Sample exam question 4 - June 2015

Doctor House worked as an employee doctor for Princeton Medical Enterprises.  Prior to leaving Perth to move to Sydney on 30 June 2014 he sold the following assets:

• The family home on 1 April 2014.  The home was bought on 31st January 1996.  The house cost $200,000 and renovations totalling $85,000 were carried out in June 2000. Stamp Duty on the purchase was $10,000 which was paid on 2nd February 1996 and commission on sale $25,000 paid on 1st April 2014 - $990,000
   
• Shares in Medical Supplies Pty Ltd on 10 November 2013. The shares had cost $55,000 in January 1995. - $50,000
    
• A vacant block of land on 1 June 2014.  The block had cost $235,000 on 28 June 2013.  Stamp duty on purchase was $20,682 and commission paid on sale was $10,350.  Interest of $13,000 was paid in respect of the loan which had been taken out to finance the purchase. - $345,000

Doctor House had a capital loss from the previous year of $5,900.  In addition, during the current year he had a loss of $7,900 from renting out a factory unit in a Perth suburb. 

 

Doctor House had a salary of $285,000 in addition to a salary of $5,000 from the Naval Reserve in which he was an officer.  Dry-cleaning costs totalled $185 for white medical coats and $53 for the Naval Reserve uniforms.

During the year he received the following dividends from several companies he had invested in –
Medical Limbs Ltd – Fully Franked Dividend with franking credits of

$4286 attached - $10,000

 

Blood Bank Ltd – Unfranked Dividend - $2,500

 

Pills Galore Pty Ltd – Partially Franked Dividend ($1500 franking credits

attached) - $5,000

 He had incurred the following costs whilst working –

a) Subscriptions to “Weekly Medical” a journal for health professionals - $250

b) Fees paid to Medical Association - $2,500

c) Raffle tickets for a hospital charity - $100

d) Costs associated with attending a medical conference - $4,589

Doctor House intended to start his own medical practice in Sydney and intended to use a family trust.  He paid his accountant $1,500 for advice on how to structure his business and a further $800 to prepare his current year’s tax return.

During the current year Doctor House had to work a number of nights as his employer operated a 24 hour emergency clinic.  His travel to the clinic occurred in a number of different circumstances which are set out below.

• Travel from home to work and return for daytime shifts - $3,600
• Travel from home to work and return for night shifts (when there was no public transport available) - $2,100
• Travel from home to work and return at nights when he was called in after having already worked a day shift - $800
• On very busy nights he was contacted at home and would give instructions over the phone to nursing staff then he would drive in and continue treating the patients.  Cost of this travel from home to work and return - $930

Required

Calculate Doctor House's taxable income and net tax payable including Medicare.

  

Click here to view the answer.

 

Time-management tactics to try this EOFY

Nothing tests your ability to crunch deadlines quite like the end of financial year (EOFY). The weeks leading up to the last day of June are often ruled by mountains of paperwork and an endless series of tasks. However, employing a few clever strategies can preserve your sanity and help you optimise the hours you spend at your desk – especially if it’s your first as a full-time tax professional. Here are four top time-management tactics to apply this EOFY.

1. Embrace the Pomodoro technique

Conceived in the 1980s by the entrepreneur Francesco Cirillo, the Pomodoro technique is a foolproof trick for enhancing mental clarity and saving time. Using a timer, work solidly on a task for a 25-minute period before rewarding yourself with a five-minute break. Adhering to strict time increments can help you power through your to-do list. It also chases away the urge to procrastinate. And no need to place an egg timer on your desk – there's an app you can download straight to your smartphone.

2. Keep a daily task list

When you’re faced with serious deadlines, it’s important to know what work to tackle first. Whether you prefer to use the to-do list function in Microsoft Outlook or old-fashioned pen and paper, outlining the tasks you need to accomplish each day and ranking them from low priority to high priority is a clever way to take control of your time. Although the power of the to-do list is well documented, it’s equally important to consider the things that can wait until after 30 June. When compiling your daily tasks, strike out the non-essential items and relegate them to a work period that’s lower pressure.

3. Tackle the most challenging task first

When you’re faced with a daunting project complete with administrative hurdles, it’s tempting to put it off. But if you start your day by addressing the most difficult task on your agenda before moving on to less pressing things, you’ll stand a higher chance of managing your time and energy effectively.

4. Batch-process tasks

Multitasking might be a modern phenomenon, but you’ll be far more efficient if you focus on one thing at a time. Whether it’s responding to an overflowing inbox or reconciling urgent accounts, blocking out time to batch-process your duties is a powerful tactic for bolstering productivity and conserving your hours.
From working within short increments to completing your most difficult task first, mastering the art of time management can make for a smooth lead-up towards EOFY. What’s your favourite time-management trick?


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Five ways to impress your boss this EOFY

If you’re an accountant, you’ll know that nothing can accelerate stress levels quite like end of financial year (EOFY). Whether you’re tasked with processing countless tax returns or reconciling accounts, the weeks preceding 30 June can be fraught with professional and administrative challenges. However, the end of financial year also offers a serious opportunity to prove your ability to perform under pressure and establish yourself as the firm’s rising star. Here are five ways to impress your boss this EOFY.

Don’t be afraid to take initiative

If you’re facing back-to-back deadlines, it’s tempting to take a reactive approach to work. However, taking the time to identify a scheduling clash before it happens or fixing a mistake before it creates bigger problems can show your manager you’re unwilling to simply go through the motions.

