Australian Taxation Law

Australian Taxation Law

The length for this assignment is 600 words.

Tom Ltd is incorporated in Australia. It is a retailer who sells clothes to the public. The following transactions occurred in the year ended 30 June 2013.

1. The company purchased $180,000 stock during the income year. The opening balance of its stock was $120,000 and the closing balance was $160,000.

2. The company paid $10,000 bonus to its Chief Executive Officer.

3. The company also sells goods to customers on credit. During the year, a number of customers owing a total of $15,000 defaulted on their accounts.

4. A competitor has recently applied to the council for permission to operate as a clothes retailer in the commercial building next to Tom Ltd. Tom Ltd incurred $30,000 in legal fees opposing the application. The action was successful.

5. During this year, Tom Ltd received $35,000 fully franked dividend; and paid $15,000 income tax. It also declared and paid $280,000 fully franked dividend to its shareholder (you can assume the open balance of franking credit account is zero).

Advise Tom Ltd of the Australian income tax implications of the above transactions. Provide relevant case law, ATO rulings and section references to support your answer.

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