Ethical and Legislative Requirements for Tax Documentation Preparation

Each assessment component is recorded as either Satisfactory (S) or Not Yet Satisfactory (NYS). A student can only achieve competence when all assessment components listed under procedures and specifications of the assessment section are Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NYS is eligible for re-assessment. Should the student fail to submit the assessment, a result outcome of Did Not Submit (DNS) will be recorded.

Based on Clauses 1.8 – 1.12 from the Australian Standards Quality Assurance’s (ASQA) Standards for Registered Training Organizations  (RTO) 2015, the learner would be assessed based on the following principles:

Fairness – (1) the individual learner’s needs are considered in the assessment process, (2)  where appropriate, reasonable adjustments are applied by the RTO to take into account the individual leaner’s needs and, (3) the RTO informs the leaner about the assessment process, and provides the learner with the opportunity to challenge the result of the assessment and be reassessed if necessary.

Flexibility – assessment is flexible to the individual learner by; (1) reflecting the learner’s needs, (2) assessing competencies held by the learner no matter how or where they have been acquired and, (3) the unit of competency and associated assessment requirements, and the individual.

Validity    – (1) requires that assessment against the unit/s of competency and the associated assessment requirements covers the broad range of skills and knowledge, (2) assessment of knowledge and skills is integrated with their practical application, (3) assessment to be based on evidence that demonstrates tat a leaner could demonstrate these skills and knowledge in other similar situations and, (4) judgement of competence is based on evidence of learner performance that is aligned to the unit/s of competency and associated assessment requirements.

Reliability – evidence presented for assessment is consistently interpreted and assessment results are comparable irrespective of the assessor conducting the assessment

Rules of Evidence

Validity       – the assessor is assured that the learner has the skills, knowledge and attributes, as described in the module of unit of competency and associated assessment requirements.

Sufficiency – the assessor is assured that the quality, quantity and relevance of the assessment evidence enables a judgement to be made of a learner’s competency.

Authenticity – the assessor is assured that the evidence presented for assessment is the learner’s own work. This would mean that any form of plagiarism or copying of other’s work may not be permitted and would be deemed strictly as a ‘Not Yet Competent’ grading.

Critical Elements of Australian Tax Law for Legal Entities

Currency    – the assessor is assured that the assessment evidence demonstrates current competency. This requires the assessment evidence to be from the present or the very recent past.

• All documents must be created using Microsoft Office suites i.e., MS Word, Excel, PowerPoint
• Upon completion, submit the assessment via the student learning management system to your trainer along with the completed assessment coversheet.
• Refer the notes on eLearning to answer the tasks
• Any additional material will be provided by Trainer

Instructions for Students

Please read the following instructions carefully

• This assessment is to be completed according to the instructions given by your assessor.
• Students are allowed to take this assessment home.
• Feedback on each task will be provided to enable you to determine how your work could be improved. You will be provided with feedback on your work within 2 weeks of the assessment due date.
• Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency.
• If you are not sure about any aspect of this assessment, please ask for clarification from your assessor.
• Please refer to the College re-assessment and re-enrolment policy for more information.

To complete the unit requirements safely and effectively, the individual must:

• Define international marketing
• Identify international trade patterns
• Explain international trade policies and agreements
• Identify legislative requirements

For this task you must research each of the following topics, and complete a detailed report on your findings. Your report will need to be completed and submitted in a professional, word processed, format. The report must be 1000 words minimum in length. The research topics are:

