Law Degree With Honours
Instructions This assignment is to be written in essay form and not as a letter of advice. Please use footnotes and your referencing must conform to AGLC style. A bibliography is required (not included in word count). No calculations are required but they may be used at your discretion. You are not required to cover FBT or GST. All transactions are for the year 2014/2015 unless otherwise stated. If you need further information state precisely what it is and why it is required. Although dates may relate to the years prior to the introduction of the re-write of the ITAA 97, please base your answer on the ITAA 97. The Question: Beverly Jacobs graduated from her Law degree with honours in June 2014. In July 2014 Beverly applied for a position with ME Lawyers (a large law firm) and was offered a three year employment contract at a salary of $55,000 per year. Beverly accepted the offer and signed the employment contract which specified that she would start work in four weeks’ time. Two weeks after signing the contract Beverly was contacted by the Personnel division of ME Lawyers and they explained that due to the financial down turn they are not proceeding with the graduate appointments. Beverly agreed to the following offer. “To be paid compensation of $10,000 to defer the starting time for her appointment by 12 months and a reduction of the contracted employment period from three years to two years. In addition, Beverly also received an additional $5,000 for agreeing to waive all claims for damages for breach of the original contract.” After Beverly accepted the offer from ME Lawyers she decided to take the year off and enjoy herself. At one of the parties she attended she was approached by a young couple who were not able to have children and they made the suggestion that they were looking for a surrogate mother to become pregnant with their fertilised embryo. At first Beverly thought this was a ridiculous suggestion but later wondered who the couple were. On further investigation she discovered that the couple were famous European film stars who have been offering on Facebook to pay $70,000 for a ‘suitable’ woman to be a surrogate mother for their child. The money seemed very enticing so Beverly sought legal advice and discovered that it was illegal to accept money to be a surrogate mother. However, the solicitor she consulted had dealt with this before and seemed willing to advise on how this contract could be made legal. He also noted that none of his past clients had been prosecuted for acting as a surrogate. After talking to her parents and lengthy negotiations with the famous couple, Beverly entered a contract to be the surrogate mother and was paid $20,000 once the pregnancy reached 8 weeks, and the remaining $50,000 was paid when the healthy baby was delivered (May 2015). Beverly had become good friends with the couple and they regularly met and started exchanging presents on birthdays and Christmas. Following the safe delivery of a healthy girl the couple presented Beverly with a beautiful diamond ring valued at $7,000 with a note expressing their friendship and to remind Beverly of the little girl that she carried for 9 months. The couple named the beautiful baby girl Sweetypi! Beverly also managed to find part-time work during her pregnancy as a human rights lawyer. To make it easier to work at home Beverley set up an empty room in her rented property as an office with some existing furniture she owned. She estimated that this office was about 10% or the floor area of her rented home and she estimated that she could allocate about 12% of her power bill to the use of her office. In March 2015 Beverly was shocked to receive a formal complaint from one of her human rights clients claiming that she had acted negligently in the advice she had provided. Beverly incurred legal costs of $9,000 defending herself against this claim. Please cover the income tax effect of the following in your answer: Compensation for alteration of the contract of employment. Payment for signing the restrictive covenant. Payment for acting as a surrogate. Receipt of the diamond ring. Costs associated with the office. Payment for defending the claim of negligence.