The assignment is an individual assignment and is a case study to research and critically analyze tax law, relevant supporting materials and literature.
The assignment should be between 1000 to 1500 words in length. This assignment is worth 20% of the total marks in the unit.
The assignment is due for submission in week 10 (17 September 2014) and is to be submitted online. There will be a penalty of 5% deduction per day from the total mark that would have been awarded for the assignment if it had been submitted on time.
The assessment criteria are on page 3 and page 4.
ABC Ltd has recruited two new staff members Peter Jones and Jack Kendall who started on 1 April 2013. Both are Australian residents.
Peter Jones replaces the director of the compliance department and receives a salary package of $300,000. Peter will decrease his salary by the amount representing the full cost of providing the following benefit [including any Fringe Benefit Tax (FBT)]:
Company car – 2013 Toyota Landcruiser costing $55,000, which can be leased over three years for $1,500 per month (with a 30% residual value at the end of the lease). Peter expects to travel 15,000 km per year and would be for private purposes only. He would like ABC Ltd to pay the lease instalments and all of the running costs, including registration, insurance, fuel and servicing costs, estimated at $5,500 per year. The contact was entered on 1 April 2013.
Vehicle parking space – at the company premises during the normal business hour from 8am till 6pm (48 weeks per year, five days per week). The cheapest nearby (within 1km radius) commercial parking station is charging $10 per day.
Daughter private school fee – Peter would like ABC Ltd to pay his daughter’s private school fee of $25,000 per year.
Jack Kendall is a marketing manager and receives a salary package of $90,000. Jack will decrease his salary by the amount representing the full cost of providing the following benefit (including any FBT):
Company car – 2013 Holden Commodore costing $30,000, which can be leased over three years for $800 per month (with a 30% residual value at the end of the lease). Jack expects to travel 42,000 km per year of which 25,000 km would be for business purposes. He would like ABC Ltd to pay the lease instalments and all of the running costs, including registration, insurance, fuel and servicing costs, estimated at $3,500 per year. The contact was entered on 1 April 2013.
Child care – Jack has a pre-school kid, who he leaves at the nearby commercial child care centre for five days each week at a cost of $500 per week, $24,000 pa (48 weeks).
You are an accountant of ABC Ltd and the CFO has required you to analyze the tax effectiveness of these salary packages and submit a report before finalizing the new employment contracts.
All expenses are net off GST if GST is applicable.
For car fringe benefit, calculate FBT under the Statutory Formula method and Operating Cost method. Choose the one, which provides the lower FBT.
Evaluate tax effectiveness by considering tax payable and Medicare levy.
This report should:
Calculate the FBT and take home income of Peter Jones for FBT tax year 2013/14.
Calculate the FBT and take home income of Jack Kendall for FBT tax year 2013/14.
Compare the difference between tax effectiveness of Peter Jones’s salary package and tax effectiveness of Jack Kendall’s salary package. Provide recommendations to improve the ineffective salary package (if any).
What are the advantages and disadvantages of salary packaging considered by ABC Ltd.
What are the advantages and disadvantages of salary packaging considered by Peter Jones and Jack Kendall.
Assessment Criteria and Performance Standards for Case Studies
Unacceptable level of achievement – minimal or no evidence of understanding of theory
Acceptable level of achievement – some minimal evidence of understanding of theory
Acceptable level of achievement – meets minimal requirements
High level of achievement – displays the application of professional & industry standards
Exceptional – displays the application of professional and industry standards to a very high level
Case study context and problem identification
0 – 1
No real evidence of understanding the case study within the context of a body of knowledge or the principal issues requiring solutions
Some minimal evidence of understanding the case study within the context of a body of knowledge or the principal issues requiring solutions
Adequate evidence of understanding the case study within the context of a body of knowledge or the principal issues requiring solutions
High level of ability of understanding the within the context of a body of knowledge or the principal issues requiring solutions
Very high level of understanding the case study within the context of a body of knowledge or the principal issues requiring solutions
Depth of research
0 – 1
No real evidence of research underpinning the case study
Some minimal evidence of research
Adequate evidence of appropriate research.
High level of research – goes beyond prescribed readings
Very high level of research – goes beyond prescribed readings and applied creatively
Analysis & synthesis
0 – 1
Very little or no evidence of understanding of the topic
Some understanding of the topic evident but with little evidence of analysis
Adequate evidence of ability to comprehend case study discussion and facts, leading to research.
Good understanding of the topic with evidence of deep analysis and synthesis of information
Very high level of understanding with insightful evaluative comments and conclusions
Organisation of arguments and solutions
0 – 1
No clear hierarchy of arguments or solutions provided
Some solutions backed by arguments presented but not particularly clear or relevant
Adequate solutions presented backed by well-presented arguments
Well-presented arguments and solutions– will lead to relevant resolutions
Exceptionally well argued solutions– clear, concise and particularly insightful
Technical component – accuracy in calculations
0 – 1
Very little or no evidence of understanding of the topic and applying the knowledge in the calculations
Some understanding of the topic and applying the knowledge in the calculations
Adequate evidence of ability to apply the knowledge in the calculations.
Good understanding of the topic and applying the knowledge in the calculations
Very high level of understanding of the topic and applying the knowledge in the calculations
Expression of your view (and not a catalogue of quotes/others’ ideas)
0 – 1
Very little or no evidence of expressing your view
Some evidence of expressing your view
Adequate evidence of expressing your view.
Good understanding of the topic with evidence of expressing your view
Very high level of understanding of the topic with evidence of expressing your view
Writing style & grammar
structural issues in written material
0 – 1
Very poor grammatical expression and spelling errors
Low levels of writing ability evident, simple expression with many spelling and grammatical errors
Average levels of writing ability with some spelling and grammatical errors
High level of writing ability – clear concise expression with few grammatical or spelling inaccuracies
Very high level of writing ability with no grammatical or spelling errors.
Areas of improvement
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