Reference no: EM132132595

Assignment -

Candidates must apply the IRAC principle when answering each of the questions (i.e. I= Identify the key issues, R= Cite the relevant legislative provisions and case law (rules) where appropriate, A = apply the relevant rules to the facts presenting arguments for and against and C = form a conclusion based on your stronger argument).

QUESTION - In March 2015 Joseph Conrad took early retirement from his job as a carpenter in Brisbane. He had done some fishing as a young man and decided to build a boat to undertake commercial fishing off the coast of Queensland. The boat was completed, at a cost of $32,500, equipped with fishing gear and radio and registered with the Department of Fisheries in January 2016.

Conrad was issued with a fishing licence in February 2016 and commenced fishing activities in July 2016. He hired one person to assist him, but caught few fish because of the inexperience of his assistant. He engaged another assistant, but had trouble with the radio and so could not take the boat out overnight to the best fishing grounds.

For the period ended 30 June 2017 he sold $30,600 worth of fish and had expenses of $17,000. For the year ended 30 June 2018 he sold $44,000 worth of fish and had expenses of $14,000. In October 2018 he sold the boat and took up lawn bowls.

Required: Advise Joseph Conrad of the tax implications of these activities. Refer to relevant legislation and case law to support your arguments for and against before arriving at your conclusion.