1. CASE STUDY SCENARIO You are a Graduate Tax Advisor, employed by Tax Advisors Pty Ltd. Your Partner has assigned you the following client file after attending a meeting with the client. Client Background Judy Somerville is employed by Ansett Airways Limited ('Ansett') since 2003 as a long-haul flight attendant based in Melbourne, Australia. The nature of Judy's position with Ansett sees her flying to international ports where she spends 183 days away from her home base each calendar year. The remaining days of each calendar year are spent in Australia, and Judy uses this non- flying time to organise the importation of textiles into Australia from Textiles Inc. (a company registered in the USA). Until recently, Judy was the exclusive distributor of textiles to retailers in Australia. Client File Contents The client file has the following relevant documents: Extract of bank statement for selected transactions during the financial year ended 30 June 2020 (together with accompanying notes from Judy), as attached at Annexure A; Income Statement (2020) from Ansett, as attached at Annexure B; Dividend Statement from Westfields Ltd, as attached at Annexure C; Extract of Contract of Sale of Real Estate' between Judy Somerville (the vendor) and the purchaser, as executed on 1 May 2020, as attached at Annexure D; Extract of 'Exclusive Distributor Termination Agreement between Judy Somerville and Textiles Inc, as executed on 30 June 2020, as attached at Annexure Fixed asset register as at 30 June 2019, as attached at Annexure F; Internal file note from your Partner that provides details of the discussions with the client at the meeting, as attached at Annexure G. Scope of Engagement between Tax Advisors Pty Ltd and Judy Somerville Your Partner has requested that you review the file in its entirety (as below) in order to undertake the engagement work as agreed between Tax Advisors Pty Ltd and Judy Somerville, as outlined in the 'Required' section of this document. Credit Note 1 Debit 14.128.00 Balance 7.293.00 2 2,345.00 4,948.00 5,203.00 10.151.00 3 54,000.00 64,151.00 4 1,920.00 62,231.00 10,000.00 52,231.00 5 629.00 51,602.00 6 1,008.00 50,594.00 7 220.00 50,374.00 Date Transaction 1 Apr 20 Norman Harvey Ltd Debit Card Transaction 1 Apr 20 Myer Coles Pty Ltd Invoice 65 Textiles 15 Apr 20 Ansett Airways Ltd Salary Deposit 3 May 20 Real Property Pty Ltd Early Deposit Release 6 May 20 Textiles Inc. Textiles Purchase 15 May 20 Stillwell Bib Pty Ltd Debit Card Transaction 15 May 20 Skin Care Australia Debit Card Transaction 15 May 20 Tim Rivers Salary Payment 17 May 20 Traffic Infringement Office Speeding Fine 20 May 20 Abel & Abel Solicitors Invoice 13129 25 May 20 Maze Restaurant Debit Card Transaction 21 May 20 First Newspapers Advertising Invoice 39221 10 Jun 20 Institute of Aviation Course Fees 30 Jun 20 Victoria State Bank Interest Charge 30 Jun 20 Australian Taxation Office PAYG Instalment 30 Jun 20 Textiles Inc. Damages 30 Jun 20 Westfields Ltd Dividend 30 Jun 20 Woodlands Pty Ltd Serviced Office Rent 30 Jun 20 Tim Rivers Redundancy 8 5,950.00 44,424.00 9 450.00 43,974.00 10 2,550.00 41,424.00 6,300.00 35,124.00 430.00 34,694.00 11 3,000.00 31,694.00 8 49,950.00 81,644.00 12 700.00 82,344.00 13 1,500.00 80,844.00 6 7,500.00 73,344.00 $ AUD Notes Regarding Bank Statement Extract Note Description / Further Information 1 Acquisition of Furniture & Office Equipment Desks and Chairs (acquired 1 July 2019) Partitions acquired 20 August 2019) 2 Outstanding debtors at 30 June 2019 Debts written off > 12 months old Judy provisions bad debts equal to 3% of the outstanding debtors. 9,865 4,263 23,000 20,000 3 72,000 (18,000) 4 Obtained an Early Release of Deposit for Property Sold. Net of Agents Commission of $18,000. Stock Purchase of Textiles (USD $2,000.00 = AUD $1,920.00) Stock at Start Stock at End Skin care products purchased due to flight attendant role. Salary Payment for Employee Tim Rivers Redundancy Payment for Employee Tim Rivers 1,920.00 25,500.00 12,500.00 5 629.00 6 1,008.00 7,500.00 7 220.00 8 5,950.00 49,950.00 9 Note the minimum superannuation guarantee contribution is included in the above amounts, where relevant. Speeding fine incurred whilst travelling from Melbourne Airport to Retailer for Textiles business. Legal fees incurred in relation to distributor agreement. Settlement sum received in relation to distributor agreement. Client dinner at Gordon Ramsey's Maze Restaurant. Advertising contract payment. Paid one month in arrears and prepaid up to 30 September 2020. PAYG instalments (quarterly equal payments). Fully-franked dividend received (refer Dividend Statement) Office rent paid for 1 June 2020 to 31 July 2020. 