Betty is a sole trader and owns the business Cake Magic. Bettys business sells baking goods and
Question:
Betty is a sole trader and owns the business Cake Magic. Betty’s business sells baking goods and equipment to wholesale and retail customers. Cake Magic also has a small manufacturing function that has just commenced making cake trays and tins from recycled products. Cake Magic is located in Byron Bay and the business sells its products to various wholesalers and retail outlets throughout Australia. Cake Magic currently has four (4) employees.
Betty has asked for your assistance in completing the June quarter 2021 Business Activity Statement (BAS). Betty is registered for GST and operates on an accruals basis. To assist you, Betty has provided you with the following information about the activities of the business for the June 2021 quarter.
Sales and receipts received for the quarter ended 30 June 2021 (inclusive of GST where appropriate)
Sales for the quarter from wholesale customers | $150,000 |
Sales for the quarter from retail customers | $55,000 |
Bank interest received | $65 |
Sale of Chef grade oven for product testing purposes on 31 May 2021 used within the business | $2,500 |
Trainee government grant received for Libby (staff trainee) | $1,000 |
Expenses and payments for the quarter ended 30 June 2021 (inclusive of GST where appropriate)
Materials and supplies purchased in the June quarter | $75,000 |
Payments for materials relating to March supplies | $10,000 |
New oven purchase via loan on 1 May 2021 | $9,000 |
First repayment of the oven loan 31 May 2021 | $450 |
Freight charges for the new oven | $150 |
First aid training for staff | $600 |
Staff amenities (biscuits, milk, tea and coffee GST free) | $100 |
Yearly staff function at a local restaurant ($80/head) * | $400 |
Cake decorations imported from the US ** | $2,500 ($AUD) |
Freight charges for the cake decorations** | $400 |
Airfares for Betty to attend four tradeshows in Melbourne*** | $1,200 |
*The staff function would be considered minor and infrequent and be considered entertainment for the purposes of income tax, hence not tax deductible.
** The US company did not charge GST on cake decorations. The Australian freight company did charge GST.
*** Betty had booked flights in advance to attend 4 upcoming tradeshows in Melbourne over the next few months. Due to lockdowns associated with COVID, Betty only attended two (2) tradeshows. The airline did not refund the unused amount of airfares of $600 and have provided the business with a credit to be used at a later date.
Salary and Wages
Cake Magic has 4 employees. They are paid fortnightly and all employees are entitled to the tax-free threshold and superannuation as per the superannuation guarantee. Wage details for each of the employees are as follows;
Alisha (permanent staff member) | $45,500 per annum |
Conor (permanent staff member) | $32,500 per annum |
Dane and Libby are casual employees (Libby is also a trainee) and they are paid on the basis of the number of hours they work each week. The hours worked for Dane and Libby are as follows;
Fortnight ending | Dane $22 per hour | Libby $9.50 per hour |
2 Apr | 36 | 10 |
16 Apr | 28 | 12 |
30 Apr | 20 | 10 |
14 May | 40 | 10 |
28 May | 42 | 10 |
11 June | 36 | 12 |
25 June | 28 | 14 |
Business Activity Statement information
Cake Magic had previously provided one of their former staff with a motor vehicle and the business was paying fringe benefits tax (FBT) on this. The FBT was calculated using the operating cost method and had a business use of 70%. The staff ceased their employment with Cake Magic on 31 March 2021
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Operating costs are the ongoing expenses incurred from the normal daytoday of running a busines... View the full answer