Put in extra time

High-stress periods often call for employees to go above and beyond. Although work-life balance is essential, preparation for EOFY often involves the kind of mounting workload that warrants extra hours. Whether it’s arriving at the office half an hour early or staying back late, proving that you’re willing to be flexible when your job demands it can be a testament to your work ethic and level of commitment.

Dream up a system that’s more efficient

Sometimes, small changes to workplace systems can spell big gains in terms of productivity, efficiency and your ability to get things done. Whether it’s coming up with a new way to enter data or a filing method that improves client-record accuracy, spearheading a system that’s more efficient is a sign you can think outside the box. Don’t be afraid to schedule a meeting to communicate your ideas to your boss. Even if your scheme isn’t implemented, giving it your best shot can be rewarding in itself.

Offer to lend a hand

When your team mates are struggling with their workloads or dealing with a client issue that’s come out of nowhere, it’s wise to extend a helping hand. High-pressure periods can send stress levels through the roof, so putting your own interests aside to be a supportive colleague can make a world of difference.

Show extra attention to detail

It’s no secret that long days at your desk can see concentration levels wane. However, paying extra attention to the task at hand – even if it means giving yourself more time to complete it – can deepen your manager’s faith in you and save your firm from costly mistakes.

From taking initiative to helping struggling colleagues, EOFY can be a great opportunity for your skills and talents to shine. How do you go about upping your performance in the lead-up to 30 June?


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Member profile: Autumn Slavin

Employer: JH Advisory

Position: Manager

I am a Chartered Tax Advisor (CTA) and Chartered Accountant (CA) who has worked in public practice for nearly 13 years. My clients are predominantly Small and Medium size Entereprises (SMEs) and therefore, I have been fortunate to work with clients from various industries, with a variety of tax and accounting issues. I began my career at Accru Harris Orchard, where I worked from being Graduate Accountant, up to being in the role as a Self-Managed Super Fund Manager. After nearly 10 years, I then decided it was time for a change of scenery and began employment with Bartons Chartered Accountants in a managerial position. This year I have begun an exciting managerial role at JH Advisory.

Describe your current role

My current focus is on tax and compliance but I am also working with a group of people who have a diverse range of skill sets and will enable me with the opportunity to develop and learn other skills in business services.

Describe your involvement in The Tax Institute’s committees or contribution to the Institute

For the last year I have been on the Tax Institute’s membership committee. It has been such a privilege to give back to an organisation that has provided me with so much support and resources over the last few years, as a member of the Tax Institute.

What are your career highlights?

• Becoming a CTA and CA;
• Working with great people and being able to work with a range of cliental on a range of tax and compliance issues.

Why did you join The Tax Institute?

To help support and contribute to a great organisation, the ability to be kept up-to-date with the latest tax issues and to be given the opportunity to network with like-minded individuals.

What advice can you give to graduates?

Try to be as open minded as possible. You will need to be open to new opportunities and to always remember that a career in tax, means a career with no limitations.

Who or what inspires you?

As a female, I am inspired by other women professionals in my industry. Especially those in management positions, who have successfully accomplished that work/life balance.

What do you do to unwind?

Spending time with my family and friends and watching one of many of my DVD box set collections – there are a few.

Favourite holiday destination?

Sorry but I don’t have one, as I am such a homebody. My favourite destination so far was touring around Tasmania (Must-Do).  I do tend to spend my holidays hanging out in little ole Radelaide.

Client liaison: Dealing with your first EOFY

There’s only one date on the tax calendar that has the potential to frighten even the most seasoned tax professional: 30 June.

One of the biggest pressure points during these closing months is dealing with clients who are also feeling the pinch. Navigating this initiation into end of financial year (EOFY) can often become equally about client management as it is about the steep increase in your workload.

Here are our tips to help you handle difficult client relationships and come out ahead this EOFY.

Protect yourself from risk

While never a pleasant realisation, in the tax accountancy industry there’s always the potential threat of litigation. Complaints most commonly registered about tax advisors include those who do not lodge documentation in a timely manner or do not process and forward refunds to their clients promptly.

Of course, you can protect yourself by asking your clients a number of questions rather than simply relying on the documentation and information they provide. Ensure you have an open channel of communication with your clients – that way, should there be any delays processing their documentation you have an opportunity to provide a solution on how the situation could be rectified.

Be prepared and take the initiative

Tax mistakes are more likely to arise if your clients have not been in regular contact throughout the financial year. Whether this includes something as minor as miscoding bank transactions or more significant still, such as not keeping tax records up to date, errors in documentation can soon become time-consuming tasks to amend. Many firms now encourage their tax specialists to send reminders to their existing clients about the approaching EOFY. By prompting their hand, you’ll have an opportunity to better plan your schedule as well as make requests for additional information or timely fixes.

Be specific, not agreeable

When dealing with clients, they may be prone to unloading their undue stress on to you. In this case, while it may be tempting to offer advice, it is not wise to agree with them or communicate with them in vague terms that they can misconstrue. Offer your clients specific timelines for documentation processing and continue to ask them measurable phrases such as: “If this is completed, does it fix your issue?”

EOFY doesn't have to be a daunting time. By staying on top of your clients’ demands, you can sail through the period and grow as a tax professional.


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If you are a tertiary education student, The Tax Institute can help you progress in your career journey.

Find out about Student Membership.