8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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2

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

Instructions and Materials Permitted:

  Write your answers in the space provided on this questions paper.

  You must provide reasons that explain and support your answers. Whereappropriate, relevant cases or sections of the tax legislation must be cited.

“Yes” or “No” responses would not be considered to be sufficient. Failure

to provide adequate explanations will result in very low marks.

  Two A4 sheets of your own handwritten notes on both sides of each sheet  

  Core Tax Legislation and Study Guide in a book form (NO photocopies orloose pages) 

You are not allowed to: 

  Use any electronic device capable of file searching, communication ortaking photos. This includes mobile phones and tablet and notebook

computers. Such devices are to be turned off and put away on entry to the

examination room.

  This means YOU MAY NOT USE MOBILE PHONES OR COMPUTERS AS

CALCULATORS

   Any student who attempts to copy the examination paper by any means will be guilty of Examination Misconduct, will be asked to

leave, and will gain zero (0) marks for the test. Furthermore they will be

formally reported to the Faculty’s Discipline Committee.

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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3

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

QUESTION 1

The following article appeared in the press:

Tax haven plan makes NT like Singapore... with crocs 

ANALYSIS By ABC's Stephen Long Updated 16 Aug 2013, 8:44am

PHOTO: The NT is doing ok without any special treatment.(Greg Wood: AFP) 

A plan to turn the Northern Terr i tory into a tax haven apparent ly enjoys bipar t isansuppo rt . But there are so m any reasons why this is a dum b idea, the baf f ling qu est ion

is why , says Stephen Long.

There are dumb ideas, there are really dumb ideas and then there is the Northern Territory SpecialEconomic Zone.

Turning the territory into a tax haven - kind of like Singapore with crocodiles - is, apparently, a policy thatenjoys bipartisan support.

Kevin Rudd wants a 20 per cent corporate tax rate in the Northern Territory - one third lower than thenational rate. The baffling question is: why?

It's plain weird on so many levels. To start with, why would you want to stimulate a 'zone' that is already

booming? However you slice and dice it, the region that boasts the red centre is running red hot.

Until recently the Northern Territory enjoyed the lowest unemployment of all the states and territories -bottoming out at just 2.5 per cent in December 2010. That's about as close to full employment as youget in this day and age. It's still well below the national average, with the NT unemployment ratebettered only by Western Australia and the ACT.

We don't have any complete statistics for economic growth by state and territory but state final demandgives us a vague proxy.

The rise in state final demand in the NT has been stratospheric. In the year to last September, it soaredby nearly 29 per cent in seasonally adjusted terms and by a massive 32 per cent in trend terms. Overthe same period, final demand in the other states and territories averaged just 2.6 per cent.

With major gas projects, infrastructure projects and commercial activity, the NT is doing ok...

http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/2013-08-16/a-mature-saltwater-crocodile/4891032http://www.abc.net.au/news/stephen-long/167162

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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4

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

Terry Ryder, a property expert, opined in March: "The numbers tumbling out of Darwin and the NorthernTerritory are extraordinary".

He observed that the NT ranked number one on most key property market indicators: growth in homeloans to buyers, growth in investor loans and building approvals.

House commitments to owner occupiers were up by five times the national average, for investors byfour times the national average, and, at a time when building approvals nationally had increased by just1.4 per cent, they were up by 46 per cent in the NT.

The property boom is great for owners but it is pricing buyers and renters out of the market. The cost ofliving pressures and attendant social problems are serious.

So where did the national brains trusts of the LNP and the Labor Party come up with the bright idea ofpouring economic fuel on the fire?

Gina Rinehart, it seems. The mining mogul, who's not exactly ecstatic about taxation, has been pushingthe concept for some time.

If we didn't know it came from Gina, one might have imagined that the pollies had pulled this one out of

the place where they keep the "suppository of all wisdom", as Tony Abbott so mal-appropriately put it.

