Taxation Assignment Facts
You are a tax accountant at Partners Taxation Consultants. Mr M O Mirzy (hereafter will be referred to as Mirzy), a resident of Western Australia, has approached you to seek tax advice and to prepare his 2021 tax return. For your services you will charge him $275. This amount is $25 more than last year when he came to you for assistance with his 2020 tax return.
Mirzy is a widowed father therefore he has no obligations to any spouse, but he is sole carer to his two children Immy (8 years old) and Dee (5 years old).
Mirzy works as an engineer but due to Covid could not work his full-time job. This meant from 1 July 2020 to 31 December 2020 Mirzy did not work. He did however receive all government benefits related to Covid through his employer ABC Engineers.
On 1 January 2021 Mirzy began working full time again for ABC Engineers. His salary for the remainder of the tax year was $95,671. In addition, from February 2021 he did some casual consulting work and was paid $47,305.
In order to upskill post Covid Mirzy did some training through Tafe. The full cost of the training was $10,000. The government subsidised $4,164 and Mirzy paid the rest.
During the training there was $2,000 equipment costs that Mirzy paid. ABC Engineers reimbursed Mirzy for the full cost.
During a phone conversation Mirzy provided you with further details relating to his annual activities and investments. Mirzy won $1,000 at the casino in June 2021 plus he received $500 from close friends when he gave them eggs laid by the family pet chickens. Also, in June 2021, Mirzy sold some shares which were purchased three years prior. He did a calculation which you checked for correctness and the capital gain on the shares was $15,928. Dividends received during the year on these shares were $5,058. These were unfranked. Interest on a fixed investment totalled $1,000.
Mirzy was involved in a work accident in March 2021 and was paid workers compensation of $1,000.
You worked out total deductions to be $15,000. Of this $5,000 relates to food, beverage and entertainment expenses that Mirzy spent to entertain his close engineering clients.
Mirzy had private insurance from 1 January 2021 and a HELP debt of $20,000.
Ignore any PAYG tax withheld by the employer.
Requirements:
Part A – Complete the template of client notes (on LMS) in Worksheet A that will help you decide what is relevant to Mirzy’s 2021 tax return. For each item state:
Should it be included in the tax return – Yes/No
Give a reason as to why you would or would not include it in the tax return
State a relevant section of the tax law to support your answers in i) and ii).
You may list other items that you think are relevant that have not been included in the template under Other Income and Other Deductions.
(8 marks)
Part B – Calculate Mirzy’s taxable income and income tax payable in Worksheet B.
(5 marks)
Part C – Mirzy works in the sun and also wears a work uniform. He believes he cannot claim any deductions for sunglasses and laundering of the uniform as he does not have receipts or a logbook. In 50 words or less in Worksheet C advise Mirzy if he is correct and the amount that could be claimed for these, if in fact any amount is claimable.
(2 marks)
