Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2: Company Taxation: Share Repurchases NineNinety Ltd (NNL) has 1,000,000 fully paid ordinary shares which are held by the following shareholders: Chris Eli

image

Question 2: Company Taxation: Share Repurchases NineNinety Ltd (NNL) has 1,000,000 fully paid ordinary shares which are held by the following shareholders: Chris Eli Ji Marlon Matiu John 175,000 175,000 175,000 175,000 175,000 125,000 The market value of the shareholders' funds is currently $2,250,000. The shareholders are not associated other than that five are members of a music band, with the other being their manager. NNL has Available Subscribed Capital (ASC) of $1,000,000. REQUIRED: Assuming that the Commissioner of Inland Revenue (Commissioner) will be satisfied that the repurchases are not made in lieu of a dividend if the brightline tests are met, you are required to determine whether the brightline tests (thresholds) are met in the following alternative circumstances. (You should include an explanation of what the relevant brightline tests are in your answer). Comment on the tax implications (if any) of your calculations. Work to 2 decimal places. Alternative 1: NNL offered to repurchase 35,000 shares from Eli and 40,000 shares Ji on 1 June 2021. The offers are accepted. Alternative 2: EDL offered to repurchase 45,000 shares from Matiu on 1 June 2021 and 15,000 shares from John on 15 June 2021. Both offers are accepted. 18 MARKS

Step by Step Solution

3.36 Rating (162 Votes )

There are 3 Steps involved in it

Step: 1

To determine whether the brightline tests thresholds are met in the given alternative circumstances we need to calculate the relevant thresholds and c... 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_2

Step: 3

blur-text-image_3

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

Frank Woods Business Accounting Volume 2

Authors: Frank Wood, Alan Sangster

10th Edition

0273693107, 978-0273693109

More Books

Students also viewed these Law questions

Question

Where is the position?

Answered: 1 week ago

Question

Which aspects of this exhibit also relate to financial accounting?

Answered: 1 week ago

Question

Calculate the missing values for the promissory notes described

Answered: 1 week ago