Assessment Tool FNSACC502 Prepare tax documentation for individuals FNS50215 Diploma of Accounting Version 3.0 December 2015 Level 2, 25 George Street, Parramatta, NSW 2150 Phone: +61 2 9633 1222 Fax: +61 2 9633 1888 Email: [email protected] Web: www.australisinstitute.nsw.edu.au Table of Contents Pre-assessment Checklist 3 Assessment Submission Sheet 4 Assessment Information 5 Style Guide for Assessment Submission 6 Assessment Activity 1 – Knowledge Questions 7 Assessment Activity 2: Case study 10 Assessment Activity 3- Role paly (Group 2 Students) 15 Assessor marking and Feedback Form: Prepare tax documentation for individuals 16 Pre-assessment Checklist Candidate’s name: Units of competency: FNSACC502 - Prepare tax documentation for individuals Trainer/Assessor: Date: Checklist Comments • Talked to the candidate about the purpose of the assessment. • Discussed the assessment environment and the process covering when the assessment will occur, where the assessment will occur, who will assess the candidate, and the feedback process. • Printed the unit outline and explained the unit of competency including each element, performance criteria, foundation skill, performance evidence, and knowledge evidence that the candidate will be assessed on. • Discussed the various methods of assessment, assessment instruments, submission requirements and the due date. • Discussed what resources are required to successfully complete this assessment. • Discussed what performance level is required for each assessment task. • Organised the necessary arrangements to meet the assessment conditions essential for the candidate to carry out each assessment task. • Ensured that the candidate read and understood the Student Assessment Handbook involving following concepts: • authenticity of candidate’s work • re-submission, re-assessment and study plan policy/procedures • appeals process • regulatory information • confidentiality procedures • Discussed special needs (if any) of the candidate and made the necessary arrangements. • Summarised information and allowed candidate to ask questions. Assessment Submission Sheet Course Title Diploma of Accounting Course Code Unit Title Prepare tax documentation for individuals Unit Code FNSACC502 Version 3.0 Created on November 2015 Please read and sign this assessment coversheet and submit it together with your assessment to your Assessor by the due date. Student Name Student ID Assessor Date Due Declaration I affirm that all work submitted in this assessment is my own work and does not involve plagiarism or teamwork other than that authorised for any particular assessment activity. I have read the Student Assessment Handbook under Section 2 Assessment Guidelines and understood the serious consequences in case this work is found plagiarised. Student Signature: Date Signed: ____/____/____ Assessor Use Only First Submission Date Re-submission Date Re-assessment Date 0S 0NYS ___/___/____ 0S 0NYS ___/___/____ 0S 0NYS ___/___/____ Feedback: Trainer/Assessor’s Comments: I hereby confirm that I have been given feedback from the Assessor and I agree with the assessment outcome. Student Signature Assessor Signature Date ___/___/______ Student Feedback on Assessment: Would you like to make any comments about this assessment? Assessment Receipt Student Name Student ID Course Code & Title Extension Granted Yes  No  Unit Code & Title Date Received ___/___/____ First Submission  Re-submission  Re-assessment  Received by Assessment Information This assessment tool is designed to gather evidence on your knowledge as well as abilities to prepare non-complex income tax returns for individuals in accordance with statutory requirements, and encompasses gathering and verifying data, calculating taxable income and reviewing compliance requirements. Your Trainer/Assessor will go through the unit of competency at the very beginning of this unit explaining each element, performance criteria, foundation skill, performance evidence, and knowledge evidence that you will be assessed on via this assessment tool. You can find more information at https://training.gov.au/Training/Details/ FNSACC502 This assessment has three parts:  Assessment Activity 1 – Knowledge questions  Assessment Activity 2 – Case studies/ Business scenario  Assessment activity 3- Role paly In order to be deemed competent in this unit you must obtain satisfactory outcome in each part of this assessment. You must collate the following documents and submit in a portfolio format: • Assessment activity one • Assessment activity two • Assessment activity three Guide for Preparing and Submitting Assessment • Read each task carefully, to make sure you know what is expected of you. Check whether the task has multiple parts, and make sure you answer all parts. • Answer all the required task in the sequence as provided • Research widely and use a variety of reputable sources. Use class notes and discuss with your trainer • Remember to observe the principles of academic honesty, as we do check assessments for plagiarism. Writing and Submitting the Assessment • Your answers must be written in a formal format. • Write and save your assessment as a Microsoft Word document to your computer. • Give a title to your assessment and use headings and subheadings when appropriate. • You must submit your assessment as one portfolio where each part must have its own cover page