QUESTION

Doddy Pry Ltd is a private company which was incorporated in 2001 and operated a coffee shop. The company has following results in past 4 years.

Tax year Taxable Income (loss)

2018/19. $ (47,000)

2019/20 $ (65,000)

2020/21 $ (35,000)

2021/22 $ (90,000)

Note: the above figures comprise only assessable income and deductions excluding losses of previous years. On 29 September 2019, 70% of the company's shares changed ownership.

On 21 March 2021, the company leased adjoining premises and opened a retail outlet selling firewood.

There is also a $3500 bad debt carried from the 2020/21 year

Doddy Pty Ltd also received $4000 exempt subsidy payment in the 2021/22 income year

Required

a) Utilising ALL tests determine whether Doddy Pty Ltd can utilize any of its tax losses against its 2021/22 taxable income.

b) Determine whether a deduction for the bad debt is available

c) Calculate Doddy's taxable income for 2021/22.