Question
DellaBella Pty Ltd is a private company which incorporated in Australia in 2009 under the Corporations Act 2001 in order to operate a Bungee jumping
DellaBella Pty Ltd is a private company which incorporated in Australia in 2009 under the
Corporations Act 2001 in order to operate a Bungee jumping business.
The company has had the following results in the last three years:
Income year Tax result |
2015/16 $370 000 loss |
2016/17 $500 000 loss |
2017/18 $35 000 loss |
Della Bella Pty Ltd has prepared the following income statement for 2018/19:
Income |
Gross profit from trading 510,000 |
Fully franked dividends 16,800 |
Exempt income 11,000 |
Gross Income 537,800 |
Expenses |
Interest expense 23,000 |
Wages 58,000 |
Entertainment expense 12,000 |
Fines and penalties 3,000 |
Increase in provision for |
annual leave |
14,700 |
Depreciation 41,000 |
PAYG Instalments paid 130,000 |
Total expenses 281, 700 |
Net Profit 256, 100 |
Other information
Note 1 Decline in value for 2017/18 was $38,900.
Note 2 Annual leave paid amounted to $12,000.
Note 3 - The $256, 100 profit does not include any tax losses from previous years.
Law 2002 T3 2020
Page 6 of 10
On the 1 September 2016 65% of the shares with voting, income and capital distribution rights
changed ownership. On the 17 June 2017 the company started to operate a Berry Bomb ice
cream outlet.
DellaBella Pty Ltd has collected GST of $25 909 and received a yearly subsidy since 2009 from
the Government of $20 000. The subsidy is classified as exempt income.
Required
With reference to the relevant legislation and/or case law:
a) Explain the conditions that must be met to establish if a company is a resident of
Australia for tax purposes and determine whether the company is a resident of
Australia for taxation purposes
b) Calculate DellaBellas taxable income
c) Calculate the tax assessed and the balance of Della Bella 2018/19 tax assessment
d) Discuss how a companys residency status impacts the taxation of a company in
Australia. ( Disregard Double Tax Agreements foer the purpose of this question)
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