Tasmanians must be wondering what it's all about. Their state economy is really in the doldrums.Tasmania has long endured high unemployment rates, low incomes and a thin economic base.

But no-one's offering to build a 'special economic zone' with concessional company tax across BassStrait; … 

If it does go ahead, it could open up massive potential for tax avoidance, and a host of economicdistortions.

What's to stop companies who make their money elsewhere from creating a paper domicile in Darwin, Alice or Humpty Doo to take advantage of the low company tax rate?

In theory, you could create rules that would require companies to perform a certain level of activity in theTerritory to qualify for the lower tax rate. But there would doubtless be an army of clever accountantsand lawyers finding ways around them.

Stephen Long is the ABC's economics correspondent. View his full profile  here. 

Topics: tax, business-economics-and-finance, rudd-kevin, abbott-tony, federal-elections First posted 16 Aug 2013, 7:54am

REQUIRED: 

 Assume that you are a tax consultant, and that you have beenapproached by either one of the major political parties to advisethem on the steps needed to implement this special zone, do yousee any constitutional obstacles to setting it up?

If yes – (give reasons); if no – (give reasons as well). 

(4 MARKS )

http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/stephen-long/167162http://www.abc.net.au/news/thedrum/topic/taxhttp://www.abc.net.au/news/thedrum/topic/taxhttp://www.abc.net.au/news/thedrum/topic/taxhttp://www.abc.net.au/news/thedrum/topic/business-economics-and-financehttp://www.abc.net.au/news/thedrum/topic/business-economics-and-financehttp://www.abc.net.au/news/thedrum/topic/business-economics-and-financehttp://www.abc.net.au/news/thedrum/topic/rudd-kevinhttp://www.abc.net.au/news/thedrum/topic/rudd-kevinhttp://www.abc.net.au/news/thedrum/topic/rudd-kevinhttp://www.abc.net.au/news/thedrum/topic/abbott-tonyhttp://www.abc.net.au/news/thedrum/topic/abbott-tonyhttp://www.abc.net.au/news/thedrum/topic/abbott-tonyhttp://www.abc.net.au/news/thedrum/topic/federal-electionshttp://www.abc.net.au/news/thedrum/topic/federal-electionshttp://www.abc.net.au/news/thedrum/topic/federal-electionshttp://www.abc.net.au/news/thedrum/topic/federal-electionshttp://www.abc.net.au/news/thedrum/topic/abbott-tonyhttp://www.abc.net.au/news/thedrum/topic/rudd-kevinhttp://www.abc.net.au/news/thedrum/topic/business-economics-and-financehttp://www.abc.net.au/news/thedrum/topic/taxhttp://www.abc.net.au/news/stephen-long/167162

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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5

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

6/11

6

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

QUESTION 2

Betty is a barrister who received $110,000 in fees during thecurrent income year (80% related to services provided during

the current year and 20% related to services provided in theprevious year). Betty is owed $33,000 in fees from clients whohave not paid their bills for work she completed this year.

How much income has Betty derived this year?

(4 MARKS )

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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7

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

QUESTION 3

What is the purpose of CGT roll-over relief? Discuss the

difference between same asset and replacement asset rollovers.

(5 MARKS ) 

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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8

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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9

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

QUESTION 4

“Tax delayed is tax saved”. Explain the meaning and significance

of this statement with reference to what you have studied so far

in this unit.

(6 MARKS )

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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10

You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.

QUESTION 5

Why were the taxpayers in FC of T v Cooke and Sherden 80 ATC4140 not assessed in relation to the overseas holidays? Does s21A ITAA36 overcome the decision? 

(6 MARKS )

8/15/2019 BUSL320 Mid Sem Test- Session 1-Monday-2015

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You must provide reasons that explain and support your answers. Where appropriate, relevant

cases and/or sections of the tax legislation must be cited. “Yes” or “No” responses would not be

considered to be sufficient. Failure to provide adequate explanations will result in very low

marks.