UNSW

THE UNIVERSITY OF NEW SOUTH WALES

AUSTRALIAN SCHOOL OF BUSINESS
SCHOOL OF TAXATION AND BUSINESS LAW
TABL2751 / LAWS3147
BUSINESS TAXATION / ELEMENTS OF INCOME TAX LAW
SEMESTER 2, 2014
ASSIGNMENT
DUE DATE AND TIME

Tuesday 7th October, 2014, 6:00 pm

(Week 10 of semester)

LATE LODGEMENT

Late lodgement not accepted unless prior

arrangements have been made with the lecturerin-charge.

PLACE OF LODGEMENT

You must submit your assignment both

electronically and in hard copy:
Electronic lodgement: via course Moodle site
Hard copy lodgement: Designated Assignment
Box on Ground Floor, West Lobby of ASB
Building.

VALUE OF ASSIGNMENT

20%

LENGTH OF ASSIGNMENT

2,000 words (maximum)

ASSIGNMENT INSTRUCTIONS
PLEASE READ THE BELOW INSTRUCTIONS AND ENSURE YOU
FOLLOW THESE IN COMPLETING YOUR ASSIGNMENT
1. The word limit is 2,000 words this is the maximum word limit.
2. You are required to reference all legislation, cases, secondary sources that you have used
to answer the assignment. There is no set referencing style required, but footnotes are
preferable to in text referencing. (If you would like guidance as to a referencing style,
you can refer to the Australian Guide for Legal Citation AGLC available
http://www.law.unimelb.edu.au/files/dmfile/FinalOnlinePDF-2012Reprint.pdf).
Note however that you do not have to use the AGLC style, as long as your referencing is
consistent throughout your assignment. Words, case names/case citations and legislative
references in footnotes are not counted in the word count. However, you must not place
substantive parts or central parts of your answer or argument in footnotes.
3. If your answer requires you to show substantial calculations (e.g. half a page), show these
in an appendix/appendices to your answer and refer to these in the text of your answer.
Appendices are not counted in the word count. Small calculations (e.g. two or three lines)
should be incorporated into the text of your answer (or in footnotes at the relevant part of
your answer).
4. Your answer must be typed. You must use one and a half (1.5) spacing and a font size of
12. You must leave at least a 2.54 cm margin from both sides of the A4 page (note that
this is the normal margin setting in Microsoft Word). Your pages must be numbered
sequentially. Your hard copy answer should be single sided.
5. Your assignment should include a reference list.
6. You should carefully proof-read your answer before submission. Incorrect spelling and
incomplete sentences will be reflected in the grade for your answer.
7. You must keep a copy of the answer that you have submitted.
8. You must complete and attach a copy of the Official Assignment Cover Sheet at the front
of your answer. Ensure that the Assignment Cover Sheet is properly stapled to your
answer pages. (The Official Assignment Cover Sheet will be posted on Moodle under the
Assessment icon). This includes signing the plagiarism declaration.
9. Do not place your assignment in a plastic sleeve. Do not place a plastic cover over your
assignment. Do not ring-bind your assignment. Do not bind your assignment in any other
way. All these items are a complete waste of resources. Stapling the top left hand corner
of your assignment is sufficient.
10. In preparing an answer, you will inevitably discuss issues raised by the assignment with
other students. There is nothing in the UNSW rules prohibiting such discussions. Indeed,
you are encouraged to discuss issues arising from the assignment with other students.
However, in the end, you must be able to state that the work that you have submitted is
2

your work. Importantly, you should ensure that you have not committed (either
deliberately, or without intent) an act of plagiarism (e.g. presenting anothers work or
ideas as your own, failing to acknowledge the source of a quotation, submitting the same
or similar version of work to that of another student). Due to the potential for damage to
reputation, plagiarism is taken very seriously by the university, and therefore, the
lecturer-in-charge of this course.
11. Although the broad topics raised in the assignment will be topics covered in the course,
the assignment will raise issues that will not necessarily have been discussed in lectures
or tutorials. This means that you may have to go beyond the prescribed materials for the
course in regard to some issues.
12. Given that this assignment is a problem type question requiring you to undertake
research, no staff member working on this course (e.g. lecturer, tutor(s)), or any staff
member in the School of Taxation and Business Law), will provide assistance to you in
writing and researching your answer. Any queries of an administrative nature relating to
the assignment should be directed to the lecturer-in-charge.
13. Extensions will only be given in exceptional circumstances outside of a students control.
Request for an extension must be made to the lecturer-in-charge prior to the due date of
the assignment. No other staff members apart from the lecturer-in-charge will grant
extensions.

ASSIGNMENT QUESTION
Martin purchased a derelict building on 1st January 2013 in Surry Hills for $500,000. To
finance the purchase Martin borrowed $500,000 from Big Bank Ltd at 10% interest per
annum. Before Martin bought it, the building had been leased by a charitable organisation to
a womens refuge at a nominal rental of $100 per week. On 1st January 2013, there was still a
year remaining under the lease.
When Martin purchased the building he shouted, I have a dream! Martins dream was that
one day the building would be a multicultural caf, the World Community Caf, where
people from all over the world would want to come and eat. Martin wanted the logo to be a
world globe inside a coffee cup. On 14th February 2013, Martin applied to the local council
for permission to redevelop the building as a caf. The cost of putting together the
application, including the architects fees, was $35,000. On 14th February 2013, Martin also
gave the womens refuge one months notice to vacate the premises. The womens refuge
refused to vacate and Martin incurred $10,000 in legal fees associated with ejecting the
group. The womens refuge finally vacated the building on 1st June 2013.
The local council consented to the redevelopment on 1st May 2013. On 1st May 2013 Martin
borrowed a further $700,000 from Big Bank Ltd, again at an annual interest rate of 10%, to
undertake the necessary renovations for the redevelopment. The total cost of the renovation
work was $700,000. $100,000 was spent on the central coffee making machine and the
individual nozzles. $500,000 was spent on plastering and painting the inside of the building.
$60,000 was spent replacing the existing awning to protect caf customers from the weather.
The old awning was made from cloth and was operated manually. The new awning is made
from Kevlar and operates electronically. $40,000 was spent on a new stereo system that is
Apple compatible. Martin had the stereo system at home between the time when he bought it
(4th May 2013) and 1 January 2014.
The caf was due to open on 1st December 2013. However, on 15th November 2013, Martin
received an injunction notice from a competitor, World Cup Coffee. The injunction prevented
Martin from opening his caf until a substantive matter was resolved in court. World Cup
Coffee alleged that Martins logo was substantially similar to theirs and that Martins caf
would materially affect their business. (World Cup Coffees logo is a cup of coffee inside a
globe of the world.) Martin incurred $50,000 in legal fees in relation to the injunction
proceedings but was unsuccessful. Martin tried to find another concept and logo for his caf
before 1st December 2013 but he was so disillusioned by the legal proceedings that he lost
interest in the caf. Instead he opened an art gallery on 1 January 2014 which shows photos
by artists from all around the world.
Required:
Advise Martin of the tax consequences that will result to him on these facts. You need to
consider both the 2012-2013 and 2013-2014 income years.