450.00 10 2,550.00 11 3,000.00 12 700.00 13 1,500.00 Income Statement - individual non-business Income Gtatement for year ending 30 June 2020 Payee details NOTICE TO PAYEE Ms Judy Somerville if this income statement shows an amount in the total tax withheld box you must lodge a tax return. If no tax 10 Diamond Avenue was withheld you may have to lodge a tax retum. Waverley Vic 3150 For more information on whether you have to lodge, or about this payment and how it is taxed, you can: - refer ta Tatflick - phone 13 28 61 between 8.00am and 6.00pm (EST) Monday to Friday, or - visit www.auto.gov.au Period during which payments were made 01/07/2019 to 30/06/2020 Payee's tax file number 584 935 771 TOTAL TAX WITHHELD $ Gross payments $182.252 A CDEP payments $ B$ Ds Other income Reportable fringe benefits amount FAT 11 March $ 22,581 Allowances Total $3,321.00-comprising of: - Laundry: $2,080.00 - Uniform: $1,241,00 Payer details Payer's ABN or withholding payer number 90111222333 Payer's name ANSETT AIRWAYS LIMITED Branch number Signature of authorised person DIRECTOR, HUMAN RESOURCES ANNEXURE C DIVIDEND STATEMENT WESTFIELDS LTD ABN 96 123 456 789 Dividend Statement Ms Judy Somerville 10 Diamond Ave Waverley VIC 3150 Notification of Final Dividend Record Date: 1 March 2020 | Payment Date: 30 June 2020 Security Number Unranked Amount Frank Amount Franking Credits Ordinary Shares 201 0.00 700.00 300.00 Your dividend payment has been remitted to the following account on the payment date: Bank: BSB Number: Account Number: Account Name: Victorian State Bank 011-111 123456790 Judy Somerville Please note that your tax file number has been received and recorded. Please retain this Dividend Statement for taxation purposes. *End of Dividend Statement ANNEXURED EXTRACT OF CONTRACT OF SALE OF REAL ESTATE CONTRACT OF SALE OF REAL ESTATE FORM 1 - PARTICULARS OF SALE (EXTRACT) VENDOR'S ESTATE AGENT Real Property Victoria of 123 Wellington Road, Clayton, Victoria T. (03) 9999 8888 F. (03) 88889999 Judy Somerville of 10 Diamond Avenue, Waverley Victoria, 3150 VENDOR PURCHASER Scott Jackson of 200 Church Street, Brighton, Victoria, 3186 PROPERTY ADDRESS Unit 1/300 Glenferrie Road, Hawthorn, in the State of Victoria, Australia LAND The land is described in the attached copy titles) and plan(s) as Lot 12 on Plan of Subdivision 094821 being all that piece of land more particularly described in Certificate of Title Volume 12345 Folio 123 and includes all improvements and fixtures GOODS Al fixed floor coverings, electric light fittings, window furnishings and all factures and fittings of a permanent nature. PAYMENT Price Deposit $ 720,000 $_72.000 10% of the price payable on signing thereof (of which $ 72,000 has been paid). payable at settlement Balance S548.000 GST (refer to general condition 13) The price includes GST (if any) unless the words plus GST appear in this box: If this is a sale of a farming business' or 'going concern' then add the words farming business' or 'going concern' in this box If the margin scheme will be used to calculate GST then add the words "margin scheme' in this box SETTLEMENT is due on 05/07/2020 unless the land is a lot on an unregistered plan of subdivision, in which case settlement is due on the above date or 14 days after the vendor gives notice to the purchaser of registration of the plan, whichever is the later. Signed by the Purchaser SIGNATURE ON FILE on 29 / 04 / 2020 Print name of person signing SCOTT JACKSON State nature of authority if applicable (e.g. director', 'attorney under power of attorney This offer will lapse unless accepted within clear business days (3 business days if none specified). Signed by the Vendor SIGNATURE ON FILE on 30/04/2020 Print name of person signing Judy Somerville State nature of authority if applicable (e.g. director', 'attorney under power of attomey ANNEXURE E EXTRACT OF EXCLUSIVE DISTRIBUTOR TERMINATION AGREEMENT Exclusive Distributor Termination Agreement Date: This agreement is dated the 30day of June 2020. Between the Parties: Distributor Judy Somerville 10 Diamond Avenue, Waverly, Victoria, 3150, Australia Supplier Textiles Inc. of 200 Santa Monica Boulevard, Santa Monica, CA 90405, USA Recitals: 1. Textiles Inc. is the manufacturer of the Textiles product and holds a registered patent over its design. 