LAWS20060 Taxation Law of Australia – Assessment 1: Individual Case Study (40%)

Unit and Assessment Overview

Unit code and title: LAWS20060 – Taxation Law of Australia (Postgraduate, Level 9)

Term: Term 1, 2026

Campus/Mode: Brisbane, Melbourne, Sydney, Online

Credit points: 6 CP

Unit coordinator: John McLaren

This assessment aligns with LAWS20060 learning outcomes on residency, assessable income, capital gains, and the calculation of income tax liabilities for individual taxpayers and entities, as set out in the 2026 unit profile and weekly schedule (Weeks 1–6).

Assessment 1 Details

Assessment title: Assessment 1 – Individual Case Study

Assessment type: Case Study (problem-based written analysis)

Weighting: 40% of overall unit grade

Word limit: 2,000–2,500 words (excluding references, statutory extracts, and appendices)

Due date: Week 8 Monday, 4 May 2026, 11:00 pm AEST (submission via Moodle Turnitin)

Submission format: One file in .doc or .docx (MS Word). Submissions in any other format will be treated as non-submissions.

Referencing style: Australian Guide to Legal Citation, 4th ed (AGLC4).

Assessment Context

In the first half of LAWS20060, you examine residency rules, the source and derivation of income, ordinary and statutory income, deductions, capital gains tax (CGT), and the basic framework for calculating taxable income. Assessment 1 provides an integrated case study that requires you to apply these principles to realistic factual scenarios involving an Australian high-wealth individual and a privately held tech company, together with a separate capital gains and assessable income problem involving rural land and small-scale wine production.

The factual patterns draw directly on concepts in Weeks 1–6: constitutional taxing power, residency and source (Week 2), ordinary income from employment, business and property (Week 3), general and specific deductions (Weeks 4–5), and CGT and trading stock (Week 6). Your analysis should demonstrate not only technical accuracy in identifying the income tax consequences but also the ability to reason from statutory provisions and relevant case law to a defensible conclusion for each issue.

Case Study Scenario – Question 1 (20 marks)

Question 1: Residency, Employment Income and Company Tax (20 marks)

Australian citizen and tech entrepreneur, Marty Goodson, founded “Planks Pty Ltd” in Silicon Valley (USA) in 2012. Planks is a technology company that develops web platforms for global clients. The company was incorporated in the United States, with an issued capital of 10 shares: five held by Marty and five held by five friends who are now resident in the US, Europe, Asia, Australia, and New Zealand. Each share had an initial value of AUD 100,000, so Planks commenced with AUD 1,000,000 in equity capital. Marty and his team used this capital to grow Planks into a profitable tech company over a few years.

Marty’s personal circumstances and income

• 2012/2013 income year: Marty’s employment and other income totalled AUD 100,000. He remained outside Australia for the entire income year and did not visit Australia.
• 2013/2014 income year: Marty’s income increased to AUD 200,000. He returned to Australia for four weeks over Christmas to visit his parents and his sister. His sister and her spouse occupy Marty’s Brisbane residential home rent free. During his visit, Marty met with his Australian accountant to review his three commercial investment properties in Brisbane, Sydney, and Melbourne and also attended a friend’s birthday, where he began a serious relationship.
• 2014/2015 income year: Marty’s income increased to AUD 400,000. He spent 1 September to 1 April in Australia to be with his partner. During this time he continued to receive his Planks salary and performed some work remotely.
• 2015/2016 income year: Marty earned AUD 100,000 before deciding to return to Australia permanently to marry his partner and start a family. He moved back and took up residence in his Brisbane home.

Planks Pty Ltd’s management and profits

• 2012/2013: Marty was the sole director and made all key management and operational decisions for Planks from the US. The company reported a profit of AUD 1,000,000.
• 2013/2014: Planks expanded and appointed a board of directors, all resident in the US. It was widely assumed by staff that Marty continued to make all important strategic decisions. The company made a profit of AUD 10,000,000.
• 2014/2015: Marty became managing director. From 1 September to 1 April, he was physically present in Australia and made all key management decisions from there; he also signed contracts and conducted platform trading on behalf of Planks while in Australia. In that year, Planks made a profit of AUD 25,000,000.
• 2015/2016: Marty resigned as managing director, sold all his Planks shares to another tech company for AUD 50,000,000, and returned to Australia as a very wealthy individual. Planks made a profit of AUD 50,000,000 in that year.

