Assessment 3 Case Study Data
\nBackground
\nAmity Holdings Pty Limited (Amity) is an Australian resident company that was incorporated during 2022. After purchasing several investments including real estate and shares, in 2023 Amity commenced business as a golf equipment wholesaler with both Australian and overseas clients.
\nKaty Mahon, the Managing Director of Amity, has terminated Kurt Aild, the company\u2019s accountant, as she is concerned that there are several errors in the returns prepared. Katy has provided the following information produced by Kurt:
\na) 2023 Income Tax Return
\nb) Additional notes accompanying the income tax return including franking account
\nc) June 2023 Business Activity Statement (BAS)
\nd) Additional notes accompanying the BAS
\ne) 2023 Fringe Benefits Tax Return
\nf) Notes and workings accompanying the FBT return
\nRequirements
\nKaty has requested that you prepare a statement of advice including:
\ni) Any necessary corrections to Amity\u2019s Income Tax Return that impacts taxable income, income tax liability or the franking account. Each correction should be supported by a brief explanation and correct referencing from legislation, along with any workings and calculations.
\nii) Any necessary corrections to Amity\u2019s Fringe Benefits Tax Return that impacts the taxable value of benefits and fringe benefits tax liability. Each correction should be supported by a brief explanation and correct referencing from legislation, along with any workings and calculations.
\niii) Any necessary corrections to Amity\u2019s Business Activity Statement that impacts GST on sales, GST on purchases and net GST payable. Each correction should be supported by a
\nbrief explanation and correct referencing from legislation, along with any workings and calculations.
\nAmity Holdings Pty Ltd 2023 income tax return
\nAmity Holdings Pty Ltd 2023 income tax return (cont.)<\/p>\n
Amity Holdings Pty Ltd 2023 income tax return (cont.)<\/p>\n
Amity Holdings Pty Ltd 2023 income tax return (cont.)<\/p>\n
Notes and workings accompanying the tax return
\nE – BAD DEBTS
\nProvision for doubtful debts (none written off during year) 20000 20000
\nITEM 6
\nINCOME $ $
\nC – OTHER SALES OF GOODS AND SERVICES
\nSales of goods and services to Australian customers 525000
\nExported sales of goods and services 65000 590000
\nH – TOTAL DIVIDENDS
\nFully franked dividends received from listed companies 21000
\nUnfranked dividend from listed companies 2000 23000
\nR – OTHER GROSS INCOME
\nRent from residential investment properties
\n(includes $5,000 accrued for rent outstanding) 195000 195000
\nEXPENSES
\nA – COST OF SALES
\nPurchases 175000
\nadd: Closing stock (at cost) 37000 212000
\nD – SUPERANNUATION EXPENSES
\nContributions to complying fund 21500
\nSuperannuation Guarantee Charge 1500 23000
\nH – RENT EXPENSES
\nManagement Fees 16000
\nStrata Levies 44000
\nInsurance 14500 74500
\nNotes and workings accompanying the tax return (cont.)
\nY – MOTOR VEHICLE EXPENSES
\nRunning costs 14500
\nSpeeding Fines 500 15000
\nS – ALL OTHER EXPENSES
\nFringe benefits tax paid 22300
\nWages 205000
\nOther employee benefits 16000
\nCommercial rent – fully serviced business premises 63000 306300
\nITEM 7
\nA – NET CAPITAL GAIN
\nAmity entered into a contract for the sale of a residential property that was acquired in 2022:
\nCapital proceeds 820000 less: Purchase price 685000
\n135000 less: 50% discount 67500 67500
\nJ – FRANKING CREDITS
\n30% x $21,000 6300
\nCALCULATION STATEMENT
\nT1 \u2013 TAX ON TAXABLE INCOME 69,300
\n$231,000 x 30%
\n(Kurt noted that Amity is not a Base Rate Entity as more than 20% of assessable income is Passive)
\nD \u2013 NON-REFUNDABLE CARRY FORWARD TAX OFFSETS
\nAs per Item 7 J \u2013 Franking credits from listed companies 6,300
\n30% x 21,000
\nNotes and workings accompanying the tax return
\nNOTE 1 Amity prepared the following franking account for the year:
\nDATE DESCRIPTION DR CR BAL
\n1-Jul Opening Balance 3000
\n30-Sep Fully franked dividends totalling $21,000 received 6300 9300
\n21-Nov PAYGI Paid 8500 17800
\n21-Jan Dividend of $70,000 paid – fully franked 21000 -3200
\n31-Jan PAYGI Paid 8500 5300
\n21-Apr PAYGI Paid 8500 13800
\n28-Jun Dividend of $24,500 paid – unfranked 0 13800
\nNOTE 2 Rental properties held by Amity had unexpired constructions costs totalling $600,000. All properties were constructed between 2000 and 2010.
\nNOTE 3 Amity was provided with artwork valued at $11,000 by a client in return for
\nproducts provided at no charge. This has not been included in any returns as it is non-cash.
\nNOTE 4 In 2022, Amity incurred company set-up and initial costs of $15,000.