1.Identify and explain ethical considerations and legislative requirements relevant to the preparation of tax documentation for legal entities, including:

a.Conflict of interest

b.Responsibilities of tax agents including code of professional conduct obligations under the tax agent services act (TASA) and tax agent services regulations (TASR)

c.Government tax policy documents issued by reviews, treasury and board of taxation

d.Explanatory materials in relation to legislation

e.Statutes

f.Court and administrative appeals tribunal decisions

g.Commissioner of taxation’s interpretive guidance in rulings and determinations

2.Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including:

a.The rules and principles of Australian tax law, with an understanding of the legal environment in which these principles operate, basics of the legal system, constitutional considerations and separation of powers

b.The key aspects of income tax law covering concepts of residence and source, related elements of international tax, assessable income, deductions, tax rebates and offsets, and tax accounting

c.Goods and services tax (GST)

d.Taxation aspects of superannuation law

e.Administrative aspects of the taxes identified above including documentation, tax collection and withholding mechanisms, assessments, obligations, rulings, penalties and audits

f.Specific and general anti-avoidance tax rules

3.Describe the key sources of information and taxable transactions data required to calculate taxable income, including:

a.Allowable deductions

b.What are Capital gains and how are they calculated or identified?

c.Financial adjustments such as write-offs and revaluations

d.Income

e.Payments

f.Purchases

g.Superannuation payments

Essay:

Regardless of the usual prohibition against the tax practitioner’s representation of the client in respect of the conflict of interest, the tax practitioner might represent the client where the conflict of interest is represented given;

a.It is the belief of the practitioner that they would be able to offer adequate and competent representation of impacted client;

b.Every impacted client relinquishes the conflict of interest and provides informed consent by writing regarding the prevalence of conflict of interest.

Key Sources of Information and Taxable Transactions Data Required to Calculate Taxable Income

Responsibilities of TASA and TASR:

Responsibilities of TASA are as follows;

a.Responding the request and directions issued by the board in a judicious, responsible and sensible manner.

b.Advising the client of the rights of clients and obligations under the taxation laws which is materially associated to the tax agent service they provide.

a.Services provided by the responsible entity of the managed investment scheme

b.Making the decision as quick as possible following the receipt of submission by the board.

The government tax policy document issued by reviews, treasury and board of taxation are as follows;

a.Creative commercial licences

b.Methodology of the data sources

Explanatory material represents the material that is prepared when the law is created to describe the operations. The court might use the explanatory material and extrinsic material to determine the meaning of law when it is not clear under section 15 AB of the Interpretation Act 1901. The explanatory material comprises of explanatory memorandums, explanatory statements and some of the regulatory impact statements.

Statute is another term for law, legislation or the collection of the legislation. The statute book is generally considered as the reference to the legislation which is in force at the particular point of time. In force legislation is placed on the statute book having force of law. On the other hand, a repeal is regarded as the elimination of the regulation or provision of regulation from the statute book.

The court and administrative appeal tribunal decisions makes decision by reviewing the exception of few of the oral decisions with written statement relating to the decision and reason for ethical considerations and legislative requirements necessary in the preparation of the tax document for lawful entities. The member may undertake the decision of sending the applicant with written reason relating to the oral decision.

The commissioner of taxation interpretive guidance in ruling and determinations includes the strategy of risk mitigation to recognize and clarify the technical issue by providing guidance to the taxpayers that may involve drafting and issuing of the public ruling.

The key aspects of the income tax laws relating to the covering the theory of residence and sources associated to the elements of overseas tax and taxable income and tax accounting. Similarly, the key aspects of the taxes is applicable to the ordinary income tax base including the relevant principles and implementation of the capital gains tax and fringe benefit taxation rules.

Tax invoice for the sales should include the following for GST that are as follows;

Organisational Policy and Procedures for Tax Documentation Preparation

a.The document that is intended to be taxed

b.Identity of the seller

c.Date when the invoice was issued

d.The amount of GST that is payable can be distinctly shown on the Total price including the GST amount.

Taxation aspects of the superannuation law are as follows;

a.Contribution that is received in respect of the superannuation fund

b.Investment income derived under the superannuation fund

c.Benefits that is paid by the fund.

