Written Task 2

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Nov 24, 2024

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TAFE SA VET ASSESSMENT STUDENT WRITTEN ASSESSMENT Business Unit/Work Group Financial Services Qualification Code FNS60217 Qualification Title Advanced Diploma of Accounting Unit Code/s FNSACC601 Unit Title/s Prepare and Administer Tax Documentation for Legal Entities Assessment Task Title Written Task 2 Student Declaration I hereby declare that the material herein submitted for assessment is my own work except where specifically acknowledged and referenced. Student Name Student SIS ID Student Signature Date Assessor Name STUDENT GUIDE FOR WRITTEN ASSESSMENT Overview of Assessment  You are required to undertake a written assessment for FNSACC601 Prepare and Administer Tax Documentation for Legal Entities  This is a written and oral assessment task requiring the preparation of a tax return, written short answer questions, a video presentation and a written report/session with lecturer  Your assessor may ask you to provide more information if your answer is unclear or incorrect  All aspects of the written assessment must be completed successfully to be deemed “Satisfactory”  If you are unclear about what you have to do, please ask the assessor before you start  If you do not satisfactorily complete this assessment a “Not Satisfactory” result will be recorded  If you are deemed “Not Satisfactory” then you will be provided with an additional opportunity for reassessment.  Clearly type your answers into this assessment document  This assessment document must be submitted on Learn  The tax return MUST be submitted on Learn: o Upload the tax return as a separate document to the assessment task OR o Take a screenshot of each page of the tax return and copy and paste this into the assessment document Task/s to be assessed This is a written and oral assessment task. This assessment consists of 5 parts: o Part A – preparation of a company tax return o Part B – 4 theory questions 1/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

STUDENT GUIDE FOR WRITTEN ASSESSMENT o Part C – video presentation o Part D – 4 theory questions o Part E – session with lecturer and short report Time allowed Duration of Assessment: 5 weeks Location This assessment will take place outside of the classroom. Decision making rules To receive a satisfactory outcome for this assessment a good understanding must be demonstrated in all questions with only minor errors present. All questions must be attempted. An assignment submitted without an attempt for a question will require reassessment. Assessment conditions This assignment is to be completed outside of the classroom over a 5 week period. Students may access a variety of sources including but not limited to:  Textbook  Resources provided in class  The internet Assessor support is available only to clarify the nature of a question. No assessor support can be given in helping the student provide an answer to a question. Resources required Students may need to conduct research to answer some of the questions in the assignment. Further resources that may be used include:  The Australian Taxation Office website  Other internet sites  The Master Tax Guide  Tax Legislation (ITAA97 and ITAA36)  Other supporting materials Results/Reassessment Students will be notified by email of their assessment result within 3 weeks of the assignment due date:  A result of satisfactory or not satisfactory OR  Details of corrections/resits to be made including the questions to be reassessed and a due date for these corrections 2/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

Scenario DJ Electronics is an Australian resident, private company selling televisions, stereos and DVD players. DJ Electronics have asked you, a registered tax agent, to prepare and lodge this tax return. They have provided you with the following information:  They do meet the criteria for a small business entity and have elected to apply the simplified depreciation rules. They do have a general small business pool.  They do not sell goods using the internet. They operate their store out of their business premises located at: 39 Skyview Lane Modbury South Australia 5092 This is also their postal address.  They are not a consolidated entity.  ABN: 11 222 456 789  Company TFN: 017 563 100  Bank details: BSB 100 250 Account number 276 153 999 Account name DJ Electronics Checking Account DJ Electronics Income Statement For the period ending 30 th June 2022 Revenue Sales of trading stock 435,620 Proceeds of business loan (10 years) 100,000 Interest on bank account (no tax withheld) 10,500 Insurance recovery for stolen trading stock 5,000 551,120 Less expenses Cost of sales 215,310 Employee superannuation (to a complying fund) 4,750 Employee superannuation (to a non-complying fund) 3,000 Gross wages 50,000 Bad debts 3,000 Provision for doubtful debts 2,000 Fines 4,500 Rent 45,000 Interest on loan 6,200 Purchase of a new computer 8,000 Accounting depreciation – new computer 1,500 Accounting depreciation – all other assets 14,600 Vehicle registration and insurance 2,500 Income tax expense 6,800 Entertainment expense 800 367,960 Net Profit 183,160 3/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

