Peter Thompson, who is a self-employed medical practitioner, has been operating a surgery from a building...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Peter Thompson, who is a self-employed medical practitioner, has been operating a surgery from a building he owns. Peter incurred the following expenses during the year ending 31 March 2020: (i) $2500 fees paid for undertaking a minor surgery qualification for 4 weeks. The surgery qualification will increase Peter's knowledge and ability to perform minor surgeries. (ii) $400 paid in speceding and parking fines incurred by Peter while visiting patients. (iii) $2500 paid for installation of a remote-controlled garage door at the surgery building. (iv) $1,200 paid for specialist clothing and masks Peter needed during the Covid-19 pandemic. (v) $200 paid for Uber costs incurred for travel from home to work while Peter's car was being repaired in the garage Required: For each of the listed expenditures above, advise Peter on whether a deduction can be claimed for tax purposes for his surgery business for the year ending 31 March 2020. Support your answer with references to the Income Tax Act 2007 and the general permission, the general limitation and any specific rules as necessary. (5 marks) Part B: Depreciation Ravneel Singh purchased all the assets of a business called Superior Couriers Ltd on 1 April 2019. The following assets were acquired and are used 100% in the business. All assets were purchased new, unless otherwise stated. All costs are GST exclusive. Asset Courier Van (Motor Vehicle for transporting light goods) Trailer (Class TC) Computer Printer Cost $60,000 $10,000 $4,000 $2,000 ATV $48,000 $9,000 $2,000 $1,200 During the year the following transactions occurred: • The trailer was sold for $11,000. • A new Computer was bought for $4,500 on 14 June 2019 The old computer was sold for $1,000. Required: Answer the following questions based on the information provided above. Assume that Ravneel wants to maximise his depreciation loss. (a) Explain how the depreciation loss/gain on disposal of an asset is caleulated and calculate the depreciation loss/gain on the old computer. (1 mark) (b) Explain depreciation recovery income and calculate the depreciation recovery income on the Trailer. (1 mark) (c) Find the applicable depreciation rates (DV and SL) for the Courier Van (classified under Motor Vehicle for transporting light goods) from the IRD website and calculate the depreciation loss on the (1 mark) Courier Van for the tax year ending 31 March 2020. (d) Using the pool method calculate the depreciation loss on all the items that can be pooled together for the tax year ending 31 March 2020. Assume that the pool method is used for all items costing less than $5,000. Find the depreciation rates from the IRD web site. (2 marks) Peter Thompson, who is a self-employed medical practitioner, has been operating a surgery from a building he owns. Peter incurred the following expenses during the year ending 31 March 2020: (i) $2500 fees paid for undertaking a minor surgery qualification for 4 weeks. The surgery qualification will increase Peter's knowledge and ability to perform minor surgeries. (ii) $400 paid in speceding and parking fines incurred by Peter while visiting patients. (iii) $2500 paid for installation of a remote-controlled garage door at the surgery building. (iv) $1,200 paid for specialist clothing and masks Peter needed during the Covid-19 pandemic. (v) $200 paid for Uber costs incurred for travel from home to work while Peter's car was being repaired in the garage Required: For each of the listed expenditures above, advise Peter on whether a deduction can be claimed for tax purposes for his surgery business for the year ending 31 March 2020. Support your answer with references to the Income Tax Act 2007 and the general permission, the general limitation and any specific rules as necessary. (5 marks) Part B: Depreciation Ravneel Singh purchased all the assets of a business called Superior Couriers Ltd on 1 April 2019. The following assets were acquired and are used 100% in the business. All assets were purchased new, unless otherwise stated. All costs are GST exclusive. Asset Courier Van (Motor Vehicle for transporting light goods) Trailer (Class TC) Computer Printer Cost $60,000 $10,000 $4,000 $2,000 ATV $48,000 $9,000 $2,000 $1,200 During the year the following transactions occurred: • The trailer was sold for $11,000. • A new Computer was bought for $4,500 on 14 June 2019 The old computer was sold for $1,000. Required: Answer the following questions based on the information provided above. Assume that Ravneel wants to maximise his depreciation loss. (a) Explain how the depreciation loss/gain on disposal of an asset is caleulated and calculate the depreciation loss/gain on the old computer. (1 mark) (b) Explain depreciation recovery income and calculate the depreciation recovery income on the Trailer. (1 mark) (c) Find the applicable depreciation rates (DV and SL) for the Courier Van (classified under Motor Vehicle for transporting light goods) from the IRD website and calculate the depreciation loss on the (1 mark) Courier Van for the tax year ending 31 March 2020. (d) Using the pool method calculate the depreciation loss on all the items that can be pooled together for the tax year ending 31 March 2020. Assume that the pool method is used for all items costing less than $5,000. Find the depreciation rates from the IRD web site. (2 marks)
Expert Answer:
Answer rating: 100% (QA)
PART A DEDUCTIONS The deductibility of following expenditures incurred by Peter Thomson as per Income Tax Act 2007 is as follows i Payment of Fees 2500 for obtaining further qualification related to t... View the full answer
Related Book For
South Western Federal Taxation 2015
ISBN: 9781305310810
38th edition
Authors: William H. Hoffman, William A. Raabe, David M. Maloney, James C. Young
Posted Date:
Students also viewed these accounting questions
-
The following are monthly percentage price changes for four market indexes. Compute the following. a. Average monthly rate of return for each index. Round your answers to five decimal places. DJIA:...