having: – Course Code, Course Name – Unit Code, Unit Name – Date of Submission – Your Full Name and Your Student Number – Your Trainer’s/Assessor’s full name • Number the pages in the bottom right hand corner. • Make sure you present a professional looking portfolio. Use a document folder to collate all your documents together. Ensure quality print. • Save a back-up copy of your assessment on a portable storage medium, in case your computer fails or is stolen, and/or keep a printed copy. • When submitting your assessment, please submit it as one document – do not submit the title page, the references and the body separately. If you do this, your assessment will be returned to you for re-formatt Style Guide for Assessment Submission You must submit your entire assessment in a professional portfolio format using the following guidelines as the format of your assessment: Language • Use formal and non-discriminatory language • Avoid informal terms: E.g.; Using “Yeah” rather than “Yes” • Avoid sexism in language Spelling • Use a spellchecker to ensure your portfolio is free of spelling errors. • Spell organisation/brand names as the organisation spells it. E.g.; iPhone Proofreading • Ensure the following in your portfolio: ­ correct use of grammar, spelling and punctuation ­ visual consistency and language consistency ­ coherent structure and consistent layout ­ readability and legibility in typography ­ tables have titles and aligned according to the page margins Headings and Subheadings • Use Cambria (Headings): H1: Main Heading (16pt) H2: Subheading Level 1 (14pt) H3: Subheading Level 2 (13 pt) • Use an initial capital for the first word only (unless the heading includes proper names and nouns): E.g.; Assessment Activity 1 • Use informative and intriguing wording • Using Boxed Headings is optional. Citation and Reference List • Use Harvard Style Guide • Insert in-text citation directly after the information being sourced from an external source. • Provide a Reference List (Bibliography) at the end of your portfolio • Each external image incorporated in your portfolio must be sited. Capitalisation • Use initial capitals for positions, personal names, placenames, nationalities, and groups of people E.g.; Chief Executive Officer – Alim Saiyed – Parramatta – Australia – Australian Lists • Use a colon to introduce the list, a comma before ‘or’/’and’ and a full stop at the end of the last item in the list. Use a bullet point as the first level and an en dash (-) as the second level, e.g. Students must enrol in: • Accounting units, • Marketing units, and • Business units Font Use black as text colour and Calibri (Body) 11pt or 12pt for default text (See Headings and Subheadings for headings). Spacing • Use 1.15 as line spacing. Printing • Use Moderate margins for printing (Page Layout  Margins  Moderate). • Print Black/White unless stated otherwise by your Trainer/Assessor. Privacy Principles • Visit the following page and familiarise yourself with Australian Privacy Principles http://www.oaic.gov.au/privacy-policy-summary For more information on how to write professional documents, you may refer to the ‘Style Manual’, sixth edition: http://www.australia.gov.au/publications/style-manual Assessment Activity 1 – Knowledge Questions This assessment activity is based on knowledge questions. Each question has a word limit. Answer the following task. You must answer all task to get satisfactory performance in this assessment activity. Task 1.1 Discrepancies must be identified and resolved to give the truly financial position of individuals. List types of discrepancy and unusual features that you should be aware of. (Word limit 100 to 130)(1.5) Task 1.2 Discuss the importance of confirming documentation with clients to ensure that legislative requirement are meet. Minimum 100 words (Pc 2.4) Task 1.3 David failed to disclose $4,000 bank interest in his return for the year-end June 2015 and the notice of assessment has issued. Advise the time limit on the commissioner to amend the 2014-15 assessment. Task 1.4 For how long an employee must keep records of work expenses. Task 1.5 Identify the accrued income, prepaid income, expenditure and calculate the taxable income for Murray. He operates a fitness school and use accrual basis accounting for his business. He provides the following information (all amounts are exclusive of GST) for the year of 2013/14: (PC - 1.6) Murray had the receipts: • Cash takings from casual lessons $18,000 • Receipts from regular customers $288,000 (All bookings are received in advance of the actual lessons) He had the following account balance: • Income received in advance as at 1 July 2013 $22,000 • Income received in advance as at 30 June 2014 $28,000 He also incurred the payments on 1 January 2014: • For the following 12 months rent of the business premises $40,000 • For the following 12 months lease of the business equipment $46,000 Task 1.6 Describe how you would seek advice and guidance to evaluate and moderate decision process. (Word limit 200) (PC – 2.3) TASK 1.7 Discuss the importance of taking client authorisation to ensure that legislative requirement are meet. (Pc 2.4) TASK 1.8 Who must lodge a tax return? When do you lodge a tax return? (3.1) TASK 1.9 Daniel was audited by the ATO. He runs a furniture business. Throughout the audit, he hindered the ATO by failing to attend schedule meetings and