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Other information:  Decline in value on the general pool (all other assets were in the general pool) was $19,800  PAYG instalments paid during the year amounted to $17,900  DJ Electronics incurred a tax loss of $25,000 in 2019/20. On the 1 st September 2021, 25% of the company shares were sold to new owners. On the 10 th January 2022, the company added refrigerators and microwaves to their product line.  Balances as at 30/6/2022: Debtors 15,000 Current assets (excluding debtors) 62,000 Non-current assets 210,790 Creditors 26,000 Current liabilities (excluding creditors) 19,600 Non-current liabilities 300,000 Total debt 306,200 Part A Using the information provided in the scenario above, prepare DJ Electronics tax return. You will need to download a company tax return from the ATO website. You then need to lodge this tax return on the Learn website under Written Task 2 (this will simulate the ATO for the purposes of this assessment). The tax return may be copied and pasted into this document or submitted as a separate document on Learn. Please show what amounts have been included in your total for the following items in the return (type your calculation into this assessment document):  6. Calculation of total profit or loss – Expenses: Item S ‘All Other Expenses’ (page 4 of return) o Item S "Other expenses" includes: Expenses that are unrelated to the company's normal operations and are not recurring. o All other expenses, including loss on depreciating assets sold: $19,800 decrease in general pool value $14,600 was assessed during the year for general pool depreciation. The difference of $5,200 is regarded as the sale of a depreciating asset. o Losses incurred due to financial arrangements of the company that are not included in any of the items in 6 (Calculation of total profit or loss – Expenses) $800 in entertainment expenses. o Fines of $4,500 were paid.  7. Reconciliation to taxable income or loss: Item W ‘Non-Deductible Expenses’ (page 5 of return) W Non-deductible expenses Description Amount Bad debts - to the extent to which they are not deductible 2000 Penalties and fines 4500 Superannuation charged in accounts 3000 Total 9500 4/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

 Bad debts are not included in the portion for which a provision is established, i.e. $2,000  Penalties and penalties are not deductible because they were incurred due to management's negligence.  Contributions to non-compliant annuities are not tax deductible. Please note the tax return must be submitted on Learn and cannot be handed up to the lecturer in class or emailed. If you have issues submitting the assignment on Learn, please contact your lecturer for support. Company tax return Instruction.pdf 5/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

Part B Type your answers to the Questions 1 – 3 in this assessment document. Q1. As a tax agent, what documentation would you require before including the following in DJ Electronics assessable income (one source document each): a) Sales of trading stock Prior to including trading stock sales in DJ Electronics’ taxable income, the following documentation is required.  Sales receipts and invoices.  Bank statements that reflect these quantities.  Agreements between the parties.  Monthly GST filings. b) Bank interest Prior to including bank interest in DJ Electronics’ taxable income, the following documentation is required.  Bank transaction report for the entire year  Certificate of interest from the financial institution attesting to the interest paid during the fiscal year. Q2. As a tax agent, what documentation would you require before claiming a deduction for the following expenses (one source document each): a) Purchase of trading stock Prior to deducting the purchase of inventory as an expense, the following documents must be verified:  Receipts and invoices associated with the acquisition of stock.  Bank statements that reflect payments made against invoices.  Agreements concluded with the vendor  GST returns. b) Vehicle registration and insurance Before vehicle registration and insurance fees can be deducted as an expense, the following documentation must be verified.  Registration and policy documents that contain DJ Electronics's names.  An insurance policy that mentions DJ Electronics.  Amounts are displayed for bank transactions. c) Bad debt Before deducting bad debts as expenses, it is necessary to verify the following documents and confirm that DJ electronics has taken the following steps.  The names and addresses of the delinquent debtors.  The quantity of debt considered to be delinquent.  The reasons why the debt is considered a poor debt.  Information about the tax year for which the debt amount was reported as income.  In the tax year in which the deduction is claimed, poor debts are written off.  Resolution from the board authorising the write-off for the tax year.  Recommendation in writing from the financial controller approving the cancellation of poor debts. 6/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

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d) Employee superannuation Before deducting employee retirement contributions as an expense, the following documents must be verified.  Employee information and salary listing.  The employee's contribution.  Payment receipts.  Bank statements that display the quantities. Q3. How would you lodge this tax return with the ATO? The ATO accepts tax returns in three methods.  Submit online using myTax via myGov.  Complete the paper tax return form by hand and mail it to the department.  Use a registered tax professional. Part C James is the accountant for DJ Electronics and he has made an appointment with you to have the company tax return completed. As the tax agent preparing this return, you are required to have an oral discussion with James regarding the company tax return in which you:  Discuss the assessable and deductible amounts for DJ Electronics  Explain to James a minimum of 2 differences between the company’s net profit and taxable income  Advise James of the company tax payable or refundable  Advise James of how any tax due may be paid (discuss different payment methods) or how the tax refund will be obtained  Obtain James’ signature on the tax return  Advise James of DJ Electronics obligations as a tax entity Your oral discussion must be no shorter than 5 minutes and no longer than 10 minutes. Videos shorter than 5 minutes will need to be resubmitted. You will be assessed on the following criteria:  Content of the discussion o The 6 dot points listed above must be covered  Listening skills o Summarising what client has said o Repeating back to client for further clarification if needed o Acknowledgement of client (nodding, paying attention) o Responses to client statements or questions are appropriate  Body language o Appropriate posture o Facial expressions (smiling, appearing interested in what client says) o Acts in a professional manner  Verbal skills o Uses appropriate terminology o Speaks clearly 7/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

