TAXATION LAW Homework Help

TAXATION LAW
Assignment
The assignment is an individual assignment and is a case study to research
and critically analyze tax law, relevant supporting materials and literature.
The assignment will be assessed on technical accuracy, logical arguments,
critical analysis and original ideas, the quality of written presentation and
proper use of references and footnotes. The assignment should be 2,000
words in length.
The assignment is due for submission in week 10 ((7 May 2014) and is to be
submitted online. There will be a penalty of 5% deduction per day from the
total mark that would have been awarded for the assignment if it had been
submitted on time.
CASE STUDY:
ADVANCE IT Group (ADVANCE) is a software corporation in Sydney that
makes enterprise software to manage business operations and customer
relations. ADVANCE has signed a contract with a multinational financial
institute to develop a new operating system in next two years.
ADVANCE is planning to recruit three highly skilled programmers to manage
and implement this new operating system in next two years. ADVANCE has
interviewed three candidates who are the experts in developing this type of
operating system.
The candidates’ proposed salary packages for two years contract starting
from 1 July 2013 are summarized in the following:
1. Mr. Robert Smith is an American and asks for a salary of $150,000
(before tax) and the company is required either to pay home living
away allowance ($3,000 per month) or reimburse his monthly rent and
food ($2,500 for rent and $500 for food per month).
2. Mr. Samuel Layton is an Australian resident and lives in Perth. Samuel
requires a salary of $130,000 (before tax) and the company is required
either to pay home living away allowance ($3,000 per month) or
reimburse his monthly rent ($2,500 for rent and $500 for food per
month). Samuel does not intend to maintain a home in Perth if he
works in Sydney.
3. Mr. Leslie Ross is an Australian resident and lives in Brisbane. Leslie
asks for a salary of $100,000 (before tax) and the company is required
either to pay home living away allowance ($2,500 per month) or
reimburse his monthly rent ($2,000 for rent and $500 for food per
2
month). Leslie will maintain a home while his is away as his parents will
live in this home.
The reform of the fringe benefits tax treatment of living-away-from-home
benefits commenced on 1 October 2012. The CFO has required you to
analyze the employment costs of these new employees based on the
reformed living-away-from-home benefits and prepare a report for the next
monthly management meeting.
REQUIRE:
This report should:
1. Calculate and compare the employment costs (including FBT, if any) of
these three new programmers for next two years if
a. ADVANCE reimburses their rentals and food
b. ADVANCE pays home-living-away- allowances
in addition to their salaries.
2. Calculate and compare three new programmers’ take home income
after tax for next two years if
a. ADVANCE reimburses their rentals and food
b. ADVANCE pays home-living-away- allowances
in addition to their salaries.
3. What is the most cost-effective option to ADVANCE IT Group? Explain
thereasons.
4. What are the effects of the reform of the fringe benefits tax treatment of
living-away-from-home benefits?