CLAW6026 TAXATION LAW AND PRACTICE 2024 Semester 2Web

Java Python CLAW6026 TAXATION LAW AND PRACTICE

2024 Semester 2

Mid-semester Review:

Available: On Canvas at 12:01am Sydney time on Friday 6 September 2024.

Due: By Canvas site submission via Turnitin by 11:59pm Sydney time on Sunday 8 September 2024.

Time Allowed: 72 hours

Instructions:

1. Answers are to be typed.

2. Submission via Canvas.

3. In total the answers to the 3 questions must be in total no more than 800 words.

4. Ensure that your SID is in the header or footer of the document you submit as your answer.

QUESTIONS

QUESTION 1

Julie is an Australian tax resident. She recently joined the Qantas frequent flyer program. During the 2023-2024 income year, her employer entered a deal with Qantas whereby all employees are given bonus frequent flyer points. Due to the bonus points, Julie was able to redeem a free ticket from the airline. The conditions of the program are that the points can only be redeemed for tickets for herself and are not transferable. Because of her work commitments she is unable to use the ticket, and it expired on 30 June 2024.

In the same year of tax, Julie gave her twin nieces each a birthday present of one earring each from a pair of pearl earrings she owned. The pair of earrings had a value of $5,000. She had acquired the pair of earrings at a jewellery fair in 1999 by trading a necklace valued at $900.

Explain the income tax implications of the above transactions for Julie. You must cite relevant sections, case law and tax rulings in support of your answer.

TOTAL: 10 marks

QUESTION 2

Axel Ltd is a company incorporated in Australia whose business is building construction, CLAW6026 TAXATION LAW AND PRACTICE 2024 Semester 2Web property development and farming in New Zealand. In 2021 Axel Ltd entered into a 50/50 joint venture agreement with an Australian incorporated agricultural finance company called Greedy Ltd. Each joint venture partner agreed to take up 200,000 $1 shares in an Australian incorporated farming company called Black Pty Ltd, which owned the farmland in question.

Axel intended to hold its interest in Black Pty Ltd as a long-term investment. Owing to unforeseen circumstances, farming proved to be unprofitable and there was a zoning change in 2023 whereby properties in the area could only be disposed of in 25- hectare parcels. Black Pty Ltd borrowed $1 million in December 2023 to hire lawyers and surveyors to divide up the property. In January 2024 Black had sold all the 25- hectare parcels to a single buyer for a profit of $5 million and invested the proceeds to buy more land. Axel Ltd and Greedy Ltd then sold their interests in Black Pty Ltd for $10 million in June 2024.

Explain the income tax implications of the above transactions for Axel and Black. You must cite relevant sections, case law and tax rulings in support of your answer.

TOTAL: 9 marks

QUESTION 3

Dolmio recently arrived in Australia from Italy. He is an Italian citizen. He is a very wealthy businessman who owns several properties in Italy. Dolmio expects he will live in Australia for 2 years with his family. His purpose of entering Australia is to expand his European business to Australia. Dolmio arrived in Australia on 17 May 2024 and his family arrived on 3 July 2024. Upon his arrival in Australia, Dolmio immediately engaged the services of a real estate agent to find him a suitable mansion to accommodate his family. Dolmio also commenced his Australian business operations one month after his arrival.

Advise Dolmio whether he is a tax resident of Australia in the 2023-2024 income year. You must cite relevant sections, case law and tax rulings in support of your answer