Australian Taxation Law

Answer the question based on Australian Taxation Law, cite cases wherever necessary Question 20.1 Joan and Bruce own a small café. They do not keep very good records because they prefer paper to computers. Instead, they put receipts in" rel="nofollow">into a drawer and then give them in" rel="nofollow">in a bundle to their tax agent at the end of the year. They are not registered for GST, They are subject to an audit as part of the cash economy task force special project for cafes and restaurants, Two auditors from the ATO spend half a day with Joan and Bruce lookin" rel="nofollow">ing at their records and lifestyles, The auditors decide that Joan and Bruce are keepin" rel="nofollow">ing about S1,500 per week in" rel="nofollow">in cash and issue a default assessment under Section 167 of the ITA 1936, in" rel="nofollow">includin" rel="nofollow">ing that amount in" rel="nofollow">in their assessable in" rel="nofollow">income. Joan and Bruce object to their assessment on the basis that the ATO has not considered the deductions they are entitled to for the purchase of the food sold in" rel="nofollow">in café, as well as the cost of launderin" rel="nofollow">ing the tablecloths used in" rel="nofollow">in Café, Discuss. Question 20.2 Roger and Elizabeth are auditors with the ATO task force attached to pubs and clubs. They are in" rel="nofollow">investigatin" rel="nofollow">ing George who owns a pub in" rel="nofollow">in a country town in" rel="nofollow">in Victoria because they are sure he is skimmin" rel="nofollow">ing a lot of undeclared cash. When they issue a notice under Section 264 of the ITAA 1936 George does not attend at the scheduled time. He fails to attend at any of the other appoin" rel="nofollow">intments the ATO makes for him. What options are available to the ATO? Question 20.5 A taxpayer who is refused an extension of time in" rel="nofollow">in which to lodge his annual return complies with the Commissioner’s demand and lodges it by the specified date. The taxpayer notifies the commissioner that he will lodge an amended return when further in" rel="nofollow">information relatin" rel="nofollow">ing to the partnership in" rel="nofollow">in which the taxpayer is a member becomes available. Three months later the taxpayer lodges a second amended return calmin" rel="nofollow">ing a large loss from tradin" rel="nofollow">ing activities in" rel="nofollow">incurred by the partnership. The taxpayer receives a notice of assessment and an adjustment sheet statin" rel="nofollow">ing that the assessment will be reviewed when the partnership losses have been confirmed. The commissioner subsequently issues an amended assessment disallowin" rel="nofollow">ing the partnership losses. Can the commissioner record tax owin" rel="nofollow">ing under the first assessment? What arguments can the taxpayer raise? Question 20.19 (1) A notice under s 264 of the ITAA 1936 is served on Gillian Williams as trustee of the William Family Trust. The notice requires her to produce within" rel="nofollow">in seven days: a. All the accountin" rel="nofollow">ing records relatin" rel="nofollow">ing to the office block which is owned and leased by the William family trust. The trust had owned the block for 7 years and the origin" rel="nofollow">inal of most documents where retain" rel="nofollow">ined at the offices of the ABC bank. Gillian had photocopies of most of them; and b. Annual returns lodged by the trust for the last 15 years (2) When Gillian fails to comply with the notice, two officers from ATO arrive at Gillian’s office at 10zm on Monday mornin" rel="nofollow">ing and request they be shown the specified documents. At the same time two officers go to the ABC bank and make the same request. (3) Hopin" rel="nofollow">ing they will disclose relevant in" rel="nofollow">information, the ATO sends two auditors to the William’s family home. No search warrant is obtain" rel="nofollow">ined prior to the arrival. Discuss the position of both Gillian and the ATO in" rel="nofollow">in relation to the above. Question 20.20 The ATO believes that the accountin" rel="nofollow">ing firm, Smithers and Jones, has been encouragin" rel="nofollow">ing its clients to in" rel="nofollow">invest money in" rel="nofollow">in tax haven countries and claim a large deduction for management fees paid to the offshore fin" rel="nofollow">inancial in" rel="nofollow">institutions. The ATO issued serval notices under Section 264 of the ITAA 1936 requestin" rel="nofollow">ing that both Smithers and Jones attend its Sydney office to answer questions in" rel="nofollow">in relation to the matter. Both refuse to attend. In frustration, the ATO sends ten officers unannounced to the firm’s premises. When requested to leave, the officers in" rel="nofollow">instead in" rel="nofollow">insist that the firm’s employees leave for 3 hours while they copy various files from the hard disks of the employees. Several of the officers scan the directories and assess what they thin" rel="nofollow">ink will be the most relevant before copyin" rel="nofollow">ing them. Advise all the parties.