Your client is a sole trader consulting business operated by the owner with five part-time employees, three being employed in the past year due to growth of the business and your client is seeking to employ a further two full time employees to satisfy contracts for which deposits have been received, in place for the next financial year. From the time the business was established, 1 July 2015, it has been accounting for tax purposes on a cash basis. For the current financial year your client is considering if they should account on an accruals basis as the size of the business is increasing. In considering the options the client notes that as at 30 June it has $40,000, which was paid to it from consulting work that was undertaken in the previous financial year. a.Calculate Jamee’s assessable income for the current year ended 30 June 2020. b.Should this amount be included in its assessable income for this year or last year if they decide to go ahead and report on an accruals basis? c.Would your answer be different if your client had deliberately told the customer not to pay its account for $40,000 until after 30 June?
Answer all subparts a,b,c.if answered within 45mins,it would be helpful.
Your client is a sole trader consulting business operated by the owner with five part-time employees, three being employed in the past year due to growth of the business and your client is seeking to employ a further two full time employees to satisfy contracts for which deposits have been received, in place for the next financial year. From the time the business was established, 1 July 2015, it has been accounting for tax purposes on a cash basis. For the current financial year your client is considering if they should account on an accruals basis as the size of the business is increasing. In considering the options the client notes that as at 30 June it has $40,000, which was paid to it from consulting work that was undertaken in the previous financial year.
a.Calculate Jamee’s assessable income for the current year ended 30 June 2020.
b.Should this amount be included in its assessable income for this year or last year if they decide to go ahead and report on an accruals basis?
c.Would your answer be different if your client had deliberately told the customer not to pay its account for $40,000 until after 30 June?
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