Linda Wong Owns A Restaurant Called Chinese Dragon Which Disclosed: Taxation, SU, Australia

Question 1

Linda Wong (a single, resident taxpayer aged 39) owns a restaurant called Chinese Dragon which disclosed the following for the 2019/20 tax year (ignore GST). Ignore small business concession. Purchase of Pizza Oven on 1 May 2020 (effective life 5 years) 16,300 using diminishing value method Purchase of wall Stove on 1 July 2019 (effective life 4 years) 5,000 with the installation cost $200 using prime cost method Calculate deductions available for Linda with section numbers.

Question 2

John receives contact receipts to act as sales analyst of XYZ Pty Ltd. His contract is for 1 year. John is paid on the basis of performing a complete analysis report which he performs using the client’s in-house software, scanning devices, and other computer systems.

Question 3

Hass Pty Ltd receives contract fees from Ham and Fats for accounting services provided by his director Harriet. Hass Pty Ltd leases a small office in the city, but Harriet performs the accounting work at the premises of Hams and Fats and merely allows his sister to work from the leased office.

Barry, via the entity in which he is a partner Barry & Packo, derives fees for presenting and producing a radio program. Barry & Packo employ two others who work with Barry as a producer and a sound engineer. It is estimated that these employees perform work to the value of $80,000 out of a total fee of $25,000

Question 5
Hammer Pty Ltd was found to be a PSE in receipt of PSI on behalf of Edwin. Edwin and his wife Susan are the two equal shareholders of Hammer Pty Ltd.
Receipts and payments of the company for the 2018/19 tax year were as follows.

Receipts
Fees received $230,000

Payments
Salary – Edwin $130,000
Salary – Susan (receiving phone calls) –  $59,000
Superannuation – Edwin $19,000
Superannuation – Susan $18,000
Applying the PSI provisions, calculate the taxable income for Hammer Pty Ltd, Edwin, and Susan.

Question 6

Jack and Jill trade as partners in an Accounting practice. Their partnership agreement states that all profits and losses are shared equally after partners’ salaries. The following receipts and payments were recorded during the 2018/19 tax year.

Receipts
Gross fees  – $780,000
Proceeds from buildings (note 1) –  $125,000
Interest received on trading account – t $15,000
Received fully franked dividend  – $14,000

Payments
Salary (Jack) –  $90,000
Salary (Jill) –  $50,000
Salaries (employees) –  $450,000
Other deductible expenses –  $192,000