Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ken Marsden began his business, Marsden Consulting Pty Ltd, in the 2014 tax year, after being made reduntant from his management role. He has successfully

Ken Marsden began his business, "Marsden Consulting Pty Ltd", in the 2014 tax year, after being made reduntant from his management role. He has successfully built up his business helping new and established businesses ensure they meet appropriate accreditation requirements to provide servies and advice. Despite this, in the first few years the business builty up some losses.

In the 2016 tax year, Lena joined the business to expand the capacity for assessment, however she did not work full time due to family commitments.

After contemplating the benefits of expanding the busienss into other areas, in the 2018 tax year Ken began a town planning degree. Lena took on a greater share of the business at this time, to reflect her continued commitement to the business. Luke, an experienced trainer, joined the business in the 2020 tax year, which allowed the business to expand into continued professional development. At this time, however, due to it being a small portion of the business' activities, Luke's ownership share was kept to 10%. Ken completed his degree in the 2021 tax year, at whch time the Luke's workload was becoming increasingly important to the busienss and a further ownership change occurred.

The table below outlines the ownership share between each party and associated taxable income (lossess) for each period.

2014 2015 2016 2017 2018 2019 2020 2021
Ken 100 100 70 70 65 65 55 45
Lena - - 30 30 35 35 35 35
Luke - - - - - - 10 20
Total Ownership 100 100 100 100 100 100 100 100
Tax Loss ($) 15,000 7,000 5,000 3,000 1,000
Tax Income ($) 3,000 15,000 25,000

REQUIRED:

Advise Marsden Consulting Pty Ltd as to whether it can use the carry forward losses against its taxable income in the current tax year.

You are required to include references to appropriate legislation, case law and tax rulings. DISREGARD GST

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Banking And Finance Issues In Emerging Markets

Authors: William A. Barnett

1st Edition

1787564541, 9781787564541

More Books

Students also viewed these Accounting questions

Question

1. Think out loud as you solve problems.

Answered: 1 week ago

Question

Have you got a one page summary that you are happy with?

Answered: 1 week ago