Nice Car Pty Ltd runs a business selling car accessories. During the quarter ended 30 June 2021,
Question:
Nice Car Pty Ltd runs a business selling car accessories. During the quarter ended 30 June 2021, they had the following transactions:
$
Bank interest received 218
Sale of car accessories 218,600
Purchase of car accessories 56,400
Cleaning services paid to clean premises 2,350
Wages paid to employees 62,100
Bank fees paid 480
i) Required:
Calculate Nice Car’s GST liability for the quarter. Assume that they are GST registered and all figures are GST inclusive, where applicable. Show all working. 5 marks
One of your clients is a firm of architects established under a partnership by four partners. On 1 July 2020 the partnership borrowed $140,000 in order to pay each partner $35,000. This reduced their respective partners’ accounts to $0 owing to each partner. Two of partners spent the money on their private mortgages and the other two bought cars for private use.
ii) Required:
With reference to relevant case law, briefly discuss whether the partnership would be entitled to an income tax deduction with respect to interest paid on the amount borrowed. 3 marks
Essentials of Accounting for Governmental and Not-for-Profit Organizations
ISBN: 978-0073527055
10th Edition
Authors: Paul A. Copley