Assume that you are a tax agent and at the end of the current financial year one of your clients, Sarah Smith, has come to you for assistance with preparing and filing a tax return. Sarah is employed as a Business Manager by a large IT firm also works for home for the company two days a week. Due to her heavy work commitments has not organised her tax documents and matters. She currently earns $85 500 per annum and has had $18 250 PAYG withheld from her gross income. Rebecca also received an unfranked dividend from her personal BHP shares of $7500.

After sorting through the shoebox that holds all of Rebeccas paperwork, you have uncovered the following receipts and expenses;

Professional association membership $480 Phones used for business purposes $650 PR and client relationship $900 Home office expenses (stationery, electricity, $2,800 internet, printer consumables)

Bank interest earned from deposits $1,200

Sarah also advised that she had additional self-education expenses of $2,800, but could not locate the receipts.

Sarah had private health insurance for three months during the assessment period.

Sarah is single and has no dependents.

Sarah often works from her home office and she is also required to travel on a daily basis to various

work clients to service their computer systems. Sarah has not kept a log book with her kilometres. She

drives a Toyota Corolla which has a 1300-cc engine.

Among her papers, you find a daily work log which details her client appointments, times and

locations. With help of the above information, complete the following tasks;

As her tax agent, what advice can you give Sarah about the ATOs lodgement process and deadlines? WhatareSarahslodgementoptions? What can you tell Sarah about the self-assessment process?

What range of powers does the ATO have for auditing and reviewing a taxpayers tax affairs?

What advice can you give Sarah a about future tax preparation, including legal information?

Calculate Sarahs taxable income.

Calculate Sarahs tax payable/refundable for the 2011/12 financial year, using the rates provided

below.

Provide Sarah with a code of conduct, outlining your ethical and professional responsibilities as a tax

agent that you have to adhere to when dealing with tax matters

Assuming that Sarah has accepted your assessment and is ready to lodge her return, prepare her return using ATOs e-tax application. Use fictitious information to set up the tax file. E-tax application can be downloaded from ATO website at: http://www.ato.gov.au/etax. Your assessor may ask you to change/modify some information in the return.

You will not actually lodge the return but prepare the return to the point where it can be sent to the ATO as an actual return.