UTSOnline by 5pm on Monday 5 February 2018. Facts: Bridget

Taxation Law 79017: Research Assignment (40%) Word limit: 1500 words maximum (excluding footnotes & bibliography) Due Date: The assignment must be submitted both in hard copy to Law Reception (Level 3) and online via UTSOnline by 5pm on Monday 5 February 2018. Facts: Bridget is employed full-time as an accountant at a top tier accounting firm. She receives a salary of $100,000 in the 2016/17 year of income. Bridget spends many evenings working past 8pm at the office and her employer pays for her taxi travel to go home. Bridget lives in the suburb of Epping. Bridget is very hard-working and she is also employed casually as a bookkeeper in the accounts department of a clothing manufacturing company (located in Epping) where she works in the early mornings from 7:00 am to 9:00 am, before commuting directly to the accounting firm in Sydney where she is employed full-time. Bridget receives $60,000 from her casual bookkeeping work at the clothing manufacturing company in the 2016/17 income year. Bridget also receives rent of $30,000 in the 2016/17 income year, from her rental property in Canberra. She has $40,000 of allowable deductions in relation to the rental property in the 2016/17 income year. In Bridget’s spare time, she enjoys baking cakes and experimenting with different recipes. On 1 January 2017, she enters a TV baking competition “Bake-off” where she wins a cash prize of $3,000. Over the next few months, Bridget makes several cakes for special occasions as a favour to her family and friends. She does not receive any payment for the cakes. She also makes and consumes a very elaborate almond meringue cake (valued at $1,000) for her own birthday. On 1 June 2017, Bridget is approached by a TV station. She agrees to appear on a TV cooking show “Delectable Desserts” in consideration of a payment of $30,000 to Bridget by the TV station. She also receives new cake-mixing equipment valued at $10,000 from the TV station.On 1 June 2017, Bridget also enters into a second agreement with the TV station in which she agrees not to appear on any similar TV cooking shows for a period of two years, in consideration of a payment of $20,000 made to Bridget, by the TV station. Bridget incurs legal fees of $5,000 in relation to the second agreement. Bridget is also very ambitious and she is keen to get a promotion to the position of “Director” of her division at the accounting firm. Bridget undertakes a part-time “Master of Professional Accounting” degree at the University of Technology, Sydney, and pays $7,000 in university fees in the 2016/17 income year. In an effort to enhance her overall image/presentation, in the 2016/17 income year, Bridget also spends $5,000 on a range of contemporary suits which she believes makes her look more “professional”. On 15 June 2017, Bridget receives a $5,000 cash award for “Best Accountant in Sydney” from the Chartered Accountants Association. However, Bridget still feels discouraged as she has not yet been promoted at the accounting firm. On 17 June 2017, she travels to Melbourne in order to attend a job interview with a rival top-tier accounting firm and incurs $400 on airfares and $800 on accommodation. Bridget has $70,000 of allowable deductions in total (including any deductions arising in the above facts) in the 2016/17 income year. Required: Advise Bridget regarding the income tax implications to her, arising from the above facts in relation to the 2016/17 income year. In your answer, make sure you: (1) apply the HIRAC methodology and refer to any relevant cases, legislative provisions, and principles of tax law; and (2) show your calculation of Bridget’s taxable income for the 2016/17 income year, fully explained by reference to any relevant legislative provisions, and principles of tax law. (40 marks)

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