Hamberg Kart Pty Ltd is an Australian retail company operating in Coburg. It is an Australian resident private company for tax purposes. The accounting profit and loss statement for the year ended 30 June 2021 is presented below:
$ Sales 690,000 Less Cost of Goods Sold $ Opening Stock Purchases 115,000 79,000 194,000 Closing Stock (see note a) 69,000 125,000 Gross Profit 565,000 Other Income Dividend Receipts (see note b) 62,000 Interest Receipts 26,000 88.000 Total Income 653,000 less: Operating Expenses Advertising 53,000 66,000 12,000 75,000 31,000 Advertising Bank and Interest Charges Fringe Benefits Tax Provision for Annual Leave (see note c) Provision for Doubtful Debts (see note d) Gifts (see note e) Income Tax Instalments Depreciation (see note f) Electricity Entertainment (see note g) Payroll tax Travel expenses (see note h) 15,000 13,000 100,000 60,000 15,000 47.000 32,000 200,000 Wages and Salaries 719,000 Net Profit (Loss) (66,000) Additional Notes: A. The Opening stock value for tax purposes was $79,000. The stock value at the end of the year: Cost price ($33,000), Replacement price ($37,600) and Market Selling value $40,500). The company has not made an election under S.328-285(2) of ITAA97. B. On 31 December 2020 the company received a dividend of $62,000 (franked to 40%) from a resident public company. The company paying the dividend pays tax at a rate of 30%. C. Annual leave paid during the year was $34.000. D. Bad debts written off during the year were $5,000. E. The company spent $5,000 on donations to World Vision (Deductible Gift Recipient) and $10,000 to the Cancer Council (Deductible Gift Recipient). F. Tax depreciation equates to $38,000. G. Exempt from fringe benefits tax. H. Relating to flights and accommodation for employees attending site visits. REQUIRED Advise Hamberg Kart Pty Ltd of the tax consequences arising from the above fact situation for the year ending 30 June 2021 by answering the following three questions: 1. Calculate Hamberg Kart Pty Ltd's taxable income (15 marks). 2. Determine whether Hamberg Kart Pty Ltd is a base rate entity (4 marks). 3. Calculate Hamberg Kart Pty Ltd net tax payable (2 marks). You are required to present a complete analysis, explaining the treatment of all items and/or elements in this question Disregard GST. $ Sales 690,000 Less Cost of Goods Sold $ Opening Stock Purchases 115,000 79,000 194,000 Closing Stock (see note a) 69,000 125,000 Gross Profit 565,000 Other Income Dividend Receipts (see note b) 62,000 Interest Receipts 26,000 88.000 Total Income 653,000 less: Operating Expenses Advertising 53,000 66,000 12,000 75,000 31,000 Advertising Bank and Interest Charges Fringe Benefits Tax Provision for Annual Leave (see note c) Provision for Doubtful Debts (see note d) Gifts (see note e) Income Tax Instalments Depreciation (see note f) Electricity Entertainment (see note g) Payroll tax Travel expenses (see note h) 15,000 13,000 100,000 60,000 15,000 47.000 32,000 200,000 Wages and Salaries 719,000 Net Profit (Loss) (66,000) Additional Notes: A. The Opening stock value for tax purposes was $79,000. The stock value at the end of the year: Cost price ($33,000), Replacement price ($37,600) and Market Selling value $40,500). The company has not made an election under S.328-285(2) of ITAA97. B. On 31 December 2020 the company received a dividend of $62,000 (franked to 40%) from a resident public company. The company paying the dividend pays tax at a rate of 30%. C. Annual leave paid during the year was $34.000. D. Bad debts written off during the year were $5,000. E. The company spent $5,000 on donations to World Vision (Deductible Gift Recipient) and $10,000 to the Cancer Council (Deductible Gift Recipient). F. Tax depreciation equates to $38,000. G. Exempt from fringe benefits tax. H. Relating to flights and accommodation for employees attending site visits. REQUIRED Advise Hamberg Kart Pty Ltd of the tax consequences arising from the above fact situation for the year ending 30 June 2021 by answering the following three questions: 1. Calculate Hamberg Kart Pty Ltd's taxable income (15 marks). 2. Determine whether Hamberg Kart Pty Ltd is a base rate entity (4 marks). 3. Calculate Hamberg Kart Pty Ltd net tax payable (2 marks). You are required to present a complete analysis, explaining the treatment of all items and/or elements in this question Disregard GST
