Taxation calculation

Taxation calculation

Project instructions:
During the 2013-2014 income year, X Ltd (a resident manufacturing company) received a dividend of $100,000 franked to the extent of 30% from Y Co. On 1 July 2010 the shares of the company were owned 80% by William and 20% by Richard. There was no change in the shareholding of the company until 1 September 2012 when the shareholding of the company changed to 10% William, 15% Richard and 75% Angela and remained so until 30 June 2014. On 30 May 2013 the company?s acquired an insurance business. The company earned $20,000 from the insurance business in the income year ending 30 June 2014. Assuming that the company?s only other receipt of income is $100,000 dividend referred to above and assuming X Ltd has carry forward losses of $60,000 from the 2011-2012 income year, how much tax will it be required to pay for the 2013-2014 income year?

a)What difference would it make if the company had acquired the insurance business on 30 May 2011?

b)What difference would it make if on 1 September 2012 Angela Pty Ltd had acquired 75% of the shares in X Ltd and the shareholding of Angela Pty Ltd on 1 September 2012 had been Angela 60%, William 20% and Richard 20%?

Which group do you think would sag more – school dropouts or Medical Doctors? Why?

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