2. Textiles Inc. entered into an exclusive distributor agreement with the Distributor on 1 September 2018 3. The agreement referred to in Recital 2 was, amongst other things, (a) for a term of five (5) years, concluding on 31 August 2023; and (b) provided for the Distributor to have exclusive distribution rights of the Textiles product during the term in Australia 4. Textiles Inc. now requires more traction in the Australian market and wishes to engage more distributors and contract directly with retailers in relation to its Textiles product. The Parties Agree: 1. Termination (a) The Supplier and Distributor agree that the Exclusive Distributor Agreement dated 1 September 2018 is terminated from the date of this agreement. (b) The Distributor agrees to, and will take all necessary steps to assign all contracts it has with its Australian based customers to the Supplier, with effect from the date of this agreement. 2. Release (a) The Supplier and Distributor agree and acknowledge that both the Supplier and Distributor shall be immediately and forever released and discharged from any action or claim known or unknown, including, without limitation, any claim for costs, interest to which each either the Supplier and/or Distributor may be entitled to against each other. 3. Restraint of Trade (a) As consideration for the Settlement Sum in clause 4 of this agreement, the Distributor agrees that for a period of not less than three years from the date of this agreement that the Distributor will not: (a) directly or indirectly solicit business away from the Supplier; (b) trade in the products manufactured or sold by the Supplier, (c) entice any employee or contractor away from the Supplier, and/or (d) assist or engage any other person to undertake (a) to (c) in this clause. 4. Settlement Sum (a) In consideration of clauses 1, 2 and 3 of this agreement, and based on an estimate of the potential loss suffered by the Distributor, the Supplier agrees to pay the Distributor a Settlement Sum of $49,950.00 Australian dollars to the Australian bank account nominated by the Distributor. 5. General (a) This agreement is subject to the laws of Victoria, Australia. ANNEXURE F FIXED ASSET REGISTER Ms.Judy Somerville FIXED ASSET REGISTER File Number: 323121 900 as at 30 June 2019 Rate Asset ID Asset Description Acquisition Date Original Cost Private Use% Op. Ad. Method Value. Amount Closing Adj. Disposal Proceeds Value Date 1 Computer 1/09/10 4230.00 20% 3384.00 DV 33.30% 935.46 2.448.54 2 890.00 712.00 DV 33.30% 515.18 Printer Furniture 1/09/10 1/09/10 20% 0% 196.82 273.95 3300.00 3300.00 PC 10% 3026.06 ANNEXURE G FILE NOTE File Note Preparer: P. Slade (Partner) Client: Judy Somerville Date/Time: 20 July 2020 Subject: Meeting with Client on 20 July 2020 at 10am The purpose of this file note is to document details of discussions with Judy Somerville in relation to her tax affairs for the year ended 30 June 2020. 1. Judy entered into a Contract of Sale in respect of her investment property located in Hawthorn, Victoria. An extract copy of the contract has been provided to us and is on file at Annexure D. Judy has advised us of the following information: a. Property purchased on 1 October 2016 direct from the developer as new residential premises for $440,000 (incl GST). b. Acquisition costs at the time included stamp duty of $21,470, legal costs of $990 and building inspections of $550 Judy also undertook minor renovations in the 2019/20 financial year to upgrade the kitchen which cost $6,600 after the tenant had damaged the appliances and cupboards. 2. Judy is no longer selling Textiles to Australian retailers as the parent company terminated this agreement. This agreement is attached Annexure E which provides for a settlement and restraint of trade 3. Judy advised that despite the termination of the Textiles agreement, she has paid First Newspapers for advertising up to 30 September 2020 and paid a redundancy to her employee on 30 June 2020 in the amount of $7.500.00. Judy has $12,500 worth of Textiles in stock that she can no longer sell, and Textiles Inc. now refuses to allow her to return the stock. 