You are currently working as a graduate accountant and are provided with the following information from...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are currently working as a graduate accountant and are provided with the following information from a client. The client, Joe, has the following income and expenses for the financial year ended 30 June 2019. Joe is employed as a manager of operations at a local transport company. In addition to his employment Joe also operates a market stall selling wood carvings on the weekend. Income $ 45,000 1,000 . 5,000 • 125.000 5,000 . . $ . • 10,000 • 35,000 25,000 1,000 . Expenses . . . . . . 2,000 5,000 800 1,500 12,000 400 200 3,200 . 900 1,000 1,000 Sales of wood carvings from the market stall An anniversary gift from his employer for Joe's 10 wedding anniversary Bonus received from his employer for successful completion of large project Salary received from his employer (including PAYG Withholding of $22,000) Interest on Bank Deposits Joe gambles on the horses and during the year had won $10,000 on betting Sale of his personal motor vehicle (he brought the vehicle for $15,000) Sale of shares (he brought the shares 13 months ago for $10,000) Received Manager of the year award from the Institute of Managers Rent on market stall for his business Purchase of wood for carvings. Joe estimates in cost he has $2,000 in wood as at 30 June 2019 as stock on hand and advises that as at 1 July 2018 his wood stock at cost was $3.000. Joe purchased steel capped work boots for $500, protective sunglasses for $220. New jeans for $80 (which he also wears on the weekend) Bookkeeping fees for the market stall business Purchase of new carving tools for the market stall business Cost of meals and entertainment that his employer did not reimburse Train fares for travel to and from work Rates on family home Electricity for family home Advertising packaging for market stall business Purchase new table and counter for market stall Joe does not have any children. Joe does have private health insurance. Joe also advises you that he had carried forward tax losses from last year of $2.000 relating to his market stall. In addition to the above Joe advises he does work from home as he attends to emails late night after dinner at least 4 nights a week. Required: • Determine which Income and Expenses are assessable income or allowable deductions. Note you will need to cite legislative references, case law and tax rulings as applicable. Emphasis is on providing substantiation for you reasoning to include as assessable income or allowable deduction. Also refer to the relevant item number on the 2019 tax return where the amount would be disclosed, i.e. (interest income is item 10). An Example format is provided below. • Assume Joe is a resident for Australian taxation purposes, calculate his tax liability including any tax offsets and levies. EXAMPLE FORMAT Income Assessable Particulars Y/N Expenses Deductible Particulars Y/N Legislation, Case law, Rulings, Reasoning (Part A 20 marks) (Part B 5 marks) Word Count: 1,000 - 2000 words Legislation, Case law, Rulings, Reasoning Item-2019 Tax Return Item-2019 Tax Return Part B During your meeting with Joe, he advises that his employer has offered him a position for 3 years in Thailand. Joe seeks your advice on residence issues for Australian taxations purposes. In particular Joe wants to understand impact on any Non Australian assets he owns (Joe currently has overseas shares valued at $150,000 and a overseas property in Singapore valued at $1.5million). Joe also wants to understand what tests will be applied to determine his residency. Case Study 2 Diamond Co Pty Ltd is a private company which currently operates a Diamond mine on a number of mineral leases in Western Australia. A new geologist with the company has advised management that during his university studies he identified the area of land covered by the mineral leases as being a valuable site to explore for Uranium. Management decides to budget $1 million to prepare a feasibility study into exploring for Uranium, Management does note that Australia currently has a no new Uranium mine policy which will need to be lifted before any Uranium mining could commence. Required: Discuss with reference to appropriate legislation, case law and/or rulings whether the feasibility expense will be an immediate deduction for Diamond Co Pty Ltd. Focus should be on whether the Uranium proposal is a new business or part of Diamond Co Pty Ltd's current business. Note reference should be made to Softwood Pulp and Paper Ltd v FCT (1976) 7 ATR 101, ensure to reference other relevant cases as well. IRAC format should be used to answer this question. (5 marks) Word Count: 500 words You are currently working as a graduate accountant and are provided with the following information from a client. The client, Joe, has the following income and expenses for the financial year ended 30 June 2019. Joe is employed as a manager of operations at a local transport company. In addition to his employment Joe also operates a market stall selling wood carvings on the weekend. Income $ 45,000 1,000 . 