LAW6001 – Taxation Law

Assessment 3: Case Study

Torrens University Australia / Holmes Institute / Similar Institution

Trimester 1, 2026

Weighting: 20%

Assessment Description

This individual case study requires you to provide written advice to clients on complex taxation issues. You must identify relevant facts, apply Australian taxation legislation and case law, reach conclusions, and make recommendations. The task assesses your ability to interpret the Income Tax Assessment Acts, understand tax administration principles, and address ethical responsibilities of tax agents.

Submission Requirements

1. Individual submission only.
2. Word limit: 2,000 words ±10% (excluding reference list).
3. Format: MS Word, no spacing, 12-pt Arial font, 2 cm margins all sides, section headings, page numbers.
4. Submit electronically via Blackboard (SafeAssign) by 11:55 pm AEST/AEDT Sunday of Week 10.
5. Use Harvard referencing style consistently for in-text citations and reference list.
6. Minimum 10 references, including the prescribed textbook, relevant legislation, case law, ATO rulings, and recent scholarly sources.
7. Plagiarism checked via SafeAssign; breaches handled per Academic Integrity Policy.
8. Late submissions attract penalties unless an approved extension is granted.

Questions

Question 1 (6 marks)

Explain the:

1. Constitutional basis of the Australian taxation system, including the specific section(s) of the Australian Constitution that confer taxation powers.
2. Role of the Courts, Parliament, and the Australian Taxation Office (ATO) in developing taxation law, with reference to the theory of separation of powers in government.

Question 2 (9 marks)

A non-resident manufacturer based in the United States derives profits from sales to Australian customers. The manufacturer has a sales representative operating from a serviced office in Australia who has been instrumental in securing orders from Australian clients.

Required: With reference to the relevant Double Tax Agreement between Australia and the United States, determine whether the profits from Australian sales are taxable in Australia. Support your answer with statutory provisions and any applicable case law or ATO guidance.

Question 3 (15 marks)

Indianna, a resident individual taxpayer, owns 22 hectares of land previously used to produce assessable income. She plans to develop the land into residential housing under three possible scenarios:

1. Indianna undertakes all subdivision activities herself, creating 80 lots plus a 2-hectare personal residence area, then sells all 80 undeveloped blocks to a property developer.
2. Indianna performs the same subdivision work and auctions the 80 blocks individually to the highest bidders.
3. Indianna sells the entire land to a development company without subdividing, paying the company 65% of total sale proceeds to complete the development, with the balance paid to Indianna on sale of the final block.

Required:

1. Explain the potential assessable income issues for each scenario if the property was acquired (i) on 1 November 1976, and (ii) on 1 November 1986.
2. Discuss when Indianna would derive any assessable income under each scenario, given the project spans at least two financial years.

Question 4 (10 marks)

Amity sought a lifestyle change and purchased land in the Adelaide Hills to develop an accommodation business. She investigated zoning, paid a deposit and instalments on the $3 million purchase, and acquired cattle and alpacas. Zoning was refused initially but later approved in principle after modification. She brought in a partner (Archie) who acquired a 25% interest 18 months ago. Income was earned from agistment, cattle, and alpaca sales. After a disagreement, Amity sold her interest.

Required: With reference to applicable legislation and case law, determine whether Amity can claim the interest on the loan as a deduction over the three-year period.

Question 5 (15 marks)

Maurice, an Australian resident, disposed of the following assets during the 2025/26 income year:

• Home acquired 20 February 1989 for $140,000 (never income-producing); market value 1 March 2025 $310,000; sold 1 March 2026 for $325,000.
• Shares in FUL Pty Ltd acquired 10 April 1984 for $15,000; sold 15 March 2026 for $19,000.
• Furniture acquired 20 May 2010 for $9,500; sold 1 May 2026 for $5,000.
• Vacant land acquired 20 June 1997 for $100,000; market value 15 May 2025 $475,000; sold 15 May 2026 for $465,000.

Maurice has carry-forward capital losses of $12,500 (antique drumkit) and $5,000 (shares). Interest expenses on the vacant land total $110,000 (never income-producing). Maurice is not a share trader.

Required: Calculate Maurice’s net capital gain or loss for the 2025/26 income year, with full workings and references to legislation and cases.

Marking Criteria

 The constitutional basis for Commonwealth taxation powers rests on section 51(ii) of the Australian Constitution, granting authority over taxation but not so as to discriminate between States. Courts interpret these powers through cases such as South Australia v Commonwealth, while Parliament enacts statutes and the ATO administers them under delegated authority. This separation ensures checks and balances in tax law development. For non-resident manufacturers, Article 7 of the Australia-US Double Tax Agreement generally allocates business profits taxing rights to the residence state unless a permanent establishment exists. The presence of a sales representative in a serviced office likely does not create a fixed place of business, meaning profits remain non-taxable in Australia absent other factors (Sadiq, 2026, Principles of Taxation Law 2026, available at https://legal.thomsonreuters.com.au/principles-of-taxation-law-2026/productdetail/132001).

References

• Barkoczy, S., 2025. Foundations of taxation law 2025. 17th ed. Melbourne: Oxford University Press. Available at: https://global.oup.com/academic/product/foundations-of-taxation-law-2025-9780190338695.
• Cooper, G. and Vann, R., 2023. Australian income tax: commentary and materials. 15th ed. Sydney: Thomson Reuters. Available at: https://legal.thomsonreuters.com.au/australian-income-tax-commentary-and-materials-15th-edition/productdetail/127228.
• Sadiq, K., 2026. Principles of taxation law 2026. Sydney: Thomson Reuters. Available at: https://legal.thomsonreuters.com.au/principles-of-taxation-law-2026/productdetail/132001.
• Woellner, R., 2025. Australian taxation law 2025. 35th ed. Sydney: Thomson Reuters. Available at: https://legal.thomsonreuters.com.au/australian-taxation-law-2025/productdetail/131457.
• Deutsch, R., 2024. Australian tax handbook 2024. Sydney: Thomson Reuters. Available at: https://legal.thomsonreuters.com.au/australian-tax-handbook-2024/productdetail/131456.