Question

Anna is a jeweller and operates her own business selling jewellery on the Gold Coast. She opened her shop to customers on 1 July 2017. Anna employs two shop assistants. The following information relates to the period from 1 July 2017 to 30 June 2018:  Anna borrowed $200,000 from her bank on 1 July 2017 to purchase equipment and stock. The bank charged interest totalling $6,000 during the income year. Anna on-lent $20,000 of the loan to her daughter at 0% interest.  Anna leased a small shop from 1 July 2017 and pays $2,000 per month in rent.  Legal fees of $4,400 paid on 20 July 2017 for advice relating to establishing the business.  Lockable glass display cabinets were purchased for $28,000 and installed on 1 July 2017.  A laptop costing $2,200 was purchased on 15 July 2017 to keep accounting and tax records for the business. Anna took this laptop home regularly and estimated 10% of the time it was used for checking her personal social media and email accounts.  An opening party was held in the shop for a few local celebrities, where Anna provided champagne and canapes to her guests. This cost $2,500 on 10 July 2017. LAW3130 Assignment Semester 2, 2018 Page | 4  Jewellery was purchased from various suppliers throughout the year at a cost of $480,000.  A security firm was paid $24,000 on 20 July 2017 to provide overnight surveillance of the shop. The contract was paid for the period 20 July 2017 to 19 July 2019.  To keep up to date with trends in designer jewellery, Anna attended New York fashion week. She flew business class at a cost of $5,600, if she had flown economy the cost would have been only $1,800. She also paid $2,000 for accommodation and food. She stayed in New York an extra 2 days to catch up with friends costing $600.  Salary and wages paid to the two employees totalled $65,000. Anna paid herself $80,000 from the business bank account.  Anna accrued $6,000 in her accounts for unused annual leave for her employees at 30 June 2018. Required: Provide advice to Anna on the income tax consequences of the above transactions for the year ended 30 June 2018. Include calculations where required. Assume that Anna qualifies as a small business entity, but refer to the normal deductibility rules in the first instance and then cite any special rules that might apply. Support your discussion with reference to legislation, case law and taxation rulings.

Answer 1

• Anna acquired 200000 from count on which she paid $6000 as intrigue. intrigue sum deductible from pay charge.
• On rent lease reason $240000 is deductible from net pay.
• Lawful expenses of $4400 is additionally deductible
• Devaluation on lockable glass show bureau deductible.
• 90% of workstation cost is deductible as the rest 10% his own utilization and individual utilization isn't deductible.
• Opening gathering cost of $2500 isn't deductible as it is close to home nature cost.
• Gems of $480000 is deductible.
• Security observation cost of $12000 is deductible aggregate $24000 is deductible from salary impose that is $1800.
• As she stayed 2 more days at newyork to make up for lost time with companions, that cost won't deductible from pay charge as its is close to home cost just $1400 is deductible
• Pay paid to representatives is deductible however paying to herself isn't deductible as she proprietor of the shop and the proprietor cannot pay compensation to herself.
• Unused yearly leaves will be given to workers that why its deductible.