Subject Code : BFA714AustralianTaxLaw
Country : Australia
BFA714 Australian Tax Law Omega Pty Ltd Case Study Assignment Help
Assignment Task:

Assignment 2
Assignment 2 is to be completed in groups of up to five students. There is no answer template and you are not required to submit this document with your answer. Ensure
that your assignment submission includes the names and student numbers of all students in your assignment group as well as your campus and the assignment
group number from MyLO.

Case study
Omega Pty Ltd (‘Omega’) accounts for income and expenditure on an accruals basis. A review of the financial records for the financial year ending 30 June 2019
reveals the following details.

 

 

 

 

BFA714 Australian Tax Law Omega Pty Ltd Case Study Assignment Help

1. Aggregated annual turnover
Omega’s aggregated annual turnover for 2017/2018 was $9 million. The company is not sure whether it qualifies as a small business entity, but if it does, it wishes to use
all of the concessions available.

2. Interest
Omega placed $1,000,000 on a twelve-month term deposit with the BNZ Bank on 1 November 2017. On maturity, the bank was instructed to transfer the interest amount
of $50,000 to Omega’s trading account and reinvest the principal of $1,000,000 for a further twelve-month term deposit. The interest accrued between 1 November 2018
and 30 June 2019 amounted to $33,000. This was the only interest earned by the company for the 2018/19 income year.

3. Rent
Omega Pty Ltd owns a small office building in Moonah, which is let to a waste management operator. The rent for this building is $5,000 per month, payable one
month in advance. On 30 June 2019, the tenant paid Omega an extra 2 months’ rent in advance. This amount of $10,000 may have to be refunded in the event that the
tenant is precluded from using the premises for its intended purpose.

4. Royalties
Omega Pty Ltd received a royalty of $100,000 from its New Zealand subsidiary on 20 June 2019. New Zealand Non-Resident Withholding Tax (NRWT) of 15% was
deducted from this payment, leaving a net receipt of $85,000.

On 15 March 2019, trading stock in transit was stolen. A claim for insurance was finalised on 30 June 2019 and Omega expects to receive $30,000 in respect of its
insurance claim within three weeks. This amount has been taken up as a sundry debtor in the Statement of Financial Position.

6. Dividends
Omega Pty Ltd owns shares in Rio Tinto, a publicly listed company. On 15 June 2019, Rio Tinto declared a fully franked dividend, of which Omega’s share amounted
to $45,000. This dividend was paid on 25 June 2019.

7. Trade debtors
Trade Debtors of $250,000 includes a provision for doubtful debts of $20,000. Last year this provision was $10,000.

8. Repairs
Repairs and maintenance expenses include the items below.

BFA714 Australian Tax Law Omega Pty Ltd Case Study Assignment Help

Notes:
1. Omega Pty Ltd occupied a building that had been constructed in the early 1980s. Since its acquisition by Omega in 1996, no significant repairs had been
undertaken. The mezzanine floor was damaged, and it was recommended that it be demolished and replaced.

2. Upon inspection of the office premises, which Omega owns, it was discovered that an external protective wall was found to be partially collapsing. This required
85% of the wall to be demolished and rebuilt on its original foundations. The works included the building of two additional internal buttress walls to offer ongoing structural integrity, and the use of larger blocks of better quality sandstone. The original wall was not extended in height or length.

3. The concrete floor in one of Omega’ warehouses was cracking due to the use of inferior steel reinforcing when the floor was first constructed. The entire floor was
demolished and replaced with the same thickness of concrete, but with better quality reinforcing. Omega estimates that had it used the same reinforcing that
was used originally, the repair would have cost only $50,000.

9. Prepayments
Omega prepaid the following amounts on 20 June 2019:

• Insurance $50,000 – this amount was insurance for its office building in Moonah and it was for 12 months cover

• Rent $30,000 – this amount was for the building it rents for its manufacturing
operation, which is paid 12 months in advance under its rental agreement.

10.Trading stock
Opening stock for 2018/2019 was $135,000; closing stock was $138,000.

11.Capital works
The building referred to in Note1 (above) had been acquired by Omega for $3,200,000. A quantity surveyor’s report estimated that the original construction cost had been $1,200,000. The construction had begun on 30 August 1982.

12.Depreciation
Accounting depreciation is as follows:

BFA714 Australian Tax Law Omega Pty Ltd Case Study Assignment Help

1. On 1 March 2019, one of the company’s motor vehicles was sold for $12,000. This vehicle had been depreciated at the commissioner’s rates. A Loss of $3,293 on sale has been included in the Statement of Financial Performance.

2. On 1 March 2019, a new vehicle (BMW) costing $60,000 was purchased for the managing director. The company estimates that the new car has an
effective life of 5 years.

13.Low-value pool
Omega’s low-value pool opening balance for 2018/2019 was $46,000.

 

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  • Posted on : October 05th, 2018
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