = 6822 + 940 = $7762
Net tax liability of Tony = 7762 – 4500 (PAYG tax withheld) = $3262
Tax payable by Steve
5000 + 25400 = 30400
first 18200 exempt
Next (30400 – 18200) = $12200 * 19% = 2318.
Add: Medicare levy @2% of 12200 = 244
total tax payable by Steve = 2318 + 244 = $2562.
____________________________________________________________________________