Question A Value 14 Marks
Smith & Jones and Associates (SJA) is a legal firm located in the Brisbane CBD.
SJA own the building from which it operates and also where all of the staff park their private vehicles whilst at work. The building was purchased in 2004.
The partners, Steven Smith and Larissa Jones also park their vehicles there during each working day (230 days pa). A Keycard, issued to each member of the firm, provides access to the secure parking area and to authorised areas of the building. None of the employees is disabled. All employees are full time and take their 4 weeks annual leave.
Analysis of the three months from August 2014 to 31 October 2014 showed that there were 588 instances where a staff member’s vehicle was parked on site for more than 4 hours during a day between the hours of 7am to 7pm. Additionally there were 53 instances where a staff member’s vehicle was parked for less than 4 hours during the period of day between 7 am and 7 pm.
The cheapest commercial car park within a 1-kilometre radius of the building charges a daily rate of $10.50 per day. SJA do not charge their employees for parking. For the purpose of calculating the Car Parking Fringe Benefit and the FBT Liability of SJA for the 2014/15 FBT year you are to ignore the effect of s.58GA FBTAA86.
SJA allows its employees to salary sacrifice various benefits.
SJA provides employer superannuation support at a rate of 9.5% of each employees salary package value (excluding car parking).
During the 2014/15 FBT all of its 16 employees received fringe benefits
The benefit value has been calculated taking into account all available, exemptions, work related reductions and all concessions.
*Property fringe benefits consist of home office IT fit outs - being a laptop, printer, scanner (along with the software & consumables), desk, chair, bookcase, lockable cabinet and a dedicated phone line + internet. Monthly phone and internet contract payments are included.
**Expense payment fringe benefit consists of a combination of private health insurance, life insurance and credit card expenditure at the ratio of 5:3:2.
The wages payable for the 2014/15 FY will be $1.455,000. This does not take into account Fringe Benefits or Superannuation.
Steve Hawkings is an employee solicitor with SJA. Steve is 29 years old. He has a HECS debt of $17,000. He is the non-custodial father of a 3 year old. He has a salary package amounting to $154,866 pa as follows:
Cash salary $112,430
Private Health Insurance $ 2,050
Income Protection Insurance $ 1,200
Life Insurance $ 1,100
Car fringe benefit $ 19,000
Credit Card expenses – food $ 1,200
Loan - $222,500 @ 2% $ 3,950
Salary Sacrifice to Super $13,436
1. Calculate what may be the amount of Car Parking FBT indicating your methodology. 4 marks
2. Advise on the amount of FBT payable by SJA on lodgement of its 2014/15 FBT return in the knowledge that it has already paid $110,000 in instalments via its BAS. 7 marks
3. Compile the figures that will appear on Steve’s Payment Summary for the 2014/15 financial year and advise him by letter of any tax related consequences. 3 marks
• State all assumptions
• Show all calculations
• Indicate what section of which tax act that you are applying or reference which ATO document you are applying.
Task # Task Description Marks
1 Calculate the net tax payable/ refund situation for Amelia for the 2014 FY 5
2 Complete the 2014 Income Tax Return for Amelia. 5
3 Prepare a letter of advice to Amelia explaining her 2014 Income Tax Result. 3
Question 2 Value 13 Marks
The Beerwah Crazy Clark’s store is operated by STU Pty Ltd.
STU Pty Ltd holds ABN 76 124 876 432 and is:
• GST registered and all supplies made are taxable
• Accounts for GST on an accrual basis
• Lodges via paper and pays electronically on a monthly basis
• Is classed as a medium remitter for PAYG withholding
• PAYG Withholding for January & February 2015 totalled $70,000
• Has been issued with a Commissioner’s PAYG instalment rate of .14
• Has been notified of an FBT quarterly instalment of $18,500
• SGL is paid on time @ 9.5% quarterly
• SGL on FB’s provided during FBT year is paid separately in June each year
• All supplies made by Beerwah Crazy Clark’s are recorded as invoices
• PAYG Turnover for January 2015 + February 2015 equalled $985,000
• Gross wages paid for January 2015 & February 2015 equalled $230,000.
The following is an extract of the accounts for the month of March 2015.
GST (where it is applicable) has not been removed from the following amounts.
The DIN of the BAS is 295 5002 3998
Required: You are the accountant
1. From the above information prepare the Business Activity Statement for the month of March 2015. Value 4 Marks
2. Advise management of STU Pty Ltd of what their GST, PAYG withholding, PAYG Instalment and FBT liabilities will be on their BAS. Value 4 Marks
3. Calculate and advise management of STU Pty Ltd it’s liability for Superannuation Guarantee for the quarter.
Question 3 Value 13 Marks
Amelia Jones, aged 28, is a single mother with a 4 yr old daughter – Rebecca – of whom she has sole care. Rebecca had nil assessable income for the 2014 FY.
Amelia has a $14,500 HECS debt incurred from a partially completed Arts Degree at UQ.
Amelia is an eligible beneficiary of the Jonas Family Discretionary Trust. The trustees decided to distribute to her, for the 2014 FY, a cash amount of $28,000.
Of that amount $4000 represented fully franked dividends and $7500 was from a capital gain where the asset had been held for greater than 12 months.
Amelia during the year also received $26,000 from employment at BCF Pty Ltd for the period 1 February 2014 to 30 June 2014. Her Payment Summary shows a PAYG credit of $8000 with no RFBA but it does show a RESC of $6000.
Amelia was in receipt of Parenting Payment from Centrelink for the period 1 July 2013 to 31 January 2014. The Payment Summary shows assessable income of $11,980 with no PAYG Credit.
Amelia also reports interest income of $3750 and receipt of cash dividends of $11,325 from fully franked dividends.
Amelia advises of investment expenses of $900.
Amelia sold a parcel of 500 BHP shares on 30 May 2014 that she had purchased back on 23 January 2007. Her brokerage costs of buying and selling equalled $120 in total.