An SBE with a turnover of less than $10 million, has profit before tax for the i

Question

An SBE with a turnover of less than $10 million, has profit before tax for the income year ending 30 June 2018 of $4,884,000. Included in profit before tax are the following expense items:
•Provision for leave pay, $43,000 •Rent expensed for one month, $3,000 Rent of $36,000 was prepaid on 1 June 2018, for the period 1/6/2018 to 31/5/2019 Please calculate taxable income. The Income Tax Equation Taxable Income Assessable Income Deductions Section 6-5(2) If you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia during the income year Section 8-1 | You can deduct from your assessable income any loss or outgoing to the extent that: It is incurred in gaining or producing your assessable income; or It is necessarily incurred in carrying on a business for the purpose of producing your assessable income. a. b.

Explanation / Answer

Calculation of Taxable Income

Particulars Amount Profit before Tax $4884000 + Provision for leave pay (Expenditure not incurred till date) $43000 Rent Expenses (No adjustment required since service period is for 1 year and ends before 30th june 2019) - Profit before tax $4927000

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