\nNOTE 5
\nPAYGI instalments paid amounts to $33,000 (i.e. 4 instalments of $8,500
\neach)
\nExtracts from the June 2023 Business Activity Statement
\nNotes and workings accompanying the business activity statement
\n$ $
\nG1 – TOTAL SALES
\nSales of goods and services to Australian customers 192000
\nExported sales of goods and services 23000
\nRent from residential investment properties 44000 259000
\nG11 – NON CAPITAL PURCHASES
\nTrading stock purchases 51000
\nSuperannuation 5300
\nManagement Fees – rental properties 4500
\nStrata Levies – rental properties 12500
\nInsurance – rental properties 1600
\nCar running costs 4600
\nCommercial rent paid 17800
\nPurchase of new office furniture 3700 101000
\nOTHER NOTES
\nAmity was provided with artwork valued at $11,000 by a client in return for products provided at no charge. This has not been included in any returns as it is non-cash.
\nExtracts from the 2023 fringe benefits tax return
\nNotes and workings accompanying the fringe benefits tax return
\nITEM 23 $
\nCAR FRINGE BENEFIT
\nRunning costs 15000
\nEstimated business use (no logbook kept) 50%
\nTAXABLE VALUE 7500
\nEXPENSE PAYMENT BENEFITS
\nHospital (medical) costs paid for employee 10000
\nFurniture purchased for employee 6000
\n16000
\nNOTE – CAR BENEFIT
\nThe car originally cost $60,000 including GST and was available for the entire FBT year. No contributions were received from the recipient.<\/p>\n
_______________________
\nIncome Tax Return:
\nBad debts of $20,000 have been claimed as a deduction, however no bad debts were written off during the year. As per s25-35 of the ITAA 1997, a deduction for bad debts is only available if a debt is written off as bad during the income year. This amount should be added back to taxable income.
\nRental income of $195,000 has been included, however $5,000 of accrued rent receivable has also been included. As per s6-5 of the ITAA 1997, accrued income is not included in assessable income until it is derived. The $5,000 of accrued rent should be removed from rental income.
\nUnfranked dividends of $2,000 have been included as assessable income. As per s44 of the ITAA 1997, unfranked dividends are not included in assessable income for a corporate tax entity. This amount should be removed.
\nConstruction costs of $600,000 relating to rental properties have not been claimed as a deduction. As per s25-110 of the ITAA 1997, unexpired construction costs can be deducted over time. $60,000 (1\/10 of costs) should be claimed as a deduction this year.
\nFringe Benefits Tax Return:
\nThe car fringe benefit has been calculated using 50% business use without having kept a logbook. As per s5C of the FBTAA 1986, the statutory formula method can only be used if a valid logbook is kept. The taxable value should be recalculated using the operating cost method based on actual expenses.
\nBusiness Activity Statement:
\nGST on rental income of $44,000 has not been included as sales. As per s9-5 of the GST Act, residential rental income is a taxable supply. $4,000 (1\/11 of rental income) should be included in GST collected.
\nInput tax credits of $6,000 relating to the furniture purchased for an employee has not been claimed. As per s11-20 of the GST Act, this purchase relates to a fringe benefit and input tax credits can be claimed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Assessment 3 Case Study Data Background Amity Holdings Pty Limited (Amity) is an Australian resident company that was incorporated during 2022. After purchasing several investments including real estate and shares, in 2023 Amity commenced business as a golf equipment wholesaler with both Australian and overseas clients. Katy Mahon, the Managing Director of Amity, has terminated […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,25,750,1327,1324,1323,1328,1326,1325,1329],"tags":[1333,1330,1341,1335,1338,1334,1331,1342,1337,1336,1344,1340,1343,1332,1339],"class_list":["post-3606","post","type-post","status-publish","format-standard","hentry","category-ace-homework-tutors","category-acemyhomework","category-assessment-brief-assignment-help","category-assessment-homework-help-online","category-assessment-task-assignment-help","category-australia-dissertation-writers","category-australia-essays","category-help-with-australia-assessment-assignment","category-uk-assessment-assignment-help","category-uk-essays","tag-best-ideas-for-dissertation-topics","tag-best-ideas-for-research-paper-topics-in","tag-best-research-paper-topics-for-examples","tag-best-thesis-topics-and-ideas-on-different-subjects","tag-dissertation-topics-good-thesis-ideas","tag-dissertation-topics-for-ph-d-and-thesis-ideas","tag-dissertation-topics-for-students-in","tag-research-titles-examples","tag-research-topics-for-college-students","tag-sample-thesis-titles","tag-thesis-and-dissertation-ideas-for-research-topics-in-uk","tag-thesis-topics-for-your-final-academic-project","tag-thesis-topics-for-your-masters-degree","tag-trending-dissertation-topics-ideas-for","tag-undergraduate-dissertations-topics-examples-ideas"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/posts\/3606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/comments?post=3606"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/posts\/3606\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/media?parent=3606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/categories?post=3606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/essays\/wp-json\/wp\/v2\/tags?post=3606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}