Maddox Smith Staff asked 4 years ago

Tax Law

On 1 July 2013 Lee commenced business as an architect. He operated as a sole proprietor from a converted garage at the rear of his residence. Much of his work consisted of preparing building designs and specifications for local council building permits but Lee quickly gained a reputation for quality drawings prepared within tight timeframes. By the end of 2013/14 he had a small client base of local builders and private referrals and billings (fees) of $75,000.         During the year 30 June 2015 Lee submitted a design as part of a national competition for the Citadel, the centrepiece of an urban redevelopment. His visionary design and revolutionary use of local materials greatly impressed the judging panel and, to national acclaim, Lee was awarded the prize early in the year and commissioned to build the structure. Immediately he borrowed $1 million, rented premises in Main Terrace, acquired state of the art equipment and employed six draughtsmen and two administrative staff. During 2014/15 his billings were $1.5 million.   Required     Discuss whether Lee should return on a cash or accrual basis in 2013/14 and in 2014/15(ANSWER WITH 700 WORDS)     You must refer to appropriate case law. Your answer must include (but should not be limited to) a discussion of the following:   ·    What factors affect the choice of a cash or accrual basis? ·    Does Lee have a choice of the basis he adopts? ·    Does the Commissioner of Taxation have a right to insist on a particular basis? ·         Should Lee’s basis be the same in both years? ·         Please discuess some other points which are related to case   FORMATE FOR ANSWER A: ·         INTRODUCATION ·         ISSUES ·         REQUIRMENTS(ANSWER RELATED TO ISSUE) CONCLUSION