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In: Accounting

Taxation Law Joseph conducts a plumbing business. With a view to future retirement he purchases 20ha...

Taxation Law

Joseph conducts a plumbing business. With a view to future retirement he purchases 20ha of land and plants native wildflowers that he plans to harvest and sell. As a preliminary measure he arranges to clear the land and plough in compost. It is expected that the first commercial crop will not be harvested for five years. He incurs interest on a loan to finance the land purchase, land preparation costs, fertilizer costs and costs of acquiring native seedlings.

Advise Joseph of the tax consequences of the venture.
You must cite the relevant case law and legislation

Solutions

Expert Solution

although you need to have license for growing flowers. you do need a range of approvals and licenses for some parts of the operation.

growers of native flora require a commercial producer's license or a nurseryman's license to sell product. these are available from the department of parks and wildlife(dpw)

A final note for plumbing-business owners: In case it needs to be said, taxes are serious business, and not something to be approached haphazardly. The penalties and fees for improper tax returns are steep, and potentially ruinous for your business.

For many plumbing companies, it is a worthwhile investment to hire an outside accountant — a seasoned professional who can remove the guesswork, ensure that everything is above-board, and ultimately get you the best savings.

It may even be prudent to find your tax professional now, because when it comes to small-business taxes, you can never plan too far in advance.


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