ASSIGNMENT DIRECTIONS:
Tanya Tassle owns Born Again Bags, a not for profit business that is registered for GST. Born Again Bags supports the diversion of post-consumer material (waste) into reusable bags to replace plastic bags. Fabric is gathered or donated and made into cloth bags which are sold to customers via an online shop.
| Born Again Bags also receives income from donations and grants. |
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| Receipts for the June quarter (inclusive of GST where appropriate): |
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| Sales of bags |
$39,950 |
| Donations |
$23,450 |
| Grants |
$19,800 |
| Trade-in of industrial sewing machine previously used in the business |
$1,000 |
| Bags donated to local growers' co-op (market value $210) |
$0 |
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| Expenses for the June quarter (inclusive of GST where appropriate): |
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| Fabric and thread purchases |
$9,900 |
| Fabric donated (market value $3000) |
$0 |
| Subcontractors (not registered for GST) |
$6,600 |
| Rent |
$6,000 |
| Lunch at local restaurant* |
$230 |
| Accommodation for staff at conferences (Hotel) |
$1,870 |
| Airfares for staff to attend conferences** |
$3,850 |
| Bookkeeping services |
$1,210 |
| First Aid courses for staff members |
$550 |
| New sewing machine |
$4,339 |
| Business Loan (Principal $450 and interest $50) |
$500 |
*Lunch at the local restaurant was for Tanya, the owner of Born Again Bags, and a commercial garment manufacturer who donates waste fabric to the business. For income tax purposes this amount would be classified as entertainment and a deduction would be denied under s32-5 ITAA97.
**During the period Born Again Bags paid for air fares for staff to attend a conference in Sydney where Tanya was speaking. Tanya was ill the week before the conference and could not attend. Consequently, the staff did not attend either and $1,100 of the airfares mentioned above were not used. The airline did not refund this amount.
Born Again Bags also imported labels from Canada. The cost of the labels was $550 and the freight was $35 (Australian Dollars). The supplier in Canada did not charge GST on these goods.
Salaries & Wages: Born Again Bags has 6 employees: 2 office staff and 4 machinists. They are paid weekly. All employees are entitled to the tax-free threshold.
Jenny, Kate, Lisa, and Martin are all permanent employees. Their weekly pay is based on an annual salary: and paid salaries. Annual salaries are:
- Jenny: $39,000
- Kate: $23,920
- Lisa: $52,000
- Martin: $18,720
Naomi and Oscar 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 |
Naomi $24/hour |
Oscar $16/hour |
| Week 1 - April |
8 |
10 |
| Week 2 - April |
7 |
10 |
| Week 3 - April |
10 |
15 |
| Week 4 - April |
12 |
15 |
| Week 5 - May |
10 |
0 |
| Week 6 - May |
10 |
0 |
| Week 7 - May |
15 |
0 |
| Week 8 - May |
12 |
10 |
| Week 9 - May |
10 |
10 |
| Week 10 - June |
12 |
10 |
| Week 11 - June |
8 |
15 |
| Week 12 - June |
8 |
10 |
| Week 13 - June |
8 |
0 |
Business Activity Statement:
The ATO has advised that Tanya Tassle, as an individual taxpayer, has a quarterly income tax instalment of $3,200. This amount is payable by her personally in the June Quarter.
In the last FBT year Fringe Benefits were provided to the office manager. There is an FBT instalment showing on the BAS of $2,400. No Fringe Benefits have been provided in the current FBT year.
There are no liabilities for WET or LCT, and no fuel credits.
Assignment Requirements (with SUGGESTED TIMETABLE FOR COMPLETION):
Question 1: Prepare the schedule of payroll information for wages paid, including PAYG withholding deductions, and net wages for each employee by week.
Question 2: Calculate the employer's statutory Superannuation Guarantee obligations for each employee for the quarter.
Question 3: Provide a short definition and discussion of GST taxable supplies. 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.
Question 4: Provide a short definition and discussion of creditable acquisitions and discuss what conditions need to be met before Born Again Bags can claim input tax credits in relation to the expenses listed? Explain whether each of the acquisitions is a creditable acquisition.
Question 5: Prepare a fully labelled Business Activity Statement for the quarter ended 30 June 2019.
Show all calculations and formulas, and support all answers with references to legislation, case law and/or rulings.
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Attachment:- Business Activity Statement.rar