Holiday Pty Ltd was incorporated on 1 July 2018 (costs of incorporation were $2,500) and conducted...

   

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Holiday Pty Ltd was incorporated on 1 July 2018 (costs of incorporation were $2,500) and conducted a travel agency business which incurred tax losses of $55,000 and $15,000 in the years ended 30 June 2019 and 30 June 2020 respectively. On 1 July 2019 the company purchased a hotel and discontinued the travel agency business. Current year trading information: Income Gross revenue from hotel operations Proceeds from the sale of shares The shares had been acquired on 15 July 2018 for $9,860. Franked dividend received 3 November 2020 Franking credits attached $1,757 Partly franked dividend received 8 March 2021 Franking credits attached $2,743 Holiday Pty Ltd is a beneficiary in the Family Trust. On 30 June 2021 the Family Trust distributed $1,000 to the company, being a dividend of $800 and $200 franking credit. Expenses Purchases of consumables used in the hotel Salaries and wages (including Directors' salaries of $60,000) Interest on loan Other allowable expenses and depreciation Fringe benefits tax paid Additional information 1. $ 1,200,000 325,000 4,100 8,000 1,000 700,000 450,000 55,125 13,000 10,327 The shareholders of Holiday Pty. Ltd. and their shareholdings were: Shareholders at 30 June 2019 30 June 2020 30 June 2021 Hapi 60 60 60 Mirko 40 40 40 Jojo 50 100 Milan 100 50 0 200 200 200 2. Voting and dividend rights are held in direct proportion to shareholdings. 3. The Commissioner of Taxation considers that $20,000 of the Directors' salaries is reasonable. 4. A dividend of $6,200 franked to 50% was paid on 5 November 2020, and a dividend of $5,400 which was franked to 100% was paid on 10 March 2021. Required: 1. Determine the losses which may be claimed as a deduction by the company for the current income year. (5 Marks) 2. Calculate the taxable income and net primary tax payable for the year ended 30 June 2021. The company will be classified as a base rate entity (BRE) for the rate of tax. (5 marks) 3. Assuming a nil opening balance on 1 July 2020 prepare the franking account for the current year and calculate any tax and/or penalty payable. (10 marks) Holiday Pty Ltd was incorporated on 1 July 2018 (costs of incorporation were $2,500) and conducted a travel agency business which incurred tax losses of $55,000 and $15,000 in the years ended 30 June 2019 and 30 June 2020 respectively. On 1 July 2019 the company purchased a hotel and discontinued the travel agency business. Current year trading information: Income Gross revenue from hotel operations Proceeds from the sale of shares The shares had been acquired on 15 July 2018 for $9,860. Franked dividend received 3 November 2020 Franking credits attached $1,757 Partly franked dividend received 8 March 2021 Franking credits attached $2,743 Holiday Pty Ltd is a beneficiary in the Family Trust. On 30 June 2021 the Family Trust distributed $1,000 to the company, being a dividend of $800 and $200 franking credit. Expenses Purchases of consumables used in the hotel Salaries and wages (including Directors' salaries of $60,000) Interest on loan Other allowable expenses and depreciation Fringe benefits tax paid Additional information 1. $ 1,200,000 325,000 4,100 8,000 1,000 700,000 450,000 55,125 13,000 10,327 The shareholders of Holiday Pty. Ltd. and their shareholdings were: Shareholders at 30 June 2019 30 June 2020 30 June 2021 Hapi 60 60 60 Mirko 40 40 40 Jojo 50 100 Milan 100 50 0 200 200 200 2. Voting and dividend rights are held in direct proportion to shareholdings. 3. The Commissioner of Taxation considers that $20,000 of the Directors' salaries is reasonable. 4. A dividend of $6,200 franked to 50% was paid on 5 November 2020, and a dividend of $5,400 which was franked to 100% was paid on 10 March 2021. Required: 1. Determine the losses which may be claimed as a deduction by the company for the current income year. (5 Marks) 2. Calculate the taxable income and net primary tax payable for the year ended 30 June 2021. The company will be classified as a base rate entity (BRE) for the rate of tax. (5 marks) 3. Assuming a nil opening balance on 1 July 2020 prepare the franking account for the current year and calculate any tax and/or penalty payable. (10 marks)

Answer rating: 100% (QA)

1 The losses which may be claimed as a deduction by the company for the current income year are 5500... View the full answer