Determine the taxable income and tax payable, Taxation

Justin's parents operate a restaurant business through a family trust, The Pepper Family Trust, which had the following receipts and expenses for the year ended 30 June 2011 (the business uses the accruals basis to account for their income):

Receipts

 

Business income - cash amounts received in the period 1 July 2009 to 30 June 2011

$550,000 (incl GST)

Business income - accounts invoiced but not payment not received  in the period 1 July 2010 to 30 June 2011 (for catering jobs)

$44,000 (incl GST)

Interest income

$3,000

Dividend Income (franked to 70%)

$30,000

Expenditure

 

Operating costs of restaurant

$406,685 (incl GST)

New oven costing $8,800 (incl GST) was delivered was delivered on 25 September 2010, but could not be installed until 1 October 2010.  The effective life was 10 years.  Other costs incurred at the time of delivery were:  transit fees $220 (incl GST), transit insurance $110 (incl GST), and installation costs of $330 (incl GST).

$9,460 (incl GST)

 

Restaurant goods delivered on 29 June 2011, but were not paid for until 10 July 2011.

$11,000 (incl GST)

Taxation service for preparation of income tax return by a registered tax agent

$1,100 (incl GST)

Justin's father, John, is the trustee of the trust and decides to distribute the trust's income to the following beneficiaries (without distinguishing between the different types of receipts):

  • Mandy Pepper, age 14 (who has no other income):                                  $3,000
  • Justin Pepper, age 26 (who also has $2,000 of interest income):               $78,000
  • Salt Co Pty Ltd (which has the other income listed below):                    the balance

 

- Unfranked dividends from a resident private company $16,000, and

- Partly franked dividends of $2,000 (franked to 60%).

In relation to the above facts about the Pepper Family Trust answer the following:

(A) Discuss and calculate the 'Net Income' of the Pepper Family Trust for the 30 June 2011 income year. Assume that the Trust is not a small business entity and uses the diminishing value method.                                 

(B) Determine the taxable income and tax payable for each of the beneficiaries for the 30 June 2011 income year.                                         

(C) Advise the trustee John, of the consequences if he had decided to retain the $78,000 in the trust for future expansion of the business rather than making Justin presently entitled to it.                                                          

For each task, please ensure that you provide full workings and explanations, and that you specify section references to support your conclusions. Include comments on amounts, if any, which are excluded from the net income calculation.

Posted Date: 2/27/2013 12:22:32 AM | Location : United States







Related Discussions:- Determine the taxable income and tax payable, Assignment Help, Ask Question on Determine the taxable income and tax payable, Get Answer, Expert's Help, Determine the taxable income and tax payable Discussions

Write discussion on Determine the taxable income and tax payable
Your posts are moderated
Related Questions
Income Tax and Investment Calculator Your task is to produce a Java program, which can calculate income tax and investment growth based on the yearly income/salary of an indiv

what is the dis advantage of digressive tax?

tds late filing fee code & late filing interest code

I have an assignment for tax subject I need it done by 04/24/2013 midnight here''s the case: Sarah is an economist for Smith LLC. In January 2009, she inherited three parcels of

Problem Facts. Larry K. and Cathy L. Zepp have been married 19 years. Larry is 62 years old (Social Security number 123-45-6789) while Cathy is 57 years old (Social Security number

#queTonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (25,000) Long-term capital gain 8,000 For the current year, Tony

Hi Dear, Could you please do the online exam for ( Tax Individuals US). The exam will be ( short answers and MC ). The exam will open about one and half to two hours. The exam w

The tab-delimited text file C223C323_A1_S1_2013_Q1_Q2.txt contains data on the share price of FirstGroup plc (FirstGroup), the public transport company, the share price of Cairn En

there is customer invoice booked with cst 2% (tru AFP) and now the customer says he wont provide c from.. so now we hv to charge extra 3% cst.. how to book this

In May 2003, Gencorp acquired Sequa Corp.'s propulsion subsidiary ARC for $133million in cash and $11 million in transactions costs. Table below lists selected information about