Timber Floors Pty Ltd.’s Income Tax Analysis

TAXATION
Timber Floors Pty Ltd.’s Income Tax Analysis
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TAXATION
Timber Floors Pty Ltd.’s
Taxable Income Statement
For The Year End 30th June 2018
$ $
Sales Fees (GST Inclusive) =3089725*1.1= 3398697.5
Less Cost of Sales (note 2) = 166433*1.1= (183076.3)
Gross profit 3215621.2
Add other Income
Dividend received from us Firm 120000.0
Dividend declared (note7) 134285.7
Total Income 3469906.9
Less Operating Expense
Advertising Fees 110000
Repairs expense 3000
Annual payment to major competitor 110000
Depreciation (note 6) 194253
Other expenses
Marketing expense done to directors daughter (note4) 22000
Wages expense (note 4) 1378000
Total Expense (1718253)
Total Taxable Income 1751653.9
Ideally this figure of 1751653.9 Australian Dollars is the taxable income for Timber
Floors Pty. Ltd that is to be subjected to a corporate tax rate of 27.5% since its taxable income is
less than the 10million turnover base value (Devi, 2018.Pg .2210.)

TAXATION
It is likewise prudent to understand that there are a lot of tax aspects that has to be written
off from the tax that will be calculating so as to avoid double taxation or tax cascading. These
items are the withholding tax on dividend from US this is because the amount captured as
income includes the tax part. The other one is GST now that we have calculated GST by
subjecting the amount twice in the transaction. Pay As You Go is another factor to be considered
since this is tax at source deducted from the wages and salaries hence the need to settle it off.
Finally is by deducting imputation credit of the dividend declared on the tax payable amount as a
sign of capturing the net effect of dividends.
Timber Floors Pty Ltd.’s
Taxable Liability
For The Year End 30th June 2018
$ $
Taxing the taxable profit at 30%=1751653.9*30%= 525496.17
Less Imputation tax credit 34285.7
Less GST payable/paid for the year transactions (note1) 239351.7
Less Withholding Tax on Dividends received from US 20000.0
Less Tax at Source PAYG 255,000.0
Total Tax Offsets (548637.4)
Total Tax Liability/Refund (23141.23)
Timber Floors Pty Ltd.’s tax liability has indeed been minimized to the extent of claiming
of refund of 23141.23 Australian Dollars hence is eligible to claim for this refund or rather use
the credit to set off future tax liabilities. Therefore Timber Ltd is now tasked to declare and file a
tax return declaring the refund for compliance purposes of the tax man.