Australian Taxation Law Exam with Solutions - Desklib

Exam LAW511 Australian
Taxation Law

TABLE OF CONTENTS
QUESTION 1...................................................................................................................................3
a. Calculating the Partnership’s taxable income.........................................................................3
b. Calculating the A1 Manufacturing Pty ltd tax payable...........................................................3
QUESTION 2...................................................................................................................................4
Part A..........................................................................................................................................4
Part B...........................................................................................................................................5
QUESTION 3...................................................................................................................................6
Preparing the business activity statement...................................................................................6

QUESTION 1
a. Calculating the Partnership’s taxable income
Net profit 150000
Less
Doubtful debt 35000
long service leave 20000
Net profit/ (loss) or the taxable income/ loss 95000
With the help of the question provided it is clear that some of the adjustments are not being
address within the profit and loss statement of the partnership firm. Hence, with regard to this
adjustment have been addressed and after that the company is having the net profit of $95000.
Thus with this it can be stated that the taxable income for the partnership firm is $95000 and the
tax will be charged over this net income for the company for the year June 2021. With regards to
the adjustment the accountant show that provision for doubtful debt and long service leave has
not been recorded. Hence it will be deducted from the net profit as earlier it was not deducted.
Thus, now it has been clear from the net income and the actual taxable income for the company
has been calculated. The tax rate will be applied on this net income and then only the tax liability
will be calculated.
b. Calculating the A1 Manufacturing Pty ltd tax payable
A1 manufacturing share in profit 38000
Add
interest 45000
interest on 50000 5000
Less
Loss on partnership 74000
Net income for A1 Manufacturing Pty ltd 14000
With regards to the calculation of A1 manufacturing Pty Ltd tax payable it is clear that
A1 manufacturing Pty Ltd is having 40% profit sharing within the total profits. Hence according
to this 40% of $95000 is $38000. After that the interest over the loan provided to partnership will