Solution-Calculate ernies average income for each tax year

Calculate ernies average income for each tax year

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Reference no: EM132469944

Ernie Wombat is a primary producer who commenced business in 2012/13. The following data relates to Ernie's first 6 years of trading:

Year	*Assessableincome*	Deductions
2012/13	$ 32,000	$ 15,000
2013/14	35,000	20,000
2014/15	31,000	39,000
2015/16	42,000	21,000
2016/17	45,000	22,000
2017/18	51,000	25,000

All assessable income and deductions are from primary production.
The deductions do not include any amounts that may be deductible for losses of previous years.

Required:

Question a. Calculate Ernie's taxable income for each tax year.

Question b. Calculate Ernie's average income for each tax year.

Year	Taxable Income	Average Income	Notes (if any)
2012/13	$17 000 ,	N/A	Averaging provisions not applicable
2013/14	$15,000	N/A	Provisions not applicable as taxable income of Year 1 >Year 2
2014/15	-$8,000	$7,500	$15,000 + $01 2
2015/16	$21000 ,	$9, 333	$15,000 + $0 + $13,000 /3
2016/17	$23,000	$12,750	$15,000 + $0 + $13,000 + $23,000 /4
2017/18	$26,000	$15,400	$15,000 + $0 + $13,000 + $23,000 + $26,000 / 5

Reference no: EM132469944

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Calculate ernies average income for each tax year

Reference no: EM132469944

Reference no: EM132469944

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