Required – Question 1

(a) Using the Australian residency tests for individuals in s 995‑1 ITAA 1997 and relevant case law, advise whether Marty would be treated as an Australian resident for tax purposes in each of the 2012/2013, 2013/2014, 2014/2015, and 2015/2016 income years. Justify your conclusion for each year with reference to:

• the “resides” test,
• the domicile and permanent place of abode test,
• the 183‑day test, and
• the Commonwealth superannuation test (if applicable).

[5 marks]

(b) Applying the Australian residency rules for companies in s 6(1) ITAA 1936 and relevant authorities, discuss whether Planks would be an Australian resident company for tax purposes in each of the four income years. In particular, evaluate:

• the place of incorporation,
• the location of central management and control, and
• the location of Planks’ voting power and shareholder control.

[5 marks]

(c) Assuming the current Australian resident individual income tax rates apply for the relevant years (ignore Medicare levy, tax offsets, and the temporary budget repair levy to simplify calculations), calculate Marty’s Australian income tax liability, if any, in relation to his employment and other income for each of the four income years outlined. Show your workings and clearly state any assumptions regarding exchange rates and timing of income derivation. [5 marks]

(d) Assuming the current Australian resident company tax rules apply, calculate any Australian income tax liability that would arise in relation to Planks’ company profits for each of the four income years. In your answer, state whether Planks would be taxed on a worldwide or source-based basis in Australia, and explain how the residency analysis in part (b) informs your conclusion. Ignore franking credits and withholding tax for this part. [5 marks]

Case Study Scenario – Question 2 (20 marks)

Question 2: Capital Gains, Small-Scale Primary Production and Assessable Income (20 marks)

In 2000, Rommy purchased a rural property in New South Wales for AUD 500,000. Initially, Rommy used the property as a weekend retreat. Over time, he developed a small hobby vineyard on the land, producing a limited quantity of grapes and bottling a modest amount of “reserve quality” wine.

In the 2014/2015 income year, Rommy’s vineyard activities produced wine that he dealt with as follows:

• He personally consumed 5 boxes of wine throughout the year.
• He gave 10 boxes of wine to friends as gifts.
• He sold 20 boxes at the local market on a single occasion when he held a stall.
• He sold another 20 boxes at the roadside outside his property using an honesty box (customers left cash in a locked box).

Each bottle of wine was worth AUD 20. Assume each box contains 12 bottles.

In 2015, Rommy subdivided the property into residential lots and disposed of the entire holding for a total selling price of AUD 1,500,000 (combined proceeds for the subdivided lots). You may assume that Rommy held the property on capital account and that he is an Australian resident individual for tax purposes in all relevant years.

Required – Question 2

(a) Advise whether Rommy should include any of the amounts associated with the wine production and distribution in his assessable income for the relevant year. In your answer, consider whether his activities amount to a business of primary production or are more properly characterised as a hobby, and explain the implications for the classification of receipts (and non‑cash benefits, if any) as ordinary income under s 6‑5 ITAA 1997. [10 marks]

(b) Calculate Rommy’s capital gain or loss on the disposal of the subdivided property, including any cost base adjustments and the availability of the general 50% CGT discount for individuals. Discuss whether any part of the gain could be treated as ordinary income from a profit‑making undertaking or plan, and explain your conclusion with reference to relevant legislation and case law. [10 marks]

Instructions for Students

Task Requirements

You must prepare a written response that addresses all sub‑questions in both Case Study 1 and Case Study 2. Your answer should be structured as a formal piece of legal advice, with clear headings, numbered subheadings, and logical sequencing of issues. For each issue:

• Identify the legal issue(s) in precise terms.
• State the relevant legislative provisions (e.g., ITAA 1936, ITAA 1997) and any applicable Tax Rulings or Determinations.
• Refer to and briefly explain key case law that guides the interpretation of those provisions.
• Apply those authorities to the facts provided to reach a reasoned conclusion.
• Where calculations are required, show all working clearly, including tax rates and assumptions.

