HI,

I need a answer for this question before 8am on 26/09/2019

Thanks

Question is -

Sam, who is 66 years old, carries on a food catering business, as a sole trader, in Perth.

With the consent of the Australian Tax Office (ATO), the cash basis of accounting applies to him.

For the year ended 30 June 2019, he has provided you with the following information regarding his business:

(1)He had sales of $441,353 of which:

(i)$50,000 remained unpaid by his customers as at 30 June 2019 although food have been delivered, invoices issued and no dispute has arisen; and

(ii)on 20 June 2019, upon his instructions to his customers, $10,000 was paid directly to Peter instead of to himself. (Peter is his builder who is building a garage for his house).

(2)(i)salary and wages paid to his employees - $70,000;

(ii)premiums paid for public liability insurance for his business - $7,000;

(iii)advertising costs relating to his business - $10,000.

(3)On 1 July 2018, the opening value of his trading stock for tax purposes was $35,000. This stock was valued at cost. On 30 June 2019, he had trading stock on hand valued at $67,000 at cost, $66,000 at market and $65,000 at replacement.

During the current income year:

(i)he purchased food provisions for his business from various suppliers at a cost of $170,000; and

(ii)he incurred direct costs of production of $67,000 as well as overhead production costs of $33,000.

(4)As part of his business, he sells coffee brewed from beans imported from the Brazil. On 31 August 2014, he purchased the most technologically advance brewing machine from Coffee Tech Ltd. for $45,000. The machine is used exclusively for the business and has an effective life of 6 years.

In December 2015, Coffee Tech Ltd. invented an automated robotic arm attachment for this machine - the purpose of the invention is to brew coffee with very little need for a barista. He decided to invest in this technology and added this automated robotic arm to the brewing machine for $6,000 on 1 January 2016.

In December 2016, Coffee Tech Ltd. invented another robotic arm ("2^nd Arm") which sprinkles powder onto the coffee cups at the end of brewing. On 1 January 2017, he purchased the 2^nd Arm for $4,000 and attached it to the brewing machine.

He depreciated the brewing machine using the Diminishing Value

Method.

[For the purposes of this question, the number of days for the relevant periods are as follows:

1.From 31 August 2014 to 30 June 2015:304 days;

2.From 1 July 2015 to 30 June 2016:365 days;

3.From 1 January 2016 to 30 June 2016:181 days;

4.From 1 July 2016 to 30 June 2017:365 days;

5.From 1 January 2017 to 30 June 2017:181 days;

6.From 1 July 2017 to 30 June 2018365 days;

7.From 1 July 2018 to 30 June 2019365 days]

(5)On 1 July 2018, he purchased a Toyota car (engine capacity 2,800 cc) for $65,000 for his business.

During the current income tax year, his logbook shows that he used it for 4,600 km of business travel and the total kilometres travelled by the car was 7,500.

The operating expenses associated with running the car for the year were $15,000 (excluding depreciation). However, he did not keep any written evidence of the expenses.

The car has an effective life of 8 years and he used the Diminishing Value Method to depreciate it.

[assume that the Toyota car is a "car" as defined in Section 995-1(1)].

During the income tax year, he paid private health and hospital insurance

premium of $4,000 to Medibank for his benefit.

He is single and has no dependents.

Advise Sam on his tax liability for the year ended 30 June 2019 (assuming that he wishes to legally minimize his income tax liability) based on the information above.