4. Judy rented a small serviced office for her business at the Tullamarine Business Centre, where the lease commenced on 1 November 2019 for 12 months. The Tullamarine Business Centre provided a free fit out and two months rent-free valued at $12.000. 5. Judy provided us with an extract of her bank statement with annotations. In particular. Judy advised that she is studying at the Institute of Aviation as she hopes to move into Flight Operational and Airport Planning Management within the airline where she currently works. Judy indicated that her HECS / HELP debt has already been exhausted from prior studies. 6. Judy borrowed $70.000 from the Victorian State Bank in early 2020 for her business at an interest rate of 7.35% per annum, as a revolving line of credit secured over her own personal home. Since drawing the loan proceeds, Judy has used $10,000.00 as a deposit for a BMW which she intended to use for her business. Other Notes 1. Judy is a sole trader and her accountancy fees for the 2019/20 financial year are $5,500. 2. Our firm organised Judy's GST registration for her business on its commencement on 1 September 2018 and she accounts for GST on a cash basis. REQUIRED Judy Somerville has engaged Tax Advisors Pty Ltd to advise her of all her tax issues which will arise from the documents provided in respect of the income year ending 30 June 2020. Your Partner has requested that you: Prepare a letter of advice to Judy Somerville which identifies all relevant tax issues that will arise out of all the documents provided, critically analyzing and applying the taxation treatment to the issues, i.e., you will need to argue and support your view and consider differing views (if applicable), and finally, indicate your recommended action based on your better view, i.e., your conclusion. Be sure to consider all issues, including but not limited to issues that may not be as obvious, for example tax accounting, tax periods, potential levies, surcharges, offsets and substantiation requirements. You must ensure that your analysis used to determine your recommended action is fully supported with relevant authority, for example, tax legislation and case law. 1. CASE STUDY SCENARIO You are a Graduate Tax Advisor, employed by Tax Advisors Pty Ltd. Your Partner has assigned you the following client file after attending a meeting with the client. Client Background Judy Somerville is employed by Ansett Airways Limited ('Ansett') since 2003 as a long-haul flight attendant based in Melbourne, Australia. The nature of Judy's position with Ansett sees her flying to international ports where she spends 183 days away from her home base each calendar year. The remaining days of each calendar year are spent in Australia, and Judy uses this non- flying time to organise the importation of textiles into Australia from Textiles Inc. (a company registered in the USA). Until recently, Judy was the exclusive distributor of textiles to retailers in Australia. Client File Contents The client file has the following relevant documents: Extract of bank statement for selected transactions during the financial year ended 30 June 2020 (together with accompanying notes from Judy), as attached at Annexure A; Income Statement (2020) from Ansett, as attached at Annexure B; Dividend Statement from Westfields Ltd, as attached at Annexure C; Extract of Contract of Sale of Real Estate' between Judy Somerville (the vendor) and the purchaser, as executed on 1 May 2020, as attached at Annexure D; Extract of 'Exclusive Distributor Termination Agreement between Judy Somerville and Textiles Inc, as executed on 30 June 2020, as attached at Annexure Fixed asset register as at 30 June 2019, as attached at Annexure F; Internal file note from your Partner that provides details of the discussions with the client at the meeting, as attached at Annexure G. Scope of Engagement between Tax Advisors Pty Ltd and Judy Somerville Your Partner has requested that you review the file in its entirety (as below) in order to undertake the engagement work as agreed between Tax Advisors Pty Ltd and Judy Somerville, as outlined in the 'Required' section of this document. Credit Note 1 Debit 14.128.00 Balance 7.293.00 2 2,345.00 4,948.00 5,203.00 10.151.00 3 54,000.00 64,151.00 4 1,920.00 62,231.00 10,000.00 52,231.00 5 629.00 51,602.00 6 1,008.00 50,594.00 7 220.00 50,374.00 