1 Taxation (ACC303) Group Assignment - Trimester 1, 2022 The assessment task requires students to correctly calculate taxable income, tax payable and complete a tax return for a company that owns two petrol stations. It gives the students the opportunity to: • Demonstrate an understanding of legal principles and their application, specifically in relation to taxation and case law. • Interpret the relevant legislation and common law principles and make informed judgements on issues relating to the application of these as they pertain to companies. • Calculate taxable income and tax payable for a business. In order to complete this task, students will be allocated to groups from within their class. Due Date: End of week 11, 2022 Weighting: 20 Marks Wezan Pty Ltd is a private company which owns two petrol stations. Their head office is 65 Arthur Street, Coburg. They started business on 1st July 2019. Deanne Wezan, the sole director, makes an appointment with you to prepare the company’s 2020 income tax return. At the interview she supplies you with the following financial information: Receipts NAB – Business Loan 4,500,000 Cash Sales Banked 10,221,000 Receipts from debtors 424,800 Payments Motor Vehicle Expenses – Holden (see note 5) 23,680 Replacement of petrol engine - Holden 5,000 Power 11,400 Rates 16,800 Insurance 10,850 Telephone Expenses 1,850 Bank charges 1,200 Repairs and maintenance (see note 3 below) 7,990 Membership to Carlton FC (Deanne would take staff to the football on occasion) 1,200 2 Wages 267,000 Superannuation Expense (see note 10 below) 12,682 Loan repayment (see note 2 below) 157,500 Fixed asset acquisition (note 6 below) 143,100 Cash purchase – trading stock 110,350 Payment to creditors Bonus (see note 11 below) 128,625 5,000 From the interview, and an analysis of the cash records and the working papers to last year’s return, you ascertain: 1. Year-end reporting details Debtors at 30 June 2020 33,010 Creditors at 30 June 2020 17,010 Stock on Hand 30 June 2020 23,750 2. Loan repayment of $157,500 included a reduction in loan principal of $42,000. The loan was for business purposes only. 3. Repairs and maintenance comprised: 1 November 2019 – acquisition and installation of air conditioner 6,000 31 January 2020 – gravel for car-park 1150 1 May 2020 – new thermostat for refrigerator unit 840 $7,990 4. Asset acquisition comprised: 1 st July 2019 - Freezer 10,000 1 st July 2019 - Refrigeration units 12,500 1 st July 2019 - Holden – sedan 1 st March 2020 – Office equipment (see note 9) 62,400 23,000 $143,100 5. Deanne owns a Holden sedan used 90% for business purposes. Log books have been maintained to substantiate this usage and the total running costs of maintaining this vehicle is $23,860. 6. On 1 June 2020 Deanne was involved in a car accident. She decided to replace the car’s wrecked petrol engine with a more efficient diesel engine with a much greater economy of operation at a cost of $5,000. She liked the idea as the new and better engine will reduce the likelihood of future repair bills. 7. On 15 June 2020 Deanne was informed that one of her clients who had owed her $2,000 since the beginning of the year was declared bankrupt and will receive no payment. 8. On 27 June 2020, Wazen Pty Ltd declared a bonus to be shared between employees of $5000. The bonus was not credited to the employee’s account until 5 July 2020. 3 9. On 1 March 2020 Deanne purchased new office equipment for $23,000 for the business. She paid $1,000 delivery costs. The effective life of the new office equipment is 5 years. Deanne wants to claim the maximum deduction. 10. Superannuation expense relates to payments made for wages paid from 1 July 2019 to 30 March 2020. All expenses were paid within 28 days of the end of the month. REQUIRED Complete a statement of taxable income, explanatory notes, and depreciation schedule for the company for the year ending 30th June 2020. The assignment should be completed in groups of 3 as allocated by your lecturer and the word limit for the explanatory notes is 1000 words. Marks will be allocated according to the marking criteria as set out below: 1. Correct calculations inclusive of clear and concise explanation of calculations. 2. Comprehensive and accurate discussion of taxation issues citing appropriate legislation, ATO Rulings and case law. 3. Evidence of usage of available legal material and wide reading/research. 4. Presentation – format, spelling, vocabulary, readability. 5. Appropriate referencing, including in-text referencing and a reference list where appropriate. 6. Engaging proactively with team members in decision making and facilitating the achievement of agreed group outcomes. 7. Any form of plagiarism will result in a report to business school coordinator. 4 Individual Component This part of the assignment should be completed individually. You are to calculate this section on your own. Do not share your answers with other members of your group. Weighting: 10 Marks Wezan Pty Ltd engages a number of staff and seeks your advice in relation to the minimum super contributions required in respect of the following staff in respect of the quarter ended 30 June 2020. 1. Hannah who is a part-time administration staff of Wezan and was paid wages of $6,000 during the quarter. 2. Tina who is a marketing consultant who manages the advertising for the company. Tina has a number of clients, employs her own staff member to assist her and was paid a fee of $2,000 during the quarter. 3. Ferdie who is a contract driver. Ferdie wears Wezan’s uniform and works the hours determined by Wezan. Ferdie was paid $18,000 during the quarter. 4. Bob is a delivery driver who uses the company’s truck and trailer. Bob was paid $15,000 during the quarter. Bob ceased working for Wezan in June and was paid $4,000 in unused annual leave. 5. Lily who is a store manager, working fulltime for Wezan. She was paid a salary of $22,000 during the quarter plus overtime (which is rarely worked) of $350. Question 1 5 Marks Explain why, or why not, each staff member is required to have super contributions made on their behalf by Trias and where applicable, determine the amount payable. Question 2 5 Marks Assuming that Wezan failed to pay the requisite super contributions by the due date, calculate the amount of Superannuation Guarantee Charge payable. You should assume that Wezan pays the Superannuation Guarantee Charge on 29 August 2020.