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Your client, Fiona Smith owns a book shop in Melbourne. She operates as a sole trader. The business is known as the High Street Bookstore
Your client, Fiona Smith owns a book shop in Melbourne. She operates as a sole trader. The business is known as the High Street Bookstore and Fiona has an ABN, a registered business name and is also registered for GST Fiona also has other investment income which she owns herself. The following figures are as at the end of the financial year, June and do not include GSTDo not make any adjustments for GST
Receipts
Sale of books and related products
Interest on Bank deposits.
Exempt income from a PhD scholarship from CQU
Private Health fund refunds
Inheritance from her grandfather
Rent from her investment property
Refund from the ATO for the last years tax return
Net capital gain from the sale of shares held for years.
Lottery win Fiona was just very lucky.
Value of a TV given to her by a book publisher for record sales
A franked dividend from ABC Ltd imputation credit $
Payments
Rent on her bookstore in Melbourne
Body Corporate fees on income producing property.
Parttime employee salaries
Superannuation contribution for employees
Interest on borrowing to purchase the income producing property.
Insurance, local council rates and land tax for the investment property
Fees paid to a registered Tax Agent
New bookshelves and counter with an estimated life of years
Travel to and from work to home
Rates on her principal residence where she lives with her family.
Doctors fees for Fiona and her family
University fees for Fiona
Personal Superannuation contribution for Fiona
Purchase of a new Toyota motor car for private use by the family
a Fiona Smith is accounting for her taxation liability as a Small Business Entity SBE
b On July the opening depreciation pool balance for the SBE pool was $ During the year Kay purchased new depreciating assets used for business purposes in the bookshop. This is recorded in the payments information listed above. The depreciation deduction has not been included in the above figures.
c Fiona has a carry forward tax loss from an earlier income year of $ This was due to the impact of COVID on her business.
d Fiona and her family are members of a private health fund and have private hospital insurance.
e Fiona has paid $ in PAYG Instalments during the financial year ending June
f The investment apartment was purchased new on July for a total cost of $ and is part of a hotel complex in Sydney. The real estate agent advised Kay that the construction cost of the apartment was $ and this was confirmed by the builder.
REQUIRED
Calculate Fionas personal tax liability for the year ended June You should explain your treatment of each item in this question. Figures must be rounded to the nearest dollar and do not include cents in your calculations.
Your answer should be in the correct format of Assessable Income less Allowable Deductions along the lines of the income tax formula. This gives you Taxable Income and you multiply this by the different marginal tax rates plus Medicare levy. This gives you tax payable less any tax offsets. The terms Payments and Receipts are not part of the Tax Formula and are not appropriate for taxation accounting.
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