Case Study on Capital Gains Tax and Fringe Benefits Tax

It is assumed that Dave Solomon, is an individual, whose main source of income is the salary, paid by his employer. He is not involved any kind of trading business. The assets sold by him in the current tax year can be considered, completely, as his capital assets. Moreover, he has generated any revenue from those assets earlier. The net taxable capital gain or loss, generated from the sale of assets by David Solomon in the current tax year, is presented below (Law.ato.gov.au, 2016):- Calculation of Net Capital Gain/Loss for the period ending on 30th June,20†¦. Less : Purchase Price of the painting Less : 50% Exemption on Capital Gain Less : Purchase Price of the Cruiser Less : Purchase Price of the Shares Less : Stamp Duty on purchase of Shares Less : Capital Loss of Previous Year The net capital gain, earned by David Solomon in the current year, will be added with the other assessable income to ascertain the net taxable assessable income of the taxpayer. The income slab for taxation purpose will be then determined on the basis of that net taxable income. If David Solomon would generate any net capital loss, then that would be carry forwarded into next tax periods. It would be adjusted only if the taxpayer would generate any capital gain in future.   It is assumed that Periwinkle Pty. Ltd. is a normal company and not entitled to any benefit for small business entities.   The FBT consequences of Periwinkle, aroused for the benefits provided to Emma, one of the employee of the company is discussed below:- 1) It is assumed that the employee uses the car not only for office use but for non-work related purpose in frequent and regular basis. Therefore, the car benefit should be accounted for FBT as it is allowed to use for private purposes (Stilwell 2016). During the interstate travel of the employee, the car was parked at airport, not at the employer’s premises and the repairing of the car was annual maintenance type, not an unscheduled repairing. Therefore, the ten days, when the car was not used, also to be included in the FBT calculation (Hodgson and Pearce 2015). The statutory formula method is used for estimating the car fringe benefit. The calculation of car fringe benefit is shown in the following table:- Calculation Of Car Fringe Benefit:- Total Kms. Travelled during the FBT year Statutory Rate as per Annualised Km. No. of Days available for Private Use 2) The interest charged on the loan, given to the employee, should be treated as FBT. The Benchmark Interest Rate for such loan is 5.95% (Ato.gov.au, 2016). The company has charged the loan at an interest rate of 4.45%. As the actual rate is lower than the Benchmark Rate, the FBT should be calculated on the actual rate of interest (Pearce and Pinto 2015). The calculation for FBT on interest on loan is shown below:- Calculation of Interest on Loan for FBT:- 3) The bathtub provided to the employee at a special discounted rate, is a FBT expense. The taxable value of the bathtub is estimated at 75% of the normal selling price and the FBT is calculated accordingly in the following table (Ato.gov.au, 2016):- Calculation of Special Discount for FBT:- The Fringe Benefit Tax for Periwinkle Pty. Ltd. is calculated in the following table according to the above-mentioned assumptions (Ato.gov.au, 2016):- Name of Taxpayer : Periwinkle Pty. Ltd. for the period ending on 31st March,2016 Total of GST Inclusive/Free Benefits If the employer, herself, purchased the shares, instead of her husband and earn dividend from such shares, then the part interest on loan for $50000, will be considered as an deductible expenses of the employee. Therefore, the FBT of the employer will also get reduced accordingly (Eccleston 2013).   Ato.gov.au. (2016).  How to calculate your FBT | Australian Taxation Office.   Ato.gov.au. (2016).  Property fringe benefits | Australian Taxation Office.   Chan, C., 2014. Earnouts and CGT: Fine-tuning the.  Tax Specialist,  18(1), p.27 Conesa, J.C. and Domà ­nguez, B., 2013. Intangible investment and Ramsey capital taxation.  Journal of Monetary Economics,  60(8), pp.983-995 Eccleston, R., 2013. The Tax Reform Agenda in Australia.  Australian Journal of Public Administration,  72(2), pp.103-113 Faccio, M. and Xu, J., 2015. Taxes and capital structure.  Journal of Financial and Quantitative Analysis,  50(03), pp.277-300 Harding, M., 2013. Taxation of dividend, interest, and capital gain income Hodgson, H. and Pearce, P., 2015. TravelSmart or travel tax breaks: is the fringe benefits tax a barrier to active commuting in Australia? 1.  eJournal of Tax Research,  13(3), p.819 Jacob, M. and Jacob, M., 2013. Taxation, dividends, and share repurchases: Taking evidence global.  Journal of Financial and Quantitative Analysis,48(04), pp.1241-1269 Law.ato.gov.au. (2016).  TR 1999/19 - Income tax capital gains: treatment of forfeited deposits (As at 11 October 2000).