Formatting and Presentation

• Length: 2,000–2,500 words for the combined response to both questions, excluding reference list and appendices.
• Font and spacing: Use 12‑point Times New Roman or Calibri, 1.5 line spacing, and standard margins.
• File type: Submit one .doc or .docx file only via the Moodle Assessment 1 submission link.
• File naming convention: StudentID_LAWS20060_A1.docx.
• Referencing: Use AGLC4 for all citations. Footnotes should reference legislation, cases, and secondary sources accurately.

Use of Legislation, Cases and ATO Materials

You are expected to rely primarily on:

• The Income Tax Assessment Act 1936 (ITAA 1936) and Income Tax Assessment Act 1997 (ITAA 1997).
• Relevant High Court and Federal Court decisions concerning residency, source, ordinary income, capital versus revenue, and CGT.
• Principles discussed in the prescribed text Principles of Taxation Law 2026 by Sadiq et al.
• Current ATO Rulings and other guidance where appropriate (e.g., on residency or CGT treatment).

Ensure that any ATO materials used are up to date, as indicated in the 2026 unit profile reminder regarding the frequent change in tax rates and rules.

Academic Integrity

The university’s Student Academic Integrity Policy and Procedure applies. You must submit original work. Use of contract cheating services, unauthorised collaboration, or copying of previous student assignments and online solutions will be treated as academic misconduct. All external sources must be properly acknowledged using AGLC4 footnotes, including legislation, cases, textbooks, journal articles, and ATO rulings.

Marking Criteria and Rubric (40 marks total)

The following rubric provides a guide to the expected standard of performance at each grade level. Markers will apply these criteria holistically when awarding marks.

Criterion 1: Identification and Framing of Issues (10 marks)

• High Distinction (8.5–10): Accurately identifies all relevant tax issues for both questions, including residency, source, characterisation of income, CGT, and any potential profit‑making undertaking aspects. Demonstrates a sophisticated appreciation of overlapping issues and articulates them clearly in a structured way.
• Distinction (7–8): Identifies most major issues with only minor omissions. Shows strong understanding of how the issues arise from the facts and frames them clearly, but some nuances may be overlooked.
• Credit (6–6.5): Identifies the core issues in each question, though some secondary issues or interactions between provisions may be missed or framed more generally.
• Pass (5–5.5): Shows basic recognition of some key issues but omits several important points or misstates certain issues. Issue statements may be vague or inconsistent.
• Fail (<5): Fails to identify most relevant issues; may focus on irrelevant points or show little familiarity with the taxation law context.

Criterion 2: Use of Legislation, Case Law and ATO Guidance (10 marks)

• High Distinction (8.5–10): Demonstrates excellent command of relevant statutory provisions (ITAA 1936, ITAA 1997) and case law. Cites and explains leading cases and ATO guidance accurately and succinctly. Shows a clear understanding of how courts interpret and apply these provisions.
• Distinction (7–8): Uses appropriate legislation and cases for most issues. Some explanations may be brief, but authorities are generally well chosen and correctly interpreted.
• Credit (6–6.5): Refers to relevant provisions and at least some key cases, but coverage is incomplete or explanations are largely descriptive rather than analytical.
• Pass (5–5.5): Limited or superficial reliance on legislation and case law. May rely heavily on textbook summaries without engaging with primary sources.
• Fail (<5): Minimal or incorrect use of relevant legislation and cases. Little evidence of understanding of primary sources.

Criterion 3: Application, Analysis and Reasoning (10 marks)

• High Distinction (8.5–10): Applies legal principles to the facts with precision and depth. Provides clear, logically sequenced arguments that acknowledge ambiguity where appropriate. Demonstrates insight into how different factual scenarios may alter the tax outcome.
• Distinction (7–8): Application is sound and well reasoned, with coherent explanations of tax consequences. Some complexities may be treated briefly but overall argument remains persuasive.
• Credit (6–6.5): Provides generally correct application of principles with some lapses in depth or clarity. May assert conclusions with limited justification.
• Pass (5–5.5): Shows basic attempts at application but often moves quickly from stating the law to asserting outcomes. Reasoning may be incomplete or occasionally incorrect.
• Fail (<5): Little or no meaningful application; reasoning is largely absent, incorrect or based on misunderstanding of the law.

