Assessment Title: Assignment 1
Weighting: 15% of total marks for semester (75 Marks reduced to a grade out of 15)
Topic Content: Payroll, GST, & FBT (Topics 1 to 4)
Due Date: End of Week 5
Submission: WORD Document only to be submitted via the link on MySCU.
File Name: SURNAME Tax Assignment 1.DOC or SURNAME Tax Assignment 1.DOCX
ONLY DOC OR DOCX FILES TO BE SUBMITTED – DO NOT SUBMIT PDF FILES
Remember: The purpose of an assignment is for you to demonstrate your knowledge and understanding of the topics. Make sure your answers are comprehensive enough to achieve this.
NOTE: THIS IS AN INDIVIDUAL ASSIGNMENT
YOU SHOULD WRITE ALL WORK SUBMITTED YOURSELF AND IT SHOULD BE BASED ON YOUR OWN RESEARCH. EVIDENCE OF COPYING FROM OTHER STUDENTS WILL BE TAKEN SERIOUSLY AND REPORTED.
Jimmy Frost owns Broadmeadow Park, a horse-racing stable that is registered for GST. The customers purchase horses and send them to Broadmeadow Park for training. The horse owners (customers) pay separate fees for training and agistment plus 50% of any prize money earned by the horses trained at the stable. Broadmeadow Park also owns horses. During the June 2017 quarter they reported the following transactions:
Receipts (inclusive of GST where appropriate):
Training fees $82,698
Share of Prize Money from customers’ horses $44,000
Prize Money from Broadmeadow Park horses $16,500
Trophy from Brisbane Cup won by a Broadmeadow Park owned horse $ 1,200
Trade-in of tractor previously used on the property $18,000
Hay and saddle blankets donated to local pony club (market value $100) $0
Expenses (inclusive of GST where appropriate):
Horse Feed $ 8,800
Veterinary Fees $ 6,600
Farrier (not registered for GST) $ 5,500
Accommodation for staff at race meetings (Hotel) $ 2,475
Lunch at local restaurant* $ 650
Airfares for staff to attend race meetings** $ 6,446
Bookkeeping Services $ 2,640
First Aid Courses for staff members $ 880
New Tractor $43,990
Business Loan Repayment (interest $750, principle $275) $ 1,025
*Lunch at the local restaurant was for Jimmy, the owner of Broadmeadow Park, and three customers whose horses are being trained at the stable. For income tax purposes this amount would be classified as entertainment and a deduction would be denied under s32-5 ITAA97.
**During the period Broadmeadow Park paid for air fares for staff to attend a race meeting in Sydney where one of their prize horses was running. The horse incurred an injury a week before the race and did not run. Consequently, the staff did not attend that race meeting and $1,100 of the airfares mentioned above were not used. The airline did not refund this amount.
Broadmeadow Park also imported saddles and other leather goods from Europe. The cost of the goods was $4,500 and the freight was $250 (Australian Dollars). The supplier in Europe did not charge GST on these goods.
Salaries & Wages:
Broadmeadow Park employs 6 strappers. They are paid weekly. All employees are entitled to the tax-free threshold.
Sarah, Ellie, Michael, & Lisa are all permanent employees. Their weekly pay is based on an annual salary: and paid salaries. Annual salaries are:
Mitch and Chantelle are casual employees and their weekly wage is based on the hours they work. Their work hours are set out in the table below:
Employee/Week Mitch $15/hour
Week 1 – April 0 10
Week 2 – April 7 10
Week 3 – April 10 15
Week 4 – April 12 15
Week 5 – May 8 10
Week 6 – May 0 10
Week 7 – May 5 15
Week 8 – May 12 15
Week 9 – May 10 10
Week 10 – June 12 10
Week 11 – June 8 15
Week 12 – June 8 10
Week 13 – June 8 0
Business Activity Statement:
The ATO has advised that Jimmy Frost, as the business owner, has a quarterly income tax instalment of $16,790. This amount is payable along with other liabilities on his June Quarter BAS.
In the last FBT year Fringe Benefits were provided to the head strapper. There is a FBT instalment showing on the BAS of $2,500. No Fringe Benefits have been provided in the current FBT year.
There are no liabilities for WET, LCT and no fuel credits.
a) Prepare the schedule of payroll information for wages paid, including PAYG withholding deductions, and net wages for each employee by week. (12 Marks)
b) Calculate the employer’s statutory Superannuation Guarantee obligations for each employee for the quarter. (10 Marks)
c) Explain and classify each transaction item listed, including wages and superannuation, by the type of GST supply, and calculate any GST included in the price. (22 Marks)
d) Discuss what conditions need to be met before Broadmeadow Park can claim input tax credits in relation to the expenses listed? Explain whether each of the acquisitions is a creditable acquisition. (16 Marks)
e) Prepare a fully labelled Business Activity Statement for the quarter ended 30 June 2017. (7 Marks)
Further information about the preparation of the Business Activity Statement will be discussed in tutorials. Show all calculations and support all answers with references to legislation, case law and/or rulings. Up to eight (8) marks awarded for quality of explanations & referencing.
END OF ASSIGNMENT INSTRUCTIONS