ASSIGNMENT 1 - SESSION 1 2019

Assessment Title: Assignment 1

Weighting: 15% of total marks for semester (75 Marks reduced to a grade out of 15)

Topic Content: Payroll, GST, & FBT (Topics 1 to 4)

Due Date: End of Week 5

Submission: ONE (1) EXCEL FILE only to be submitted via the link on MySCU.

File Name: SURNAME Tax Assignment 1.DOC/X or SURNAME Tax Assignment 1.xls/xlsx

DO NOT SUBMIT PDF FILES

Remember: The purpose of an assignment is for you to demonstrate your

knowledge and understanding of the topics. Make sure your answers are
comprehensive enough to achieve this.

NOTE: THIS IS AN INDIVIDUAL ASSIGNMENT

YOU SHOULD WRITE ALL WORK SUBMITTED YOURSELF AND IT SHOULD BE
BASED ON YOUR OWN RESEARCH. EVIDENCE OF COPYING FROM OTHER
STUDENTS WILL BE TAKEN SERIOUSLY AND REPORTED.

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ASSIGNMENT INSTRUCTIONS

Brian Pert owns Bronny Park, a horse-racing stable that is registered for GST. The customers
purchase horses and send them to Bronny Park for training. The horse owners (customers)
pay separate fees for training and agistment plus 50% of any prize money earned by the
horses trained at the stable. Bronny Park also owns horses. During the December 2018
quarter they reported the following transactions:

Receipts (inclusive of GST where appropriate):

Training fees $82,698
Share of prize money from customers’ $44,000
horses
Prize money from Bronny Park horses $16,500
Trophy from Brisbane Cup won by a $1,200
Bronny Park owned horse
Trade-in of tractor previously used on the $18,000
property
Hay and saddle blankets donated to local $0
pony club (market value $100)

Expenses (inclusive of GST where appropriate):

Horse feed $8,800
Veterinary fees $6,600
Farrier (not registered for GST) $5,500
Accommodation for staff at race meetings (Hotel) $2,475
Lunch at local restaurant* $650
Airfares for staff to attend race meetings** $6,446
Bookkeeping services $2,640
First Aid courses for staff members $880
New tractor $43,990
Business loan repayment (interest $750, principle $275) $1,025

*Lunch at the local restaurant was for Brian, the owner of Bronny Park, and three customers
whose horses are being trained at the stable. For income tax purposes this amount would
be classified as entertainment and a deduction would be denied under s32-5 ITAA97.

**During the period Bronny Park paid for air fares for staff to attend a race meeting in
Sydney where one of their prize horses was running. The horse incurred an injury a week
before the race and did not run. Consequently, the staff did not attend that race meeting
and $1,100 of the airfares mentioned above were not used. The airline did not refund this
amount.

Bronny Park also imported saddles and other leather goods from Europe. The cost of the
goods was $4,500 and the freight was $250 (Australian Dollars). The supplier in Europe did
not charge GST on these goods.

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Salaries & Wages:
Bronny Park employs 6 strappers. They are paid weekly. All employees are entitled to the
tax-free threshold.

Sarah, Lauren, Michael, & Paul are all permanent employees. Their weekly pay is based on
an annual salary: and paid salaries. Annual salaries are:

 Sarah: $52,000
 Lauren: $18,720
 Michael: $62,400
 Paul: $28,600

Kris and Sam are casual employees and their weekly wage is based on the hours they work.
Their work hours are set out in the table below.

Employee/Week Kris $15/hour Sam $22/hour

Week 1 – October 0 10
Week 2 – October 7 10
Week 3 – October 10 15
Week 4 - October 12 15
Week 5 – November 8 10
Week 6 – November 0 10
Week 7 – November 5 15
Week 8 – November 12 15
Week 9 – November 10 10
Week 10 – December 12 10
Week 11 – December 8 15
Week 12 – December 8 10
Week 13 - December 8 0

Business Activity Statement:

The ATO has advised that Brian Pert, as the business owner, has a quarterly income tax
instalment of $16,790. This amount is payable along with other liabilities on his December
Quarter BAS.
In the last FBT year Fringe Benefits were provided to the head strapper. There is a FBT
instalment showing on the BAS of $2,500. No Fringe Benefits have been provided in the
current FBT year.
There are no liabilities for WET or LCT, and no fuel credits.

REQUIRED:

a) Prepare the schedule of payroll information for wages paid, including PAYG
withholding deductions, and net wages for each employee by week. (12 Marks)
b) Calculate the employer’s statutory Superannuation Guarantee obligations for each
employee for the quarter. (10 Marks)

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 c) Explain and classify each transaction item listed, including wages and
superannuation, by the type of GST supply, and calculate any GST included in the
price. (22 Marks)
d) Discuss what conditions need to be met before Bronny Park can claim input tax
credits in relation to the expenses listed? Explain whether each of the acquisitions
is a creditable acquisition. (16 Marks)
e) Prepare a fully labelled Business Activity Statement for the quarter ended 31
December 2018. (7 Marks)

Further information about the preparation of the Business Activity Statement will be
discussed in tutorials.

Show all calculations and support all answers with references to legislation, case law
and/or rulings. Up to eight (8) marks awarded for quality of explanations & referencing.

END OF ASSIGNMENT INSTRUCTIONS