Classy Candles Pty Ltd (Classy Candles) is an Australian resident company that carries on a distribution business. It is the sole Australian distributor of the popular Parisian Lights candles. They purchase their stock direct from the overseas manufacturer and then sell it wholesale to Australian retailers. They run their business out of a small warehouse they rent in Brisbane.

Note that Classy Candles is registered as a small business entity (SBE). They also use the accruals basis to account for income tax, and the cash basis to attribute GST.

During the 2021/22 income year, Classy Candles received $924,000 (including GST) from selling stock to their Australian retailer customers. A stocktake determines that the following stock is on hand on 30 June 2022: The stock on hand on 30 June 2021 was valued at $92,000 (exclusive of GST).

In April 2022, Classy Candles donated ten large candles to a local school as a prize for a fundraising event that the school was holding. The school is not a deductible gift recipient (DGR). The candles cost the company $500 (exclusive of GST) but have a retail market value of $1,650 (including GST).

Below are the other expenses incurred by Classy Candles during the 2021/22 income year (assume that all expenses can be substantiated):

Question YOU ARE REQUIRED TO CALCULATE CLASSY CANDLES NET INCOME for the 2021/22 income year. Ensure that you provide full workings and explanations (including how GST affects Classy Candles assessable income amounts and deduction entitlements), and that you specify section references to the ITAA97 or ITAA36 and/or relevant case law to support your answers.

Present your answer in a four-column table with the following headings. To insert a table, use theBackground imageicon in the answer block: