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Part A
James Cookie is a ships officer employed by Sails International Inc, a company incorporated
in Bermuda that owns cruise boats and operates passenger cruises in the Pacific Ocean.
James owns a house in Sydney which was formerly his family home but his estranged wife
and children now live in Singapore. James rents the house to his cousin and family. The
house is let fully furnished; the furniture belongs to James. Whenever he is in Sydney, James
stays in the house and has his own room in which are stored his personal belongings. In the
current income year James spent 80 days in the house. The remainder of the time was spent
on a cruise ship except for 20 days spent visiting his children in Singapore.
The ship on which James serves visits a variety of ports, mainly in the South Pacific. Jamess
employment contract was negotiated and signed in Hong Kong.
Required 1: For Taxation purposes, is James a resident of Australia? What is the source of
his salary from Sails International?
Required 2: If James sold his house, would he be entitled to the main residence exemption
in Subdiv 118-B?
Part B
On 1 July 2012 Lee commenced business as an architect. He operated as a sole proprietor
from a converted garage at the rear of his residence. Much of his work consisted of preparing
building designs and specifications for local council building permits but he quickly gained a
reputation for quality drawings prepared within tight timeframes. By the end of 2012/13 he
had a small client base of local builders and private referrals and billings (fees) of $75,000.
During the year Lee submitted a design as part of a national competition for the Citadel, the
centrepiece of an urban redevelopment. His visionary design and revolutionary use of local
materials left the judging panel speechless with admiration and, to national acclaim, he was
awarded the prize and commissioned to build the structure. Immediately he borrowed $1
million, rented premises on Main Terrace, acquired state of the art equipment and employed
six draughtsmen and two administrative staff. During 2013/14 his billings were $1.75
million.
Required
Should Lee return on a cash or accrual basis in 2012/13 and 2013/14?
You must refer to appropriate case law. Your answer must include (but should not be limited
to) a discussion of the following:
What factors affect the choice of a cash or accrual basis?
Does Lee have a choice of the basis he adopts?
Does the Commissioner of Taxation have a right to insist on a particular basis?
Should Lees basis be the same in both years?
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Submitted an assignment that is your own work. (You may discuss the essay topics with
others but you cannot copy anothers work, give your work to someone else to copy, or work
closely with another student on how to structure or write the essay.)
The assignment is no more than 2000 words long (excluding abstract, references,
bibliography).
Read and addressed the issues raised in the Universitys Presentation of Academic Work
Read Regulation 6.1.1, Plagiarism and asked questions if you are unsure about what it
means.
Referenced direct quotes (use quotation marks or indent) AND summarising from another
persons work in the body of the essay. (This includes internet sources).
Indicated what referencing style you have chosen Harvard/APA and USED IT.
Used headings (even though this is not a report, headings are encouraged to assist structure
and flow).
Proof read the assignment for spelling, punctuation and grammar errors.
Where required, used cases to support your points or arguments. These cases can be
obtained from textbooks, or the CCH online libraries, articles found via AGIS PLUS TEXT
database etc.
Put case citations in the body of the work as well as listing the case in the List of References.
Discussed the issues as required and put arguments and gave your view.
Included a title page with your name, student number, course code and name and lecturers
name.
Have a margin so comments can be added; put page numbers and your name and student
number on each page.
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