Part 1 Boland Nominees purchased plant for $50,000 on 1 July 2012 with an effective life of 10 years. It has been depreciated under the diminishing value method. The plant has been used 50% to generate exempt income. What amount will be included as assessable income or deducted from the company's assessable income if it is sold on 30 June 2014 for $50,000? (Show workings and assume that the company is not an SBE.) (4 marks)



Part 2 Assume that the plant was sold for $50,000. The company's only other income generating transaction for the year netted it $500 of exempt income. It had a carry forward franking account balance of $500. A fully :11-anked cash dividend is then paid to Bill, the only shareholder in the company.

Assuming that:

(1) The company has no cany forward losses

(2) The company tax rate is 30%

(3) The marginal rate of tax applicable to Bill is 46.5% (inclusive of Medicare levy)



Calculate:

(a) The company's taxable income and income tax for the 2013/14 year

(b) The greatest amount of dividend the company can pay fully franked and the imputation credit, and

(c) Any tax Bill will have to pay on this dividend.

If Bill's wife held a different class of shares in the company and she had no other income, what your advice be on 30 June 2014 and why?

Answer rating: 100% (QA)

Question Part 1 The amount included in the assessable income of the company 18000 Part 2 a For 201314 The companys Taxable income 18000 Income tax 540... View the full answer