Reference no: EM132718808
Assignment - GST & BAS
Topic Content: Payroll, GST, & FBT (Topics 1 to 4) and assumes you have completed all tasks for these topics.
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.
CASE STUDY INFORMATION
Helga Hemp 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.
Receipts for the June quarter (inclusive of GST where appropriate):
|
Sales of bags
|
$58,750
|
|
Donations
|
$35,750
|
|
Grants
|
$32,890
|
|
Trade-in of industrial sewing machine previously used in the business
|
$3,000
|
|
Bags donated to local growers' co-op (market value $540)
|
$0
|
Expenses for the June quarter (inclusive of GST where appropriate):
|
Fabric and thread purchases
|
$13,200
|
|
Fabric donated (market value $8000)
|
$0
|
|
Subcontractors (not registered for GST)
|
$4,400
|
|
Rent
|
$7,200
|
|
Dinner at local restaurant*
|
$330
|
|
Accommodation for staff at conferences (Hotel)
|
$1,870
|
|
Airfares for staff to attend conferences**
|
$4,850
|
|
Bookkeeping services
|
$1,430
|
|
First Aid courses for staff members
|
$660
|
|
New sewing machine
|
$8,799
|
|
Business Loan (Principal $690 and interest $80)
|
$500
|
*Dinner at the local restaurant was for Helga, 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 Helga was speaking. Helga was ill the week before the conference and could not attend. Consequently, $1,650 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 $6600 and the freight was $145 (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.
Penny, Quentin, Rose, and Steve are all permanent employees. Their weekly pay is based on an annual salary: and paid salaries. Annual salaries are:
• Penny: $39,000
• Quentin: $24,440
• Rose: $62,400
• Steve: $18,720
Sharyn and Terry 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
|
Sharyn
$24/hour
|
Terry
$16/hour
|
|
Week 1 - April
|
10
|
8
|
|
Week 2 - April
|
10
|
7
|
|
Week 3 - April
|
15
|
10
|
|
Week 4 - April
|
15
|
12
|
|
Week 5 - May
|
0
|
10
|
|
Week 6 - May
|
0
|
10
|
|
Week 7 - May
|
0
|
15
|
|
Week 8 - May
|
5
|
12
|
|
Week 9 - May
|
10
|
10
|
|
Week 10 - June
|
10
|
12
|
|
Week 11 - June
|
8
|
15
|
|
Week 12 - June
|
10
|
8
|
|
Week 13 - June
|
0
|
8
|
Business Activity Statement:
The ATO has advised that Helga Hemp, as an individual taxpayer, has a quarterly income tax instalment of $6,600. This amount is payable by her personally in the June quarter. She has chosen to pay the fixed amount each quarter.
In the last FBT year fringe benefits were provided to the office manager. There is an FBT instalment showing on the BAS of $1,800. No Fringe Benefits have been provided in the current FBT year.
There are no liabilities for WET or LCT, and no FTC.
SUGGESTED TIMETABLE FOR CASE STUDY INVESTIGATION:
a) WEEK 2: Prepare the schedule of payroll information for wages paid, including PAYG withholding deductions, and net wages for each employee by week.
b) WEEK 2: Calculate the employer's statutory Superannuation Guarantee obligations for each employee for the quarter.
c) WEEKS 3 and 4: 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.
d) WEEKS 3 and 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.
e) WEEK 5: Be prepared to complete a fully labelled Business Activity Statement for the quarter ended 30 June 2020.
Attachment:- GST and BAS.rar