Taxation Law: Calculation of Taxable Profit and Tax Liability for Bloomingdale Florists Pty Ltd

Running head: TAXATION LAW
Taxation Law
Name of the Student:
Name of the University:
Authors Note:

1
TAXATION LAW
Contents
Answer to question 1:......................................................................................................................2
Answer to question 2:......................................................................................................................6
References:....................................................................................................................................11

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TAXATION LAW
Answer to question 1:
On the basis of the accounting records and additional information about Bloomingdale
Florists Pty Ltd, taxable profit of the company from business and resultant tax liability on such
taxable income for the income year ending on June 30, 2018 are calculated below. The notes
provided at the end of the calculation justify the tax treatments of different items to correctly
calculate the taxable profit and tax liability of the company.
Taxable income and tax liability of Bloomingdale Florists Pty Ltd for the year ended on
June 30, 2018
Particulars Amount ($) Amount ($)
Net profit as per books of accounts 126,000.00
Add: Expenditures not deductible and assessable income not included
Accounting depreciation (Tax depreciation shall be
deducted)
12,000.00
Fines for misleading advertisement is not allowed
deduction
5,000.00
Provision for long service leave is not allowed 20,000.00
Provision for doubtful debts not allowed as deduction 17,000.00
Replacement of rotten window with steel window is not
revenue expenses
10,000.00

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TAXATION LAW
Painting expenses of Company premises is allowed as
deduction
-
Gifts to Paramatta Eels League club is not allowed as
deduction
10,000.00
Borrowing cost is not allowed as expenses as it is capital
cost
3,000.00
Dividend from foreign resident company is taxable
income
1,000.00
Unranked dividend from resident company is assessable
income (9000 x 20%)
1,800.00
Directors' salary in excess of reasonable limits (50000 -
40000)
10,000.00
89,800.00
215,800.00
Less: Expenditures not considered but allowed and income not assessable
Actual long service leave paid 10,000.00
Bad debt written off 15,000.00
Capital allowances allowed for tax purposes 10,000.00