The administrative aspects of the tax document are as follows;

a.Payments that is received by the individual

b.Expenditure associated to the payments received by the individual

c.Documents relating to the acquisition and disposal of the asset

d.Contributions made in gifts and donations

The specific and anti-avoidance tax rules are;

a.Way through which the scheme was entered or executed

b.Both the form and substance of the scheme

c.Any form of changes in the financial scheme that was entered into by the taxpayer

Answer to question 3:

Allowable deductions: The vital sources of information and taxable transactions data necessary to determine the taxation income and claiming the allowable deductions it is necessary that the

a.The taxpayer should have spent the money by themselves and were not reimbursed

b.To calculate the deductions, the transactions should be directly associated to deriving the income

c.The taxpayer is required to prove those expenditures to claim deductions:

Capital Gains: Capital gain represent the rise in the value of the capital asset which provide higher return than the purchase price. Capital gain represent the differences amid the capital gain proceeds and the cost base of the asset. Capital gain is computed based on the discount method and Indexation method. The discounted method is applicable for assets that are held for 12 or more months before the relevant CGT event. Under this method the cost base of the asset is subtracted from the capital proceeds. Under the indexation method the capital gains tax is computed by increasing the cost base based on the consumer price index up to September 1999.

Write-off and Revaluation: A write-off represents the reduction in the identified value of something. In respect of the income tax statements, this represents the lowering of the income tax along with the recognition of the certain forms of expenditure needed to produce the income. In the determination of the income tax writing off is regarded as the deductions of the value of item from the person’s taxable income. On the other hand, an organization is required to revalue the asset for taxation purpose. Revaluation of asset for tax purpose is used to reduce the future income tax since depreciation cost would be increased following revaluation.

Accounting Principles and Practices for Tax Documentation Preparation

Income: In calculating the income an individual is required to include amount are

a.Foreign income

b.Personal service income

c.Income from government payment

d.Gratuities and compensation

Items that are not included in computing the income are as follows

a.Earnings derived from hobby

b.Gifts or inheritance

c.Prizes and awards that are not associated to business

d.Money borrowed by an individual

Payments: An individual is required to report payments to the Australian taxation office relating to

a.Payments related to assembly

b.Construction

c.Payments related to the excavation

Purchase: For taxable purchase there must be a payment. They are generally in the form of monetary but can be any other form;

a.Goods and services purchased instead of the money

b.Payments that is made in respect of refraining from doing anything

Superannuation: The tax that is paid by the individual based on the superannuation contribution is dependent upon the range of factors. The tax on the superannuation contribution is usually depended on the type of contribution made every year. Superannuation contributions that are allowed as the income tax deductions. Tax on superannuation is determined based on the preservation age.

Key features relating to the organizational policy and procedures associated to the preparation of the tax documentation procedure for the legal entities are as follows;

a.Understanding the taxation obligations

b.Adequate process of decision making to meet the risks related to tax

c.Facilitating adequate systems and controls to maintain the integrity in reporting.

d.Timeliness of the lodgement for tax.

e.Liabilities relating to tax and cash flow

The key accounting principles and practices that are applicable in the preparation of the tax documentation for the two different types of legal entities are as follows;

a.Making appropriate consultations with the clients

b.Using the service of tax expert and specialist advice whenever necessary

c.Rules and principles relating to taxation law

d.Ethical issues that are applicable to the regulations and organizational policies which is necessarily required to be complied with

e.Procedure and timeframes for completing, recording and submitting the documentation.      

2.Answer the following questions

2.1What are four things you would need to identify prior to lodging tax documentation?

The four things that an individual is required to identify before lodging tax documentation are as follows;

a.Details of the income summaries obtained from the employers, foreign sources, supper funds and interest from the banks.

b.Work related expenditure

c.Information related to investments, managed funds and gains or losses from the investment disposal of shares, units and rental properties.

Assessment Principles Based on ASQA Standards for RTO 2015

d.Rental property details such as rental income, expenses relating to the property and interest charged on the borrowed funds for rental property.

Define both cash and non-cash(accrual) accounting

Cash accounting can be defined as the method of accounting where the cash receipts are recorded during the period of accounting when they are received and expenditure is recorded during the period in which these expenditures are paid.

