Taxation And Business Finance In Australia

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Question :

ANswer the given short-answer questions in your textbook related to Business Finance and Taxation in Australia.

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Answer :


Issue 1

If any individual is carrying a business there will be income that will be assessed and we have to pay tax on it.Cash received from clients  is $420000 ,Stock  $80000 valued at cost. as on 1st july 2015,trading stock on 30th june $100000 valued at cost and $5000 advance fees for facilities not yet rendered to a specific client at the end of the 2015-16 financial year.The taxable income will be $420000+5000=$425000

Issue 2

Non-resident persons can also be paid or attributed franked bonuses or unranked dividends from Australian resident corporations. Though, they are taxed otherwise from resident stockholders. 

If the nationality status alters during the time there will be times where withholding tax was not subtracted from expenditures made to you before you became a local. As this happens, we should attach a schedule to your tax return amplification of conditions

There are two types of dividends 

Franked dividends

If any individual is not a resident of Australia then the franked sum of dividends you are paid or accredited are exempted and not taxable from Australian income and concealment or withholding  taxes. Withholding taxes will attract unranked amount. We cannot use any postmarking credit close to franked dividends to reduce the sum of tax owed on other Australian income and we can’t get a refund of the franking credit. We should not include the amount of any franked dividend or any franking credit on the Australian tax return.

Unranked dividend

A resident corporation may pay or credit to someone is known unranked dividend. There is no validating credit devoted to  all these dividends. Any other unranked bonuses paid or credited to a non-resident are theme to a final withholding tax.

Withholding tax is forced on the full amount of the unranked dividends. It is deductible from the unranked sum of any partly franked dividends that any individual get. This tax is deducted by the company  before any dividend is being distributed. The tax(withholding) on unranked dividends is the last tax, so we will have no additional Australian tax obligation on the dividend income.

In this case the frank dividend(50percent)  will be liable to withholding tax at the rate of 30 present .$14000 will be fully exempt

Issue 3

This will be regarded as a capital expenditure though an asset will be created and depreciation will be allocated. It won’t constitute a revenue expenditure.

Issue 4

In this case $60000 is allowed as it is a business expenditure and any amount can be allowed in taxation

Issue 5

anthem amount claimed is not allowed unless it is affirmed by specific authorities and also it is deductible on payment basis.

b. Parking expense of  $3000 is allowed as parking expense as it will be allowed as deduction as business expense

c. The amount is not allowed as deduction as it does not relate to the business (Australian Government, 2017)

did is an allowable business expenditure therefore will be allowed

Issue 6

In this case the dividend is exempt as it is received by another country. The withholding tax that will be deducted should be refundable.

Issue 7

Cost of establishing a loan is not deductible expense because the loan is  taken to purchase the car which is used for the personal purpose and not relatable for business. Interest charge be for such loan shall be disallowed.

Issue 8

Any bonus paid will be deductible on cash basis.The school feed will be added to the remuneration of the employee and Proper TDS will be deducted by the employer.

Issue 9 

The expense that is been incurred should not be allowable as it is not relatable to the business and hence not allowed as deduction

Issue 10

A capital gain or a loss is actually nothing but a difference as what u pay and what you receive at the end. The tax is paid on the capital gains. It actually becomes a part of the tax and it should not be treated as a separate tax though it is called as capital gain tax. f me make a wealth loss, w against income can’t actually claim it but we can use it to decrease a capital improvement in the same revenue year. And if the capital fatalities exceed the capital gains in an income year, we can carry the loss advancing and deduct it in contradiction of capital gains in upcoming years. At the time of sale there are short term capital gains and there are long term capital gains. Short term tax are levied when the asset is  not used for more than 36 months and long term taxations are levied when the asset is held for more than 36 months. Any asset held long term need indexation (Australian Government, 2017)

I indexation method:

For property learned before 11.45am (by legal time in the ACT) on 21 September 1999 (and detained for 12 months or more beforehand the relevant CGT event)

Assets which are held for less than 12 months need not need any indexation methods,

 If there is a net capital gain, it will be considered in taxable income and if negative the capital loss is approved forward to the next time or year

The indexation value of the year is below

Financial year 15-16-1081

Financial year 11-12-785

Financial year 16-17-1125

Financial year 10-11-711

Financial year 09-10-632

Financial year 1984-1985-125

On 21 ,2016 April  Natali sold an speculation property for $400,000. She purchased the possessions on  August 2010 and $100000 was paid.

Indexation on purchase value-100000*1125/711=158228

Capital gain- 400000-158228=$241772 .It will be taxable

book on May 2016 Natali sold off  her ring which was of gold The sale price was $6,000. She bought the gold ring on  July 2009 for $11,000. 

Indexation on purchase value-11000*1125/632=19580

Capital gain- 6000-19580=13580 is a capital loss and will be carried forward 

c. On 19 July  Natali sold 1,000 BHP shares for $45,000 that she bought on21 March 1985 for $10,000.

Indexation on purchase value-10000*1081/125=86480

Capital gain- 45000-86840=41480 is capital loss and will be carry forward

d. On 18 April 2016 Natali sold a very infrequent and much required after car to a keen collector for $250,000. She learned the car on 15 February 2011 for $175,000 and spent $20,000 refining the engine. The acquisition and sale prices amounted to $10,000. 

Indexed Purchase price 175000 *1125/711= 276898

COST OF IMPROV- 20000*1125/711-=31645


Capital gains-$250000-276898-31645-10000= 68543 is capital loss

e. On 11 May 2016 Natali sold her dress that she liked very much. She bought the dress on 21 March 2012 and paid $2,000 for it. The sale price was $9,800. C

Indexed purchase price : 2000*1125/785=2866

Capital gains- 9800-2866=6933

fin this case  $10000 is Long term capital gain and 30000 is short term capital gain. We will check whether shares are listed or not

g. $100000 will be treated as long term capital gains.

h.  On 13 February 2016 Natali sold a lot of shares for $20,000. She bought the shares on 7 June 2011 and paid $80,000 for them.  

Indexed purchase price:80000*1081/785=110165

Capital loss=110165-80000=$30165