5,000 • 125.000 5,000 . . $ . • 10,000 • 35,000 25,000 1,000 . Expenses . . . . . . 2,000 5,000 800 1,500 12,000 400 200 3,200 . 900 1,000 1,000 Sales of wood carvings from the market stall An anniversary gift from his employer for Joe's 10 wedding anniversary Bonus received from his employer for successful completion of large project Salary received from his employer (including PAYG Withholding of $22,000) Interest on Bank Deposits Joe gambles on the horses and during the year had won $10,000 on betting Sale of his personal motor vehicle (he brought the vehicle for $15,000) Sale of shares (he brought the shares 13 months ago for $10,000) Received Manager of the year award from the Institute of Managers Rent on market stall for his business Purchase of wood for carvings. Joe estimates in cost he has $2,000 in wood as at 30 June 2019 as stock on hand and advises that as at 1 July 2018 his wood stock at cost was $3.000. Joe purchased steel capped work boots for $500, protective sunglasses for $220. New jeans for $80 (which he also wears on the weekend) Bookkeeping fees for the market stall business Purchase of new carving tools for the market stall business Cost of meals and entertainment that his employer did not reimburse Train fares for travel to and from work Rates on family home Electricity for family home Advertising packaging for market stall business Purchase new table and counter for market stall Joe does not have any children. Joe does have private health insurance. Joe also advises you that he had carried forward tax losses from last year of $2.000 relating to his market stall. In addition to the above Joe advises he does work from home as he attends to emails late night after dinner at least 4 nights a week. Required: • Determine which Income and Expenses are assessable income or allowable deductions. Note you will need to cite legislative references, case law and tax rulings as applicable. Emphasis is on providing substantiation for you reasoning to include as assessable income or allowable deduction. Also refer to the relevant item number on the 2019 tax return where the amount would be disclosed, i.e. (interest income is item 10). An Example format is provided below. • Assume Joe is a resident for Australian taxation purposes, calculate his tax liability including any tax offsets and levies. EXAMPLE FORMAT Income Assessable Particulars Y/N Expenses Deductible Particulars Y/N Legislation, Case law, Rulings, Reasoning (Part A 20 marks) (Part B 5 marks) Word Count: 1,000 - 2000 words Legislation, Case law, Rulings, Reasoning Item-2019 Tax Return Item-2019 Tax Return Part B During your meeting with Joe, he advises that his employer has offered him a position for 3 years in Thailand. Joe seeks your advice on residence issues for Australian taxations purposes. In particular Joe wants to understand impact on any Non Australian assets he owns (Joe currently has overseas shares valued at $150,000 and a overseas property in Singapore valued at $1.5million). Joe also wants to understand what tests will be applied to determine his residency. Case Study 2 Diamond Co Pty Ltd is a private company which currently operates a Diamond mine on a number of mineral leases in Western Australia. A new geologist with the company has advised management that during his university studies he identified the area of land covered by the mineral leases as being a valuable site to explore for Uranium. Management decides to budget $1 million to prepare a feasibility study into exploring for Uranium, Management does note that Australia currently has a no new Uranium mine policy which will need to be lifted before any Uranium mining could commence. Required: Discuss with reference to appropriate legislation, case law and/or rulings whether the feasibility expense will be an immediate deduction for Diamond Co Pty Ltd. Focus should be on whether the Uranium proposal is a new business or part of Diamond Co Pty Ltd's current business. Note reference should be made to Softwood Pulp and Paper Ltd v FCT (1976) 7 ATR 101, ensure to reference other relevant cases as well. IRAC format should be used to answer this question. (5 marks) Word Count: 500 words
Expert Answer:
Answer rating: 100% (QA)
Following is the table for receipts taxable or not expenses deductible or not Particulars Legislation ITAA 97 Treatment A cash gift of 100000 on the w... View the full answer
Related Book For
Accounting Tools for Business Decision Making
ISBN: 978-1118096895
6th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
You have been provided with the following information from the balance sheets and income statements of Batchawana Inc. (Batchawana). Accounts payable and inventory are from the balance sheet as of...
