You are working as a tax accountant in a chartered accounting firm. One of your clients Chrystal View Pty Ltd (a resident private company) sent you the data file generated from the integrated financial software.

Instruction: You have now run the data file in your integrated financial software and generated the P & L statement and Balance sheet and found the following information to complete the requirements.

Required:

1. Please use the P & L Statement, Balance Sheet and other notes from the client’s accountant to calculate the following:
2. Calculate Taxable Income                                                                         
3. Calculate Tax Payable/Refund                                                                 

General information

Tax File number	987654321
ABN	123456789101
Postal Address	20 Pitt Street, Sydney NSW 2000
Main business	Computer specialists
Tax agent	Mr Harry Johns of Harry Johns & Associates 100 George Street, Sydney NSW 2000
Tax agent	Phone 9788-6549
Public Officer	Mr John North Phone 9657-1234

P & L Statement

Income		$	$
Gross sales		1,300,000
Less COGS
Purchases	500,000
Plus opening stock	40,000
	540,000
Less closing stock	50,000
	490,000	490,000
Gross Profit		810,000	810,000
Fully franked dividend			70,000
Interest received			120,000
			1,000,000
Expenses
Wages		300,000
PAYG Instalments		50,000
Accounting depreciation		110,000
General expenses		78,000
Bad debts		4,000
Doubtful debts		17,000
Legal expense (note 2)		40,000
Rent paid		90,000	689,000
Net Profit			311,000

Notes to accounts

(1) Decline in value for taxation purposes is $130,000.

(2) The legal expense of $40,000 was for an unsuccessful takeover of a competitor.

BALANCE SHEET AT 30 JUNE 2015

	$	$
Current Assets		536,000
Cash at bank	451,000
Account receivable	35,000
Closing stock	50,000
Non Current Assets		189,000
Machinery	39,000
Land	150,000
Total Assets		725,000
Current Liabilities		45,000
Account payable	40,000
GST Payable	5,000
Non current liabilities		130,000
Mortgage	130,000
Less Total liabilities		175,000
Net Assets		550,000
Equity		550,000
Share capital	100,000
Retained earnings	450,000

Note that there was no personal services income, no internet trading, no international dealings, no overseas interests, no thin capitalization, no foreign source income and no transactions with specified countries.

1. Taxable Income and tax payable refund. Advise the financial management strategies the business followed that assisted optimum tax position.