Taxation Law Exam

TAXATION LAW EXAM

Question: 1
a) Calculation of taxable income of partnership firm
Particular Amount
Accounting profit for the year 385000
Adjustments for non-deductible expenses
Speeding fines 5000
Movement in provisions 55000
Taxable income of partnership 445000
John family trust (60%) 267000
Electrical Pty ltd. (40%) 178000
Depriciation on shelves:
Prime cost method: cost of shelves – salvage value / useful life = 20000 – 0 / 2 = 10000.
b) Calculation of tax payable by Electrical Pty ltd.
Share of partnership income = 178000
Interest on capital = 5000
Setting off previous year’s tax loss (5000)
Taxable income 178000
Up to 18200 0
18201 – 37000 3572
37001 – 90000 17225
90001 – 178000 32560
Tax payable 53357 + 2% Medicare levy = 56917
c) Distribution of trust income
Share of partnership profit = 267000
Interest received on loan = 50000
Interest on capital = 5000
Carry forward loss (25000*60%) (15000)
Taxable income of trust as partner= 307000

Distribution of trust income among beneficiaries
Rachel = 102333
John = 102333
John (son) and Kim = 102333
John = 51166
Kim = 51167
As all the beneficiaries are adults, then there income can be individually assessed in order to
reduce tax liability.
Rachel tax liability
102333 + 250000 = 352333.
Question 2
a) As per the Australian Taxation system, the Goods and Service Tax is basically implied on the
sale and purchase of goods and services only. It applies to most goods and services but with
some exempted goods such as foods, certain medical, healthcare and some educational services.
The standard rate of the GST on general goods and services are 10% along with that the same
rate is applied on the goods which are imported from the foreign. GST (goods and services tax)
is a type of consumption tax. The Australian government applies it on the sale of goods and
services. GST isn’t paid by businesses instead, it’s charged to consumers in the price of goods,
and collected by businesses, making it an indirect tax. Businesses are then responsible for
reporting it to the government (Murphy, 2019).
From the above transaction the GST in implied only on the following transaction and that
include:
 Receipt from the sales of the general goods in which the company deals regularly and is
also cover under GST goods and services criteria.
 Payment for the purchase of general goods from the supplier which is also included in the
GST tax law.
 And the last imported goods from the Thailand. It is because the goods which are
imported from the outside Australia GST payment on import goods @10%.
b)
All Goods Pty Ltd.