Date Transaction 1 Apr 20 Norman Harvey Ltd Debit Card Transaction 1 Apr 20 Myer Coles Pty Ltd Invoice 65 Textiles 15 Apr 20 Ansett Airways Ltd Salary Deposit 3 May 20 Real Property Pty Ltd Early Deposit Release 6 May 20 Textiles Inc. Textiles Purchase 15 May 20 Stillwell Bib Pty Ltd Debit Card Transaction 15 May 20 Skin Care Australia Debit Card Transaction 15 May 20 Tim Rivers Salary Payment 17 May 20 Traffic Infringement Office Speeding Fine 20 May 20 Abel & Abel Solicitors Invoice 13129 25 May 20 Maze Restaurant Debit Card Transaction 21 May 20 First Newspapers Advertising Invoice 39221 10 Jun 20 Institute of Aviation Course Fees 30 Jun 20 Victoria State Bank Interest Charge 30 Jun 20 Australian Taxation Office PAYG Instalment 30 Jun 20 Textiles Inc. Damages 30 Jun 20 Westfields Ltd Dividend 30 Jun 20 Woodlands Pty Ltd Serviced Office Rent 30 Jun 20 Tim Rivers Redundancy 8 5,950.00 44,424.00 9 450.00 43,974.00 10 2,550.00 41,424.00 6,300.00 35,124.00 430.00 34,694.00 11 3,000.00 31,694.00 8 49,950.00 81,644.00 12 700.00 82,344.00 13 1,500.00 80,844.00 6 7,500.00 73,344.00 $ AUD Notes Regarding Bank Statement Extract Note Description / Further Information 1 Acquisition of Furniture & Office Equipment Desks and Chairs (acquired 1 July 2019) Partitions acquired 20 August 2019) 2 Outstanding debtors at 30 June 2019 Debts written off > 12 months old Judy provisions bad debts equal to 3% of the outstanding debtors. 9,865 4,263 23,000 20,000 3 72,000 (18,000) 4 Obtained an Early Release of Deposit for Property Sold. Net of Agents Commission of $18,000. Stock Purchase of Textiles (USD $2,000.00 = AUD $1,920.00) Stock at Start Stock at End Skin care products purchased due to flight attendant role. Salary Payment for Employee Tim Rivers Redundancy Payment for Employee Tim Rivers 1,920.00 25,500.00 12,500.00 5 629.00 6 1,008.00 7,500.00 7 220.00 8 5,950.00 49,950.00 9 Note the minimum superannuation guarantee contribution is included in the above amounts, where relevant. Speeding fine incurred whilst travelling from Melbourne Airport to Retailer for Textiles business. Legal fees incurred in relation to distributor agreement. Settlement sum received in relation to distributor agreement. Client dinner at Gordon Ramsey's Maze Restaurant. Advertising contract payment. Paid one month in arrears and prepaid up to 30 September 2020. PAYG instalments (quarterly equal payments). Fully-franked dividend received (refer Dividend Statement) Office rent paid for 1 June 2020 to 31 July 2020. 450.00 10 2,550.00 11 3,000.00 12 700.00 13 1,500.00 Income Statement - individual non-business Income Gtatement for year ending 30 June 2020 Payee details NOTICE TO PAYEE Ms Judy Somerville if this income statement shows an amount in the total tax withheld box you must lodge a tax return. If no tax 10 Diamond Avenue was withheld you may have to lodge a tax retum. Waverley Vic 3150 For more information on whether you have to lodge, or about this payment and how it is taxed, you can: - refer ta Tatflick - phone 13 28 61 between 8.00am and 6.00pm (EST) Monday to Friday, or - visit www.auto.gov.au Period during which payments were made 01/07/2019 to 30/06/2020 Payee's tax file number 584 935 771 TOTAL TAX WITHHELD $ Gross payments $182.252 A CDEP payments $ B$ Ds Other income Reportable fringe benefits amount FAT 11 March $ 22,581 Allowances Total $3,321.00-comprising of: - Laundry: $2,080.00 - Uniform: $1,241,00 Payer details Payer's ABN or withholding payer number 90111222333 Payer's name ANSETT AIRWAYS LIMITED Branch number Signature of authorised person DIRECTOR, HUMAN RESOURCES ANNEXURE C DIVIDEND STATEMENT WESTFIELDS LTD ABN 96 123 456 789 Dividend Statement Ms Judy Somerville 10 Diamond Ave Waverley VIC 3150 Notification of Final Dividend Record Date: 1 March 2020 | Payment Date: 30 June 2020 Security Number Unranked Amount Frank Amount Franking Credits Ordinary Shares 201 0.00 700.00 300.00 Your dividend payment has been remitted to the following account on the payment date: Bank: BSB Number: Account Number: Account Name: Victorian State Bank 011-111 123456790 Judy Somerville Please note that your tax file number has been received and recorded. Please retain this Dividend Statement for taxation purposes. *End of Dividend Statement ANNEXURED EXTRACT OF CONTRACT OF SALE OF REAL ESTATE CONTRACT OF SALE OF REAL ESTATE FORM 1 - PARTICULARS OF SALE (EXTRACT) VENDOR'S ESTATE AGENT Real Property Victoria of 123 Wellington Road, Clayton, Victoria T. (03) 9999 8888 F. (03) 88889999 Judy Somerville of 10 Diamond Avenue, Waverley Victoria, 3150 VENDOR PURCHASER Scott Jackson of 200 Church Street, Brighton, Victoria, 3186 PROPERTY ADDRESS Unit 1/300 Glenferrie Road, Hawthorn, in the State of Victoria, Australia LAND The land is described in the attached copy titles) and plan(s) as Lot 12 on Plan of Subdivision 094821 being all that piece of land more particularly described in Certificate of Title Volume 12345 Folio 123 and includes all improvements and fixtures GOODS Al fixed floor coverings, electric light fittings, window furnishings and all factures and fittings of a permanent nature. PAYMENT Price Deposit $ 720,000 $_72.000 10% of the price payable on signing thereof (of which $ 72,000 has been paid). payable at settlement Balance S548.000 GST (refer to general condition 13) The price includes GST (if any) unless the words plus GST appear in this box: If this is a sale of a farming business' or 'going concern' then add the words farming business' or 'going concern' in this box If the margin scheme will be used to calculate GST then add the words "margin scheme' in this box SETTLEMENT is due on 05/07/2020 unless the land is a lot on an unregistered plan of subdivision, in which case settlement is due on the above date or 14 days after the vendor gives notice to the purchaser of registration of the plan, whichever is the later. Signed by the Purchaser SIGNATURE ON FILE on 29 / 04 / 2020 Print name of person signing SCOTT JACKSON State nature of authority if applicable (e.g. director', 'attorney under power of attorney This offer will lapse unless accepted within clear business days (3 business days if none specified). Signed by the Vendor SIGNATURE ON FILE on 30/04/2020 Print name of person signing Judy Somerville State nature of authority if applicable (e.g. director', 'attorney under power of attomey ANNEXURE E EXTRACT OF EXCLUSIVE DISTRIBUTOR TERMINATION AGREEMENT Exclusive Distributor Termination Agreement Date: This agreement is dated the 30day of June 2020. Between the Parties: Distributor Judy Somerville 10 Diamond Avenue, Waverly, Victoria, 3150, Australia Supplier Textiles Inc. of 200 Santa Monica Boulevard, Santa Monica, CA 90405, USA Recitals: 1. Textiles Inc. is the manufacturer of the Textiles product and holds a registered patent over its design. 2. Textiles Inc. entered into an exclusive distributor agreement with the Distributor on 1 September 2018 3. The agreement referred to in Recital 2 was, amongst other things, (a) for a term of five (5) years, concluding on 31 August 2023; and (b) provided for the Distributor to have exclusive distribution rights of the Textiles product during the term in Australia 4. Textiles Inc. now requires more traction in the Australian market and wishes to engage more distributors and contract directly with retailers in relation to its Textiles product. The Parties Agree: 1. Termination (a) The Supplier and Distributor agree that the Exclusive Distributor Agreement dated 1 September 2018 is terminated from the date of this agreement. (b) The Distributor agrees to, and will take all necessary steps to assign all contracts it has with its Australian based customers to the Supplier, with effect from the date of this agreement. 2. Release (a) The Supplier and Distributor agree and acknowledge that both the Supplier and Distributor shall be immediately and forever released and discharged from any action or claim known or unknown, including, without limitation, any claim for costs, interest to which each either the Supplier and/or Distributor may be entitled to against each other. 3. Restraint of Trade (a) As consideration for the Settlement Sum in clause 4 of this agreement, the Distributor agrees that for a period of not less than three years from the date of this agreement that the Distributor will not: (a) directly or indirectly solicit business away from the Supplier; (b) trade in the products manufactured or sold by the Supplier, (c) entice any employee or contractor away from the Supplier, and/or (d) assist or engage any other person to undertake (a) to (c) in this clause. 