Question

For the current income tax year ending 30 June.

ig Wheel Pty Ltd has an aggregated annual turnover of $1.7 million. It sold $33,000 of car parts for cash in the tax period, or $44,000 including debtors. It purchased trading stock (car parts) for $9,900 cash in this period, or $11,000 including creditors. It also paid cash of $4,400 for other creditable acquisitions in the period ($5,500 on accruals). There is $300 decreasing adjustment. At the end of the tax period it sends off a cheque to the ATO for:

Select one:

a. None of the options are correct

b. $1,400

c. $1,700

d. $2,200

Answer 1

Calculation of Total income
Particulars	Amount($)	Particulars	Amount($)
Purchases	11,000	Sales	44,000
Other purchases	5,500
Net profit (balancing figure)	27,500
Total	44,000	Total	44,000
Calculation of Taxable income
Particulars	Amount($)
Total income	27,500
Decreasing adjustments for tax purpose	300
Taxable income	27,200
From the year 2018–19 , a company is eligible for lower tax rate of 27.5%, if it satisfies the condition of having a turnover lower than the turnover threshold of $50 million.
In the above question, we assume the following: a)The income tax period ending of June 30 is for the Income year 2018-19. b)The assesse is maintaining its books on basis of accrual concept.
Hence, the tax would be applicable at a lower rate of 27.5% as the annual turnover of the company "Wheely Ply Ltd" is $1.7 million, which is less than the threshold limit of $50 million.
Hence, the cheque payable to ATO will be :
=$27,200 X 27.5%
=$7480
Hence, the correct answer would be (a) None of the above