Newton Group Pty. Ltd. ("NG" is a company incorporated in Australia. It manufactures electronic products, mainly batteries, power storage equipment and generators. Its headquarters and factory are in Geelong, a regional city in Victoria where it employs 300 staff members. It sells its electronic products to retailers across Australia and exports to Asia. NG is not "a base rate entity" for Australian tax purposes. Listed below are a series of events that happened at NG during the 2020-2021 income year. For each event, explain the tax implications for NG. If you need more facts, be sure to indicate those that are needed and consider the potential tax consequences if those facts apply

Question 1.1:

NG constructed a gym and table tennis room attached to the work premises for staff to encourage sports and recreational activities. The cost of construction of the facility amounted to $550,000 (inclusive of GST). NG bought gym and table tennis equipment worth $110,000 (inclusive of GST). The construction of the facility and the installation of the equipment were all completed on the 1 May 2021.

Question 1.2:

NG has a factory showroom which was last renovated 12 years ago. NG spent $6,600 (inclusive of GST) to replace worn-out carpets with timber flooring. The company had been claiming decline in value for the carpets and the tax adjustable value of the carpets was $500 at the time of replacement. The main entrance to the showroom was also repainted at a cost of $1,100 (inclusive of GST).

Question 1.3:

One of NG's major suppliers, Power Ltd., breached their contract to supply microchips to NG for the production of electronic products at a fixed price until 31 December 2024. NG commenced actions against Power Ltd. to recover $2m as damages for loss of earnings, increased costs, and damage to reputation. On 30 March 2021, NG agreed to accept Power Ltd.'s offer of a lump sum payment of $1m to settle the case. For this part you can ignore any GST implications that may be applicable

Question 1.4:

NG incurred the following expenses for the provision of food and drinks for: (a) meals provided to staff at the factory's canteen for the whole year. (b) staff training seminars on team building and launch of new products.

(c) business lunch meetings with suppliers and customers held in the company's boardroom.

Answer rating: 100% (QA)

Question 11 Constructing a gym and table tennis room for staff recreational activities can have tax implications for NG The cost of construction inclu... View the full answer