-
You have been provided with the following information from your taxpayer. Mr. B works in company ABC Ltd He is required to use his own car and incur the necessary expenses to earn commission income....
-
You have been provided with the following information about two companies: Required: a. Calculate the current ratio for each company and the amount of working capital each company has. b. Which...
-
NIU Company's budgeted sales and direct materials purchases are as follows: NIU's sales are 40% cash and 60% credit. It collects credit sales 10% in the month of sale, 50% in the month following...
-
A solution was prepared from 10.0 mL of 0.100 M cacodylic acid and 10.0 mL of 0.0800 M NaOH. To this mixture was added 1.00 mL of 1.27 10-6 M morphine. Calling morphine B, calculate the fraction of...
-
The management of Luis Inc., a small private company that uses the cost recovery impairment model, was discussing whether certain equipment should be written down as a charge to current operations...
-
Barry Randolph is a global marketing manager for Gen Tech Corporation, a leading manufacturer of computer accessories. The company has market-leading products in several categories, including...
-
The Garcia Industries balance sheet and income statement for the year ended 2005 are as follows: Income Statement (in Millions of Dollars) Net sales ............... $100.0 Cost of sales...
-
Jacquelyn's business had a budget of $154,000 in sales and $95,980 in total variable costs. What is the most her fixed costs could be for the businen to break even?
-
Draft a quarterly cash budget for the Zoo Extravaganza (ZE) for the first two quarters of the coming year. Use just the information in this problem. 1. Interest is paid on the last day of the year...
-
Mr. Bluespan believes that the recent market volatility will end soon and that equity markets are close to perfectly priced. He does not expect prices to move much over the next 12 months, in fact,...
-
Revenues $10,000 COGS Gross Profits $6,000 Operating Expenses $1,000 Operating Profit Interest $500 EBT Taxes (30%) Net Income what is the Net Profit?
-
Walmart has $ 1 , 0 0 0 par value bonds outstanding that matures in 2 0 years and has a 8 % coupon rate. Interest is paid twice per year. If investors require a rate of return of 6 . 2 % on these...
-
Research market data and trends in portfolio management and summarize the trend that you believe will impact portfolio management the greatest in the years ahead, use your independent research to...
-
QUESTION 4: What is the portfolio beta if 25% of your funds are invested in the market portfolio, 25% in an asset with twice as much risk as the market portfolio, and the remainder in a risk-free...
-
In november 2 0 0 6 the bank of america offered a 1 2 month certificate of deposit at a nominal rate of 3 . 6 % . What is the effective intrest rate rounded to three decimal places if the bank...
-
Can you help me answer these questions about the case. the case is below. Fact Summary: Summarize the important facts from the Court's decision. Legal Issues: What is/are the specific legal...
-
A certain Christmas tree ornament is a silver sphere having a diameter of 8.50 cm. Determine an object location for which the size of the reflected image is three-fourths the size of the object. Use...
-
Milton Company closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $23,800....
-
The following financial information is available for Flintlock Corporation. Instructions Calculate the payout ratio and return on common stockholders' equity for 2017 and 2016. Comment on your...
-
Adama Company incurred the following costs. Instructions Indicate to which account Adama would debit each of the costs. 5,000 1. Sales tax on factory machinery purchased 2. Painting of and lettering...
-
Which is an advantage to an employee who participates in a profit-sharing plan? A. Employee does not have to make investment decisions. B. Graded vesting schedule. C. Older employees receive the...
-
Which of the following is not a characteristic of a defined benefit plan? A. A guaranteed retirement benefit. B. Risk of preretirement inflation assumed by employer. C. Benefits based upon the...
-
Which of the following is true about cash balance plans? I. Past service credit is available. II. Employer guarantees a minimum rate of return. III. Participants direct investments in hypothetical...
Study smarter with the SolutionInn App