4. Settlement Sum (a) In consideration of clauses 1, 2 and 3 of this agreement, and based on an estimate of the potential loss suffered by the Distributor, the Supplier agrees to pay the Distributor a Settlement Sum of $49,950.00 Australian dollars to the Australian bank account nominated by the Distributor. 5. General (a) This agreement is subject to the laws of Victoria, Australia. ANNEXURE F FIXED ASSET REGISTER Ms.Judy Somerville FIXED ASSET REGISTER File Number: 323121 900 as at 30 June 2019 Rate Asset ID Asset Description Acquisition Date Original Cost Private Use% Op. Ad. Method Value. Amount Closing Adj. Disposal Proceeds Value Date 1 Computer 1/09/10 4230.00 20% 3384.00 DV 33.30% 935.46 2.448.54 2 890.00 712.00 DV 33.30% 515.18 Printer Furniture 1/09/10 1/09/10 20% 0% 196.82 273.95 3300.00 3300.00 PC 10% 3026.06 ANNEXURE G FILE NOTE File Note Preparer: P. Slade (Partner) Client: Judy Somerville Date/Time: 20 July 2020 Subject: Meeting with Client on 20 July 2020 at 10am The purpose of this file note is to document details of discussions with Judy Somerville in relation to her tax affairs for the year ended 30 June 2020. 1. Judy entered into a Contract of Sale in respect of her investment property located in Hawthorn, Victoria. An extract copy of the contract has been provided to us and is on file at Annexure D. Judy has advised us of the following information: a. Property purchased on 1 October 2016 direct from the developer as new residential premises for $440,000 (incl GST). b. Acquisition costs at the time included stamp duty of $21,470, legal costs of $990 and building inspections of $550 Judy also undertook minor renovations in the 2019/20 financial year to upgrade the kitchen which cost $6,600 after the tenant had damaged the appliances and cupboards. 2. Judy is no longer selling Textiles to Australian retailers as the parent company terminated this agreement. This agreement is attached Annexure E which provides for a settlement and restraint of trade 3. Judy advised that despite the termination of the Textiles agreement, she has paid First Newspapers for advertising up to 30 September 2020 and paid a redundancy to her employee on 30 June 2020 in the amount of $7.500.00. Judy has $12,500 worth of Textiles in stock that she can no longer sell, and Textiles Inc. now refuses to allow her to return the stock. 4. Judy rented a small serviced office for her business at the Tullamarine Business Centre, where the lease commenced on 1 November 2019 for 12 months. The Tullamarine Business Centre provided a free fit out and two months rent-free valued at $12.000. 5. Judy provided us with an extract of her bank statement with annotations. In particular. Judy advised that she is studying at the Institute of Aviation as she hopes to move into Flight Operational and Airport Planning Management within the airline where she currently works. Judy indicated that her HECS / HELP debt has already been exhausted from prior studies. 6. Judy borrowed $70.000 from the Victorian State Bank in early 2020 for her business at an interest rate of 7.35% per annum, as a revolving line of credit secured over her own personal home. Since drawing the loan proceeds, Judy has used $10,000.00 as a deposit for a BMW which she intended to use for her business. Other Notes 1. Judy is a sole trader and her accountancy fees for the 2019/20 financial year are $5,500. 2. Our firm organised Judy's GST registration for her business on its commencement on 1 September 2018 and she accounts for GST on a cash basis. REQUIRED Judy Somerville has engaged Tax Advisors Pty Ltd to advise her of all her tax issues which will arise from the documents provided in respect of the income year ending 30 June 2020. Your Partner has requested that you: Prepare a letter of advice to Judy Somerville which identifies all relevant tax issues that will arise out of all the documents provided, critically analyzing and applying the taxation treatment to the issues, i.e., you will need to argue and support your view and consider differing views (if applicable), and finally, indicate your recommended action based on your better view, i.e., your conclusion. Be sure to consider all issues, including but not limited to issues that may not be as obvious, for example tax accounting, tax periods, potential levies, surcharges, offsets and substantiation requirements. You must ensure that your analysis used to determine your recommended action is fully supported with relevant authority, for example, tax legislation and case law