-
Barbara incurred the following expenses during the year: $840 dues at a health club she joined at the suggestion of her physician to improve her general physical condition, $240 for multiple vitamins...
-
Alexander's incurred the following expenses during 19x1: Fixed manufacturing overhead ........................... $90,000 Fixed nonmanufacturing costs ........................... $70,000 Unit selling...
-
Pierce Phones is considering the introduction of a new model of headphone whose selling price is $18 per unit and whose variable expense is $15 per unit. The company's monthly fixed expense is...
-
Use mesh analysis to find ix in Fig. 13.80, Where is = 4 cos(600t) A and vs = 110 cos(600t + 30º) 12 F 150 800 mH 600 mH
-
On January 1, 2009, a U.S. firm made an investment in Germany that will generate $5 million annually in depreciation, converted at the current spot rate. Projected annual rates of inflation in...
-
Explain the statement that applications are solutions to information needs. Provide examples to make your point.
-
On January 1, 2017, Prasad SpA had the following equity accounts. Share Capital-Ordinary (25 par value, 48,000 shares issued and outstanding)....1,200,000 Share...
-
Accounts Debit Credit Cash $24,100 Accounts Receivable 5,500 Supplies 3,400 Land 53,000 Accounts Payable $3,500 Common Stock 68,000 Retained Earnings 14,500 Totals $86,000 $86,000 During January...
-
Larry has severe vision problems and, in the past, he has claimed the additional standard deduction available to blind taxpayers. This year Larrys doctor prescribed a new type of contact lens that...
-
43. The race or ethnicity of the officer has little apparent influence in the use of excessive force. True False
-
Is it true that a pebble released from rest off a bridge falls \(9.8 \mathrm{~m}\) in the first second of its fall?
-
Will interpolation between known data points always give an accurate continuous path? If so, explain why. If not, give a counterexample.
-
With about \(20 \mathrm{~min}\) to spare, you walk leisurely from your dorm to class, which is \(1.0 \mathrm{~km}\) away. Halfway there, you realize you have forgotten your notebook and run back to...
-
What minimum information must be extracted from a video clip of a moving object in order to quantify the object's motion?
-
A hot-air balloon takes off from the ground traveling vertically with a constant upward acceleration of magnitude \(g / 4\). After time interval \(\Delta t\), a crew member releases a ballast sandbag...
-
2. A U.S. firm holds an asset in Spain and faces the following scenario. In the below table, P is the euro price of the asset held by the U.S. firm. Spot rate P USD/EUR 0.90 EUR 1,500 Probability...
-
Big Jim Company sponsored a picnic for employees and purchased a propane grill equipped with a standard-sized propane tank for the picnic. To make sure there was enough propane for all the cooking...
-
In 2014, Roger pays a $3,000 premium for high-deductible medical insurance for him and his family. In addition, he contributed $2,600 to a Health Savings Account. a. How much may Roger deduct if he...
-
Assume the same facts as in Problem 36, except that the two shareholders consent to an AAA bypass election.
-
Each of the following items was incurred by Jos?e, the cash basis, calendar year decedent. Under the terms of the will, Dora took immediate ownership in all of Jos?e's assets, except the...
-
There are 24,627 species of fish on Earth. Decide whether the statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain clearly.
-
For a flight on a small plane, the pilot asks passengers what they weigh. Identify at least one likely source of random errors and also identify at least one likely source of systematic errors.
-
An American Airlines agent tells you that you must pay a surcharge because your checked bag weighs 23.018 kg, which exceeds the limit of 23 kg, and that theres no doubt that the scale is correct...
Study smarter with the SolutionInn App