Criterion 4: Calculations and Quantitative Accuracy (5 marks)

• High Distinction (4.5–5): Income tax and CGT calculations are complete, accurate and clearly presented. Shows all working and states assumptions transparently. Demonstrates a strong grasp of rate structures and discount rules.
• Distinction (4–4.25): Calculations are mostly accurate with minor errors that do not affect the overall approach. Working is reasonably clear.
• Credit (3–3.75): Core calculations are attempted and broadly correct, but steps may be missing, or errors occur in more complex components.
• Pass (2.5–2.75): Partial or approximate calculations; may omit key components such as CGT discount or misapply thresholds.
• Fail (<2.5): Incomplete or largely incorrect calculations. No coherent attempt to apply tax rates or CGT rules.

Criterion 5: Structure, Communication and Referencing (5 marks)

• High Distinction (4.5–5): Writing is clear, concise and well organised. Uses headings and subheadings effectively. AGLC4 referencing is accurate and consistent. Written expression is professional and easy to follow.
• Distinction (4–4.25): Generally well structured with only minor organisational or expression issues. Referencing is mostly correct with few errors.
• Credit (3–3.75): Organisation is adequate but may lack flow in places. Referencing meets minimum standards but occasional inconsistencies appear.
• Pass (2.5–2.75): Answers can be followed but structure is basic or uneven. Referencing shows noticeable weaknesses.
• Fail (<2.5): Poorly organised work with frequent expression errors. Referencing is largely incorrect or absent.

Sample Answer Writing Help – Residency and Capital Gains

Marty’s pattern of presence and intention suggests that he is unlikely to be treated as an Australian resident for tax purposes in 2012/2013, as he does not reside in Australia and maintains his centre of life and business in the United States; however, his increasing physical presence, ongoing ties to his Brisbane home, and ultimate decision to return permanently point toward residency in later years when the “resides” and domicile tests begin to favour Australia. In analysing the 2014/2015 income year, a structured comparison with leading residency authorities, such as cases that examine length of stay, family connections and the continuity of association, helps to justify a conclusion that Marty arguably becomes a resident once his stay extends over several months and his relationship and property ties anchor him to Australia as a home rather than a temporary base. Similarly, when considering Rommy’s vineyard, it is often more accurate to treat his small-scale wine activities as a hobby where the intention, repetition and commerciality fall short of what courts have described as a business of primary production, although any systematic selling at markets or roadside stalls may still raise questions regarding ordinary income if the activity begins to resemble a profit-making venture. For the land sale, the key task is to distinguish a mere realisation of a long-term capital asset, which falls within the CGT regime, from an isolated profit-making undertaking that could be taxed as ordinary income; this distinction rests heavily on Rommy’s intention at acquisition, the nature of the subdivision, and whether the development took on a commercial character. Where the facts support a capital account treatment, the gain is calculated under Part 3‑1 ITAA 1997 with attention to first element cost base, incidental costs and the potential application of the 50 per cent CGT discount for individuals who have held the asset for more than twelve months, as explained in commentary such as Sadiq et al.’s discussion of CGT timing and discount rules in Principles of Taxation Law. Sadiq et al., Principles of Taxation Law 2026

Residency analysis depth

A more detailed residency analysis for Marty benefits from cross-referencing ATO guidance on individual residency, which highlights indicators such as intention, family location, employment arrangements and asset holdings as critical factors, and shows that no single element is decisive. Public rulings that examine expatriate and returning resident scenarios, alongside judicial discussion of “ordinary concepts” of residence, illustrate that a taxpayer may gradually transition into residency as their pattern of visits becomes more regular and their domestic ties in Australia deepen compared with those overseas. Analytical responses should therefore track Marty’s changing circumstances across each income year rather than rely solely on mechanical day counts, because the 183‑day test operates as a deeming rule that can be rebutted where a usual place of abode is maintained outside Australia. For Rommy, case law on isolated transactions indicates that even an eventual subdivision and sale of land may remain on capital account where the taxpayer did not acquire the property with a profit-making purpose and did not undertake substantial development in a business-like manner. In practice, advanced student responses will often contrast the fact pattern with well-known land development cases and highlight specific differences in intention, scale and organisation that influence whether a gain is treated under the CGT provisions or as ordinary income. For further clarity on these distinctions, students can draw on secondary analyses that explain how courts weigh commercial purpose in property development disputes, such as articles published in Australian tax law journals that profile recent residency and CGT decisions in detail.

