Calculating Adjusted Taxable Profit or Loss for Blackmores Limited

Running head: TAX 1
Income Tax Application
Student’s Name
Institutional Affiliation

TAX 2
Income Tax Application
Introduction
The company that I wish to perform tax returns on is Blackmores Ltd. Blackmores Ltd. is
an Australian Health Supplements firm that was founded in Queensland, Australia in the 1930s
(Blackmores, 2017). The firm was founded by Maurice Blackmore with a sole aim of offering
health products to the locals of Australia and worldwide. The company is traded on the
Australian Securities Exchange (ASX) with a ticker symbol BKL and it is one of the most
performing companies in the country. Based on its performance, Blackmores Limited has
managed to employ approximately 843 people who help the company to produce vitamins,
herbal and mineral supplements which are then sold to over 17 countries worldwide, especially
in the Asia Pacific region. Blackmores Limited Australia has been performing well and as at the
end of financial year 2017, the company was recognized and inducted into the Queensland
Business Leaders Hall of Fame. Additionally, its performance is depicted by the fact that the
company was able to grow from a naturopathic health food store in Brisbane, Australia to one of
the largest international business in the world. Currently, it is a $2 billion corporation which
reflects the pioneering foundations that were laid down by its founder, Maurice Blackmores, and
the outstanding entrepreneurship and leadership of his son. With Marcus Blackmores,
Blackmores Limited was able to gain certain values such as integrity, passion and respect which
enabled the company to achieve greater heights and a higher competitive edge worldwide. The
primary reason for researching this company is because it is one of the best-performing
companies in Australia.
Analysis

TAX 3
In order to calculate the adjusted taxable profit or loss for Blackmores Limited Australia,
the correct legal entity tax data need to be collected. In this case, a tax consultant would look at
the statement of financial position and the statement of comprehensive income and profit and
loss of Blackmores Limited Australia in order to prepare the assessable taxable income or loss.
For this assessment, this information was readily available via the internet since the annual report
for Blackmores Limited Australia for the financial year ended 21st December 2017 could be
downloaded from the Internet. Through this information, the net profit reported could be easily
gotten from the financial statements as required by the Australian Taxation Office (ATO). The
procedure in preparing the assessable taxable income or loss of Blackmores Limited Australia is
that one would add the disallowable expenditures to the net profit which had been deducted from
the net profit and were not supposed to be deducted for taxation purposes as well as add the
taxable income which was recorded in the additional information or the notes to the financial
statements and they were not shown in the income statement of Blackmores Limited. The next
step is deducting the allowable expenditure which was shown in the additional information or the
notes to the financial statements, but they were not recorded in the profit and loss account as well
as deducting the non-taxable income which were added to the net profit but they did not
comprise part of the ordinary business activities such as unrealized foreign exchange gains or
losses or dividend income. Below is an assessment of the taxable income of the company for the
fiscal year ended 2017.
Blackmores Limited
Adjusted Taxable Profit or Loss Statement
For the year ended 31 December 2017
(In '000's)

TAX 4
Net profit reported $ 58,028.00
Add: disallowable
Depreciation and amortization expenses $ 8,411.00
Operating lease rental expenses $ 7,942.00
Other expenses $ 14,466.00
Promotional and other rebates $ 143,547.00
Less: Allowable or non-taxable income
Other income $ (545.00)
Adjusted taxable profit $ 231,849.00
The adjusted profit of Blackmores Limited was computed by adding the depreciation and
amortization expenses of $8,411,000, the operating lease rental expenses of $7,942,000, other
expenses of $14,466,000 and promotional and other rebates of $143,547,000 to the net profit
reported of $58,028,000 and deducting other income of $545,000. From the adjusted taxable
profit or loss statement above, it was assumed that other expenses and other income are silent
which means that they should be treated as disallowable or non-taxable income respectively
(Becker, Reimer & Rust, 2015). It is, therefore, evident that Blackmores Limited would have a
taxable profit of $231,849,000. When considering Australia’s corporate tax rate of 30%,
Blackmores Limited would have a tax liability of $69,554,700 as shown below (Johnson, 2014).
Tax liability=30 % × $ 231,849,000=$ 69,554,700
In order to prepare the adjusted taxable profit or loss statement for Blackmores Limited,
the following checklist was prepared in accordance with ITAA 1997 (Mascaro, Goldman &
Laaser, 2016). A × in the tables below portray in agreement with the statement.