A non-cash accounting is an method of accounting where the expenditure is reported in the income statement during the accounting period but there is no associated cash payment takes place during the accounting period.

Describe each of the following business structures and how the structure affects taxation.

a.Sole traders

b.Partnership

c.Trust

d.Company

e.Joint venture

f.Self-managed super fund

Sole trader: A sole trader is regarded as the simple form of business structure and they are inexpensive to set up. A sole trader is legally accountable for all the business aspects. For a sole trader having $75,000 is required to register for GST and pay it.

Partnership: Partnership can be defined as the business structure that are of specific type that is formed by the agreement between the two or more individual to perform the business as the co-owners. Under the partnership each partner are required to pay the tax based on the share of profits based on the individual tax rate and might be eligible for small business tax offset.

Trust: A trust can be defined as the obligations that is imposed on the person or other company to hold the property relating to the benefit of the beneficiaries. The trustee under the trust is required to manage the tax affairs including the registration in the trust tax system, lodging trust tax returns and paying some tax liabilities. The income of the trust estate labels requires the details of the income for filing the tax for which the beneficiaries can be held accountable.

Company: Company can be defined as the legal entity that are made up of the association of people. Company is generally natural, legal or mixture of both carrying on the commercial or industrial enterprise. The income of the companies are generally taxed based on the applicable tax rate of 27.5% or otherwise an applicable rate of 30% is applied on the profits derived.

Joint Venture:  Joint venture can be defined as the commercial enterprise that are jointly held by two or more people. They are generally characterised as the shared ownership and share governance. In respect of section 51-50 of the GST Act requires the joint venture operator to submit the GST return for each tax period.

Rules of Evidence for Assessment

Self-managed super fund: A self-managed super fund can be defined as the superannuation trust structure, which provides benefits to the members upon the retirement. The self-managed super funds is usually taxed at the concessional rate of 15%.

Describe a depreciation schedule and what it is used for. Provide an example

The depreciation schedule breaks down the depreciation of the organizations long term assets. It computes the depreciation expenditure on the investment property. Depreciation schedule is used to match the cost of productive asset with the revenues that is earned by using the asset.

An example of depreciation schedule are as follows;

Depreciation Schedule

Particulars Original Cost Depreciation Rate Depreciation Claimed Adjusted Tax Value

Electric Band 5200 15% 375.00 2500

Piano Set 6500 12% 780.00 3500

Electric Guitar 4500 20% 350.00 1750

What is an allowable deduction? Describe in detail.

Allowable deductions can be defined as the deductions for expenses that is subtracted from the gross income to lower the amount of income subjected to income tax. For instance, an individual has an income of $35000 and claims an allowable deduction of $5000 therefore the taxable income becomes $30,000.

What are the 6 types of rulings for income tax purposes?

The six types of rulings for income tax purpose are as follows;

a.Formal rulings

b.Public rulings

c.Product rulings

d.Class rulings

e.Private binding rulings

f.Oral rulings

Australian residents must lodge a tax return if they meet certain criteria. What are they?

The Australian resident should lodge tax return given that they meet the certain criteria are as follows;

a.If an individual taxable income surpasses the threshold limit

b.If the individual were the partner in the partnership and made profit

c.If individual has received an income from the person services

d.Conducted any business activities that yielded profit

When an individual lodges tax returns the following event takes place that are as follows;

a.Eligibility is checked

b.The notice of assessment is issued

c.Changes can be made if an individual makes a mistake

d.The bills can be paid

e.An individual can see where their tax goes

What is an amendment? Describe the process and why you would do it.

An amendment can be defined as the formal or official change that is made to the law, contract constitution or other legal document. Amendment is regarded as the minor change or the addition to improve the piece of legislation.

The individual carries out the process of amendment when they submit the request for amendment before the Australian taxation office has processed their tax return. The ATO might process them together and the individual taxpayer receives the notice of assessment. The reason for undertaking the amendment is to rectify or amend any mistake that is made in the tax return.