Clarifying CGT and hobby income questions

Many students search for guidance on whether small-scale selling of goods from hobbies, such as craft markets or homegrown produce, must be declared as assessable income, and examiners usually expect them to articulate a clear line between personal pastime and business. In Rommy’s case, responses gain credibility when they recognise that occasional, low-volume sales from a hobby are typically not sufficient to constitute a business, yet they also note that persistent marketing efforts, branding and systematic production could tip an activity into ordinary income under s 6‑5 ITAA 1997. To strengthen an answer, it is helpful to reference practical ATO examples on hobby versus business activities and then explain how those examples map onto Rommy’s pattern of wine consumption, gifting and selling. Likewise, confusion often arises around the application of the 50 per cent CGT discount for individuals after a subdivision, so high-quality answers explicitly walk through the steps: establish the acquisition date for the original property, confirm that the asset has been held for at least twelve months, allocate cost base appropriately to the subdivided lots, and only then apply the discount to the net capital gain. Students who articulate these steps in a plain, sequential way tend to satisfy rubric criteria on calculation and reasoning, and they also address common follow‑up questions seen in practice-focused resources and ATO CGT guides that illustrate land subdivision scenarios.

References / Learning Resources

• Sadiq, K, Coleman, C, Hanegbi, R, Jogarajan, S, Krever, R, Obst, W & Smullen, J 2026, Principles of Taxation Law 2026, Thomson Reuters, Sydney. https://legal.thomsonreuters.com.au/principles-of-taxation-law-2026/productdetail/133138
• CQUniversity 2026, LAWS20060 Taxation Law of Australia – Term 1 2026 Unit Profile, CQUniversity, viewed 20 March 2026. https://handbook.cqu.edu.au/facet/unit-profiles/profile/LAWS20060/2026/HT1.pdf
• Australian Taxation Office 2024, Residency for tax purposes, Australian Government, viewed 10 May 2026. https://www.ato.gov.au/individuals-and-families/income-and-deductions/you-and-your-family/residency-for-tax-purposes
• Australian Taxation Office 2024, Guide to capital gains tax 2023–24, Australian Government, viewed 10 May 2026. https://www.ato.gov.au/forms-and-instructions/guide-to-capital-gains-tax
• Woellner, R, Barkoczy, S, Murphy, S, Evans, C & Pinto, D 2022, Australian Taxation Law 2022, Oxford University Press, Melbourne. https://global.oup.com/academic/product/australian-taxation-law-2022-9780190337942

Write a 2,000–2,500 word individual case study for LAWS20060 that analyses Australian tax residency, assessable income, and capital gains for Marty and Rommy using ITAA 1936/1997 and AGLC4 referencing.

Complete a 6–8 page LAWS20060 Taxation Law of Australia case study that applies residency tests, income and CGT rules, and calculates tax liabilities for an individual taxpayer and a tech company, with full legal citation.

Assessment 1 for LAWS20060 requires an individual case study on Australian residency, income tax and CGT consequences for two realistic scenarios, supported by legislation, cases and AGLC4 citations.

Assessment – End of Term Online Quiz

Assessment 3: End of Term Online Quiz (50%)

The next major assessment for LAWS20060 in this term is the End of Term Online Quiz, scheduled during the exam period and covering all topics from Weeks 1–12, including residency, assessable income, deductions, CGT, company and trust taxation, Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). The quiz will consist of five short-answer case study questions, each worth 10 marks, and will require you to perform tax calculations and apply legislation to practical scenarios in a time-limited online environment. You will be expected to prepare income tax computations for individuals, companies, partnerships, and trusts of moderate complexity, and to identify key compliance issues such as tax administration and anti‑avoidance provisions. To perform well, you should use the feedback from Assessment 1 to refine your approach to structuring answers, applying the law, and managing calculations under exam conditions.[1]