Financial Accounting Midterm Project Essay Example | Topics and Well Written Essays - 2000 words

Financial Accounting Midterm Project - Essay Example Meanwhile, managerial accounting reports are designed to serve specific needs of the management. They make use of both historical data and estimated data. While financial accounting reports have to be prepared according to the Generally Accepted Accounting Principles (GAAP), the same does not hold true with managerial accounting reports. (Warren, Reeve, etc., 1987, pp. 2-4) A job opening in the field of financial accounting at the Monster website states that "the Accounting Manager is responsible and accountable for the entire Company's Accounting Department." As such, he/she will manage and provide direction to the accounting department personnel as well as direct and lead all accounting functions to ensure that all accounting, financial and tax information are properly disseminated and reported. The job requirements include a bachelor's degree in Accounting, experience in cost accounting and the preparation of cash flow statements and skills in preparing tax returns and audit revie ws. (Monster 2010) Meanwhile, a job opening in the field of managerial accounting requires a Revenue Accounting Manager who will have the following main duty: "continuously work to understand the various revenue streams to ensure the highest levels of revenue recognition." (Monster 2010) Similarly, the job requirements include a bachelor's degree in Accounting. In contrast to the job opening for a financial accountant, however, this one requires "strong project management and planning skills" and an "analytical mind which is able to process information logically delivering value added analysis." These stuffs are definitely necessary in the domain of managerial accounting. 2. According to history, accounting was first established by Luca Pacioli - an Italian Renaissance mathematician, a close friend and tutor to Leonardo da Vince and a contemporary of Christopher Columbus. Pacioli described in his work entitled "Summa de Arithmetica, Geometria, Proportione et Proportionalite" a syste m that served to make sure that financial information were efficiently kept in accurate records. This basic system eventually became established as the way to note down all transactions of businesses. (Weygandt, Kieso, etc. 2009, pp. 5-6) 3. The following are the liquidity ratios of Microsoft Corporation (MSFT) and Apple Inc. (AAPL) for the year 2010: MSFT AAPL Current Ratio 2.5 1.8 Acid Test Ratio 2.2 1.6 These ratios show that both MSFT and AAPL have sufficient liquid resources to pay up their short-term liabilities. Of the two, MSFT is the company with the higher level of liquidity. The current ratios indicate that their current assets can well be utilized to fully settle their current liabilities. Meanwhile, the acid test ratios indicate that the two companies would be able to fully settle all their short-term liabilities by using only the most liquid of their assets - namely: cash, marketable securities and accounts receivable. 4. The following are the activity measures of Micr osoft Corporation (MSFT) and Apple Inc. (AAPL) for the year 2010: Asset Management Ratios MSFT AAPL Inventory Turnover (# of times) 19.2 63.9 Accounts Receivable Turnover 5.5 16.7 Fixed Assets Turnover 8.8 17.0 Total Assets Turnover 0.8 1.1 The above

Should the U.S. Government Levy Additional Fines or Taxes on Companies Essay

Should the U.S. Government Levy Additional Fines or Taxes on Companies That Ship Jobs Overseas - Essay Example The paper tells that according to the McKinsey Global Institute the threat posed by shipping jobs abroad has been grossly exaggerated. To start with, they argue that the number of jobs lost per year to offshoring is far fewer than the normal rate of job turnover in the economy. Secondly, savings from offshoring enables companies to invest in future technologies that create more jobs at home and abroad. Thirdly, global competition improves the skills of American companies making them more competitive. Companies that offshore have the opportunity to take advantage of distinctive skills that are available overseas. Fourthly, the U.S. runs a trade surplus in services. This means that America needs other countries to buy its surplus services. If America refuses to similarly offer overseas countries a platform for trade – by refusing to procure their services – these countries may opt to retaliate and thus leave the U.S. with no one to trade in its excess capacity. On the con trary, in â€Å"It's a Flat World After All† argues that the convergence of information and communication technologies (ICTs) have leveled the playing field and if not addressed as a critical issue by the U.S. policies, it could signal the end of American wealth and global dominance. He further argues that whereas in the past American companies offshored primarily to minimize production costs, nowadays they do so because they are unable to find the talent they need locally. Nobel Laureate Paul Samuelson agrees with Friedman when he states that free trade could leave rich countries worse off by eroding them off their comparative advantages. Moreover, who says that China, India, Russia and the other emerging economies are content with providing low-end, low-wage jobs for eternity.