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Fresh Pty Ltd ( Fresh ) , a company owned by the Jones family, amongst other investments, owns and operates a profitable supermarket in Newtown.

Fresh Pty Ltd(Fresh),a company owned by the Jones family, amongst other investments, owns and operates a profitable supermarket in Newtown. Freshs supermarket is independent from, and is not associated with, the major supermarkets such as Coles and Woolworths. Fresh also has a small number of investments. Fresh is an Australian resident company for tax purposes.
(a)Fresh owns commercial premises in a busy retail-shopping mall. The premises are
currently leased out to a company that operates a computer store. The tenant has
complained for a while about how hot it becomes in the summer period in the store, and
that this has adversely affected sales in summer. The tenant has regularly requested
Fresh to install air-conditioning. Fresh eventually agrees and on30November2022,a
new single room air-conditioning unit is installed at the premises at a cost of $1000.
(b)Fresh has a50%interest in a partnership with an unrelated party, PartnerCo. The
partnership carries on the business of providing travel consulting services. Due to the
recent rise in the incidence of natural disasters at popular travel destinations, there has
been a decline in demand for travel consulting services. The partnership made a
partnership loss of $60,000for the2022/23income year. The Partnership Agreement
provides that Fresh and PartnerCo are each entitled to50%of any profits. Fresh also
received its50%of the profits for the previous income year2021/22,on5December
2022.The amount received was $70,000.
(c)During the2022/23income year, Fresh incurs advertising expenditure of $50,000in
placing advertisements on digital screens displayed in public(this is consistent with the
advertising expenditure in previous years).
(d)Fresh is also the trustee of a family discretionary trust which carries on a
Page5of8
business of providing nutrition advice to various clients. In the2022/23income year, the
trust estate earned income calculated under trust law principles of $100,000.The net
income of the trust estate, calculated under s95ITAA36was $97,000.On29June
2023,the directors of Fresh resolved to distribute the trust law income as follows:
$20,000to Bob, who has been a resident throughout the2022/23income year
and who is not under a legal disability.
$20,000to Buck who has been a foreign resident throughout the2022/23income
year and who is not under a legal disability
$10,000to Brian who has been a resident throughout the2022/23income year
and is aged12years(the directors have resolved to hold the remaining $10,000
in the trust, until Brian turns18years of age).
(e)Fresh owns20%of the shares in a medium-sized(Australian resident)company that
refurbishes old car engines and sells them at a profit. Fresh received two dividends from
the company during the2022/23income year. The first dividend was $40,000and it was
franked60%.The second dividend was $60,000and it was franked70%.
(f)During the2022/23income year, Fresh also made three frankable distributions. The first distribution($1million)is franked at50%,the second distribution($2million)is40%.(Assume a corporate tax rate for imputation purposes of30%).
question:
Freshs accountant, Jerry, is in the process of preparing the companys income tax return for the2022/23income year. Advise Jerry regarding the income tax implications to Fresh, arising from the above facts, in relation to the2022/23year of income. In your answer, make sure you refer to any relevant cases, legislative provisions, tax rulings and principles of tax law.

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