Reference no: EM132567342
Question - Quelta Pty Ltd, (a base-rate entity) is a private company for taxation purposes. It manufactures lawn mowers and clothes lines, and its operations are based in Queensland's Sunshine Coast. For the year ended 30 June 2019, the company reported an operating profit before tax of $750,000. In preparing the financial statements for the year, the accountant included the following information:
1) $30,000 had been written off the goodwill arising from the acquisition of a business in 2006.
2) A provision had been raised in respect of future warranties equal to 2% of sales. During the year sales amounted to $5,000,000.
3) Depreciation on plant for tax purposes amounted to $750,000. However, only $600,000 had been charged as an expense in arriving at operating profit.
4) Depreciation on buildings was $50,000. However, for tax purposes only $25,000 is deductible.
5) Owing to a new line of mower coming onto the market, the directors decided to make a provision for obsolete stock. This amounted to $75,000.
6) The company borrowed $200,000 on 1 January 2019 to fund the purchase of new plant and equipment. The loan is repayable over 10 years. The borrowing costs of $2,000 is written off immediately.
7) Because of a shortage of working capital during the year, the company sold some of its surplus land for $300,000 in May 2019. The land had been originally acquired on 1 January 1992 at a cost of $200,000.
8) At the end of the year the directors increased provision for:
(a) doubtful debts by $3,600, and
(b) holiday pay and long service leave, by $60,000.
9) In November 2018, the company received a distribution from a resident public company (not a base rate entity) of $150,000 that had a franking percentage of 20%.
10) Expenses incurred in entertaining employees amounted to $4,600.
11) The company had a carry forward loss of $220,000 originating from the 2017/18 tax year. There had been no change in corporate ownership between the start of the loss year and the end of the current income year.
12) FBT of $26,000 had been paid by the company for the 2018/19 FBT year.
Required - Calculate Quelta Pty Ltd's taxable income and its net tax payable for the year ended 30 June 2019?