failing to disclose important information. The auditor has discovered undisclosed income of $300,000 over four years, resulting in tax short tax of $100,000. The auditor is of the opinion that Daniel deliberately conceal the shortfall. The auditor also found Daniel did not keep proper record of his transactions. (3.2) Required: Advise client his expected current tax obligation according to taxation authorities and determine the followings. (a) How much short fall is the ATO likely to Charge? (b) What else will the ATO charge on tax shortfall? (c) Name one other administrative penalty the ATO is likely to charge? (d) What other further action can ATO take? (e) If Daniel believes the tax shortfall is incorrect, what resources does he have available to him TASK-1.10 Michael arrived at his business premises and found two ATO auditors waiting for him. They informed him that they were doing an audit and wanted immediate access to his records. Michael is nervous and phones you for advice. Advise Michael of his rights. (3.3) Task 1.11 Which legal, ethical and other requirements must be kept in mind, while preparing tax documentations for any client? Task 1.12 Explain ATO’s guidelines for following taxes: 1. Goods and services tax 2. Capital gain tax 3. Fringe benefit tax 4. Employment termination payments Assessment Activity 2: Case study Suppose you work as an assistant accountant for an Accounting firm called Maan pty ltd, an accounting firm, firm has many clients. Firm is involved with many accounting functions such Bookkeeping, tax, BAS, GST and other requirements. One of their client Marry came to you after July 2015 to lodge her tax returns. Mary has provided you the following information. Read this information carefully and answer below tasks. You must answer all tasks to get satisfactory performance in this assessment activity. Mary has advised you she runs a small tapware business from her home, which is not GST registered. Her ABN is 84 491 702 643. Details were as follows: • Sales were $58,000 o Costs were as follows: • Purchase $28,000 • Advertising $5,500 • Bank charge $1,000 • Telephone $4,500 • Stationery $1,500 • Speeding fine $386 • 12-month business insurance payment on 1 March 2015 $2,400 Suzuki 300o C.C travelled for business 1800 kilometres Mary’s TFN is 456 896 543. Mary has resided at Bass Hill for the past four years and would like all correspondence sent there. Her business address is the same as home address, 13 George St, Bass Hill NSW 2777 Mary advises that she owns 2,750 Coles share and received fully franked dividend as follows: 14/10/2014 Franked Dividend $110 Imputation credit $47 14/04/2015 Franked Dividend $126 Imputation credit $54 Mary sold Telstra (TLS) shares 29 June 2015: 3000 TLS shares @4 per share Mary bought Telstra (TLS) shares 2nd November 2011: 3000 TLS shares @3.40 per share • Interest received from ANZ bank $2,300 Mary (DOB: 03/05/1977) is married to David. Mary works part time at Coles as night filler During the work at Coles she has following expenditure: • Purchase working shoes $120 • Washing uniform 38 weeks • WHS training paid $420 • Tax agent fess $120 • Donation to Salvation Army $50 You are engaged to prepare Mary’s tax return of 2014/15. You need to communicate with her and complete the following tasks for her case. Task 2.1: Decide which tax documents are required to prepare Mary’s taxation. (1.1) Task 2.2 There could be many legal changes in terms of recording and reporting. Which sources would you use to make sure Mary is legally complaint according to changes in tax laws and other updates? (1.2) Task 2.3 Identify Mary’s assessable income and allowable deduction. You may use following table: (1.3) Assessable Income $ Amount Allowable deduction $Amount Task 2.4 Complete and record all assessable income and deduction in to individual tax return form. Also, calculate tax payable amount for Mary for the year 2015 with legislative requirement that comply Australian Taxation office requirements (ATO) requirement. Tax return must be completed with appropriate format and show necessary calculation. Tax return must have assessable income, deduction, taxable income, Medicare levy, relevant tax offset, spouse information, gross tax liability and finally net payable or refund. You may use ATO’s tax return form, which will be available from the link https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Individual-tax-return-2015.pdf it also has been attached with the assessment at the end as an appendix. (1.4, 2.1) Task 2.5: While collecting tax documents from Mary, there could be some discrepancies. What could be those discrepancies? What actions wold you take identifying and solve them? (1.5) Task 2.6 Look at Mary’s provided information to Identify and calculate prepaid and expired expenditure, which can be claimed as deduction. What will be its effect on asset on 30th June? (PC – 1.2, 1.6) Task 2.7 Preparing and lodging tax return, as accordance with ATO’s timelines is very important to meet legal and compliance requirements. What are the timelines to lodge a tax return for Mary? (2.2, 3.1) Task 2.8 Once you have prepared the tax return, now do a 2 to 3 minutes interview with your trainer, assuming him/her as tax specialist. In this meeting discuss Mary’s tax liability with trainer and ask any questions, if you are not clear about anything. This interview will help to get ready to lodge Mary’s tax return after taking her signatures.