Candidates must apply the IRAC principle when addressing the relevant issues (i.e. I= Identify the key issues, R= Cite the relevant legislative provisions and case law (rules) where appropriate, A = apply the relevant rules to the facts presenting arguments for and against and C = form a conclusion based on your stronger argument).

If candidates need to make assumptions when responding to any question, the assumption and the reason for the assumption must be clearly specified in their response

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 nonflying 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

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.

Bank Statement as follows

date transaction note DR

15 May 20 Tim Rivers Salary Payment 6 1,008.00

Notes Regarding Bank Statement Extract

Note Description / Further Information $AUD

6 Salary Payment for Employee Tim Rivers 1,008.00

Redundancy Payment for Employee Tim Rivers 7,500.00

Note the minimum superannuation guarantee contribution is

included in the above amounts, where relevant.

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.