Maria Cavella Business Case Study - Business Assignment Help

Assignment Task:

Assessment Questions:

Question 1.

Maria Cavella operated a small business in West End Brisbane for 7 years as a sole trader. On May 2018, she decided to sell the business for $500,000 and made a capital gain of $200,000. Maria Cavella had prior year capital losses of $130,000 in total.

Assuming that all the conditions of ITAA97 Sub 152-A are met, and Maria chooses the CGT "discount method" for determining capital gains:

1. Calculate her net capital gain for the 2017/2018 tax year.

Question 2.

Paul & his wife Mary purchase an industrial property as joint tenants (share equal ownership of the property) with a view to give Mary some needed financial independence. They entered into a Partnership Agreement that stated the net income of the property was to be apportioned 80% to Mary & 20% to Paul, but any losses were to be apportioned 80% to Paul & 20% to Mary.

Advise Paul & Mary about the legal and income tax implications of this arrangement.

Question 3.

Petty Pty Ltd has two directors - Al & Jenny. They each receive a salary and superannuation contributions are made on their behalf totaling $90,000. The company has been operating for many years and has Retained Earnings totaling $200,000 showing on the Balance Sheet. The previous year’s tax rates for the company was 27.5%.

Included in the Income & expenses are the following :

• Tax free grant totalling $50,000.

• Interest income from a Directors Loan $1500

• Dividends received $1200

• Fines paid $1100

• Reduction in asset revaluation - write off $18000

• Bad Debts $2000

This year (2017-2018) the Net Financial  Profit for the company was $250,000 and tax was paid on 30 August 2018. The tax rate remains at 27.5%. Note that Franking Credits totaling $455 were received with the stated dividends above.

• What is the net taxable income for 2017/2018?
• What is the tax payable for the 2017/18 year?
• What is the opening balance for the company’s Franking Account as at 01 July 2017? 
• What is the closing balance of the Franking Account as of 30 June 2019?
• What is the maximum amount of franked dividends payable on the stated balance available to the shareholders?

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