(2.3) Your trainer will use following checklist to assess your skills. Did the learner Yes/No Comments Explain Mary’s overall tax position Showed all tax calculations for Mary Used good questions methods Recorder trainer (specialist advice) with good listening skills Assessment Activity 3- Role paly (Group 2 Students) This role is based on the same case study, which you have completed in assessment activity two. Which is as below: Suppose you work as an assistant accountant for an Accounting firm called Maan pty ltd, an accounting firm, firm has many clients. Firm is involved with many accounting functions such Bookkeeping, tax, BAS, GST and other requirements. One of their client Marry came to you after July 2015 to lodge her tax returns. In last assessment activity, you have prepared Mary’s individual tax return and even have taken specialist advice. Now two students will work together, where one student will play the role of the assistant accountant, who has prepared the tax return. Second student will play the role of Mary and vice versa. As a group of two students, you will perform following: Task (2.4, 3.2) Assistant accountant will show and explain all tax calculations to Mary, take her approval as signatures on those tax documents. Here students will use the form they have used in task 2.4. Make sure Mary sign the papers (taxpayer’s declaration section with current date). Advise Mary, how many days Australian taxation office will take follow up her tax return. Also, explain the importance of following up all further enquiries from Australian taxation office. Checklist to mark role-play Did the learner Yes/No comments Two students performed the role paly One Played Mary’s role and other Assistant accountant and vice versa Explained all tax calculations with final tax payable to Marry Used good questioning and listening methods Took signatures from Mary Explained Mary about lodgement dates Discuss the importance of answering any further enquiries from ATO on time Advised Mary how many days it can take to get the tax return Learner performed professionally as they will do with a real client Assessor marking and Feedback Form: Prepare tax documentation for individuals Assessor Use Only Assessors please tick if the evidence supplied is enough to demonstrate satisfactory performance. Also, write comments on the quality of this evidence. Assessment activity one : Knowledge gathering questions S NYS Comments Task 1.1 Task 1.2 Task 1.3 Task 1.4 Task 1.5 Task 1.6 Task 1.7 Task 1.8 Task 1.9 Task 1.10 Task 1.11 Task 1.12 Assessment activity two : Case study/Business Scenario NYS comments Task 2.1 Task 2.2 Task 2.3 Task 2.4 Task 2.5 Task 2.6 Task 2.7 Task 2.8 Assessment activity three : Role paly S NYS Comments Role paly task Knowledge Evidence S NYS Comments  Identify and explain ethical considerations and legislative requirements relevant to the preparation of tax documentation for individual taxpayers, including:  conflict of interest  responsibilities of tax agents including Code of Professional Conduct obligations under the Tax Agent Services Act (TASA) and Tax Agent Services Regulations (TASR)  Identify and explain the following key elements of Australian tax law as it relates to tax documentation for individual taxpayers:  the rules and principles of Australian tax law including an understanding of the legal environment in which these principles operate, basics of the legal system, constitutional considerations and separation of powers  key aspects of the income tax law covering concepts of:  residence and source  related elements of international tax  assessable income  deductions (including general, specific and decline in value)  tax rebates and offsets  tax accounting  income test definitions that include reportable superannuation and fringe benefits tax (FBT) key aspects of relevant principles and application of the capital gains tax (CGT), FBT and termination payment rules for individual taxpayers Basic concept of goods and services tax (GST) Administrative aspects of the taxes identified above including documentation, tax collection and withholding mechanisms, assessments, obligations, rulings, penalties and audits Specific and general anti-avoidance tax rules for individuals Describe the key sources of information and data required to calculate taxable income Describe the key features of organisational policy and procedures relating to the preparation of tax documentation for individual taxpayers Outline the key accounting principles and practices relevant to the preparation of tax documentation for individual taxpayers Performance evidence S NYS Comments Research, critically evaluate and apply new or changed legislative requirements and apply where relevant to the preparation of the client's tax documentation Identify client data required to calculate taxable income Prepare tax documentation for an individual that complies with:  Australian taxation law and Australian Taxation Office (ATO) rulings  accounting principles and practices  organisational policy and procedures  Provide advice to client on tax documentation presented and obtain verification and approval. Foundation skills S NYS Comments Reading Writing Oral communication Numeracy Navigate the world of work Interact with Others Get the work done Final Comments: Assessor Initials: Date: