Tasmania Concrete Supplies Pty. Ltd. is an Australian resident private company for tax purposes and carries on the business of making and selling concrete products throughout Tasmania. The following amounts exclude GST. The internal accountant for the company, Bruce has prepared the Profit and Loss Statement for the year ended 30 June 2020 based on the financial accounting standards:

ADDITIONAL INFORMATION (1) The figures are GST exclusive. (2) On 30 November 2019, the company received a cash dividend of $240,000 from an Australian resident company. The dividend was fully franked. This dividend is not recorded in the above Profit and Loss Statement. (3) On 31 August 2019, the company also received a cash dividend of $160,000 from a Singapore company. Withholding tax of $20,000 had been withheld in Singapore. This dividend is not recorded in the above Profit and Loss Statement. (4) The accounting depreciation of $2,350,000 is based on the directors estimating the effective life of all assets being 5 years. Bruce advises you that for taxation purposes the following information is applicable:

Tasmania Concrete Supplies Pty Ltds records show that on 1 July 2019 the opening balance of the low value and low-cost pool of assets was $80,000. During the year ended 30 June 2020 the company purchased a number of low cost assets for $18,000 at various times during the year which Bruce wishes to be pooled. The reason why all of the older depreciating assets are in the low value pool is that they are all more than10 years old and need replacing. During the financial year the company purchased the following assets: 10 new motor vehicles at a cost of $500,750 on 1 July 2016. The estimated life is 6 years. The vehicles are used 100% for business and all cost less than $55,000. A new computer system for the company a cost of $70,500 on 1 July 2016. The estimated life is 4 years. 25 large trucks to deliver the concrete products at a cost of $6,400,000 on 1 July 2019. The effective life of the trucks is 5 years. (5) The provision for bad debts was based on the Directors estimate given the current economic conditions. During the financial year in fact no debts had been written off as bad debts. (6) The repairs of $230,000 consisted of painting the company premises for $100,000 and replacing the old rotting wooden office window frames with new steel window frames for $130,000. The painting was to the west wall which got the afternoon sun and had not been painted for seven years. The existing paint was peeling and needed to be done before the timber also started to rot. The cost of replacing the old wooden office window frames with new wooden window frames would have been $81,000. The new steel window frames had the advantage of not being subject to rotting but had the disadvantage, unlike the old wooden frames, of being subject to rust. The new steel window frames were installed on 1 July 2019 and have an estimated life of 25 years.

(7) Wages of $405,000 include $50,000 paid for marketing services provided by a directors daughter. The Commissioner considers that $20,000 is a reasonable amount for the services provided. (8) Tasmania Concrete Supplies Pty Ltd has carried out a stock take and values its closing trading stock at the following amounts: Cost $2,833,567 Market selling value $2,435,278 Stock at the beginning of the income year was: $1,230,000 Bruce has not included the opening and closing stock figures in calculating the net profit of $4,064,700. (9) Tasmania Concrete Supplies Pty Ltd purchased the goodwill from a competitor for $10,500,000 and the purchase price is paid over five years in exchange for five annual payments of $2,100,000. The date of the purchase was 1 July 2019. (10) The company paid a total of $1,155,000 in PAYG Instalments during the financial year.

(11) The company owns the building that it operates from and it purchased the building on 1 July 2017. The building and land cost $12,456,657. The building was five years old when purchased and the cost of the construction of the actual building was $7,200,000. This cost has been confirmed by the builder. Bruce has not included the building in the financial accounts and is unsure how to treat this expense for taxation purposes. (12) The company has advised that it wishes to pay the minimum amount of tax and wants to claim the maximum deductions allowable. REQUIRED 1. Calculate the assessable income for Tasmania Concrete Supplies Pty Ltd as at 30 June 2020. 2. Calculate the allowable deductions for Tasmania Concrete Supplies Pty Ltd as at 30 June 2020. 3. Calculate the decline in value of the depreciating assets owned by Tasmania Concrete Supplies Pty Ltd as at 30 June 2020. 4. Calculate the tax payable for Tasmania Concrete Supplies Pty Ltd as at 30 June 2020.

Sales $19,489,700 Less: 1,350,000 2,350,000 150.000 50.000 Operating expenses: Advertising Accounting depreciation (note 4) Fringe benefits tax Provision for bad debts (note 5) Provision for long service leave (note 5) Repairs (note 6) Wages (note 7) Purchase of trading stock (note 8) Payment for a new business (note 9) 340,000 230,000 5.405,000 3,450,000 2,100,000 15,425,000 Net profit $4,064,700 Sales $19,489,700 Less: 1,350,000 2,350,000 150.000 50.000 Operating expenses: Advertising Accounting depreciation (note 4) Fringe benefits tax Provision for bad debts (note 5) Provision for long service leave (note 5) Repairs (note 6) Wages (note 7) Purchase of trading stock (note 8) Payment for a new business (note 9) 340,000 230,000 5.405,000 3,450,000 2,100,000 15,425,000 Net profit $4,064,700