To complete this section of the assignment, you can choose to have a friend, family member, colleague or another student play the role of James. As this is a discussion, there must be interaction between you and your client. However, you will not be graded on your volunteer’s performance in this presentation. This conversation must be videoed (audio alone is not sufficient). How to Submit: Option 1: Cloud Storage (Preferred) Use a free cloud storage facility such as Microsoft OneDrive (https://onedrive.live.com) where you can upload and share your video from. Include the link to the video in the assessment document. Option 2: Email to lecturer Send the lecturer an email with the video attached. Option 3: Submit to Lecturer in class Deliver your assignment, on a USB or a DVD, to your lecturer in class. Please make sure that you include your name and ID number. You are required to test the DVD/USB prior to sending to ensure that it works and you must keep a copy of the presentation until you have been advised that the presentation has been assessed. Link to video: Part C.pptx Part D Type your answers to Question 4 in this assessment document. Q4. DJ Electronics has undertaken research to develop a new type of television. After months of careful planning and discussion, they have finally arrived at an innovative new design and have had a prototype developed. The company has incurred costs such as salary and wages of their development team and costs of production of the prototype. a) What tax offset may DJ Electronics be entitled to? DJ Electronics engaged in research and development activities pertaining to a novel category of television. The prototype has been formulated on the basis of a novel innovation and concept. The organisation has accrued expenses, including remuneration and compensation disbursed to the development team, as well as expenses related to the production of the prototype. In this particular scenario, DJ Electronics is eligible to receive both refundable and non-refundable tax offsets for research and development. b) What are the 5 eligibility requirements that must be met to allow DJ Electronics to claim this tax offset? In order to claim the tax offset, DJ Electronics must comply with the eligibility requirements, which stipulate that the business must be incorporated under Australian law. Conducted a research and development endeavour. Expenditures have been made in relation to research and development endeavours. The taxpayer is defined as an entity that 8/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

excludes individuals, trusts, corporate limited partnerships, R&D entities, and exempt entities. The entity in question is registered under the laws of a foreign jurisdiction and is engaged in commercial activities within the borders of Australia. Additionally, this entity is considered a resident of a foreign country that has entered into a bilateral agreement with Australia to avoid double taxation. c) If DJ Electronics can claim this tax offset, what rate will apply? DJ Electronics is eligible to claim a tax offset rate of 43.5% due to its turnover being below $20 million and not being under the control of an exempt entity. d) Is this tax offset refundable or non-refundable? When the turnover is below $20 million and is not controlled by an exempt entity, a refundable tax offset of 43.5% is available. When the turnover exceeds the prescribed limit of $20 million or is controlled by exempt entities, a non-refundable tax offset of 38.5% is applicable. The tax offset that DJ Electronics is eligible for in this scenario is a refundable tax offset of 43.5%. Part E The directors of DJ Electronics have developed an interest in the Australian film industry and between July and September 2021 incurred expenditure on development, photography and pre/post production of an Australian film. This film was produced entirely in Australia (filmed in Alice Springs). After 3 months of hard work, their film ‘Some Like It Hot’ is ready for broadcast to the public. James, the accountant, has asked if you can think of any way in which the costs incurred in the production of the film can be recovered. You are unsure how to answer James and decide to seek advice from a tax specialist. Organise a Skype session with your lecturer via the Assessment Booking link in the course site. During this Skype session, your lecturer will play the part of the specialist. In this Skype session you are required to clarify with the specialist any method that can be used by James to recover production costs. You will be assessed on:  Content of the discussion o You must discuss the question presented by James  Communication skills o The case study needs to be presented clearly to the lecturer  Listening skills o Summarising what specialist has advised OR seeking clarification to resolve uncertainty You then need to prepare a short report (maximum 100 words) summarising the feedback provided by the specialist. Type your report into this assessment document. The techniques that James may employ to recoup the expenses associated with the creation of a motion picture are under consideration. The three types of offsets that are available for film 9/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

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production are as follows: The Producer Offset is a financial incentive scheme that provides a reimbursement of 40% of eligible production expenditures for Australian feature films, and 20% for those that do not feature Australia. The Location Offset is a reimbursement mechanism at a rate of 16.5% for expenses related to principal photography or the creation of an animated commencement. This offset applies to films produced on or after May 10, 2011, and represents an increase from the previous rate of 15% that was applicable to films produced between May 8, 2007, and May 10, 2011. The offset is calculated based on the total cost of the production company's qualifying Australian production expenditure on the film. The PDV offset refers to the provision of a refund at a rate of 30% for expenses related to post-production, digital, and visual effects production. This refund is applicable to all qualifying PDV expenditure incurred in the production of eligible films or television shows that commenced on or after July 1, 2011. It is noteworthy that the previous rate of refund was 15%. Submission Checklist Part A  Completed Company Tax Return  2 calculations Part B  Answer to Questions 1 - 3 Part C  Video presentation or link to video presentation Part D  Answer to Question 4 Part E  Report 10/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B

ASSESSMENT OUTCOME Satisfactory ☐ Not Satisfactory ☐ Reassessment Details (if applicable) Date of reassessment (Attach supplementary observation checklist/s used in re-assessment) Reassessment Outcome (if applicable) Satisfactory ☐ Not Satisfactory ☐ Feedback to Student Student Name Student Signature I have been advised of the outcome of this assessment. Assessor Name Assessor Signature Date: 11/11 FNSACC601 Written Task 2 Version 2.0 ©TAFE SA RTO CODE 41026 | CRICOS 00092B