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Tutorial Q7 Inovest Limited is incorporated in Hong Kong and controlled by its directors from New Zealand. Inovest Limited is a 100 per cent owned subsidiary of a UK company. Jensen Limted is a New Zealand incorporated company that is controlled by its directors from New Zealand and has its centre of management in New Zealand. Jensen Limited is also a 100 per cent subsidiary of the UK company that also owns 100% of Invest Limited. During the income year ending 31 March 2012, Inovest Limited incurs a loss of $1 million and Jesen Limited earns assessable income of $2 million. Can the $1 million loss of Inovest Limited be grouped with the $2 million assessable income of Jesen Limited? Explain. No, both companies can’t be grouped together due to the following reasons:  Both companies have different company names  One company is based in Hong Kong therefore the currency will be in Hong Kong currency while the other company based in New Zealand with New Zealand currency  Inovest Limited has a loss therefore they are liable to cover their own loss therefore the $2m of Jensen Limited doesn’t have to cover the other company’s loss

Tutorial Q8 Part (a) Calculate the net GST payable or receivable by each of the following: i. Manufacturer pays for supplies $140,000 (GST exclusive) plus GST Manufacturer sells goods for $200,000 (GST exclusive) plus GST to wholesaler $140 000*15% $200 000*15% GST to pay IRD ii.

Wholesaler purchases goods from manufacturer for $200,000 (GST exclusive) plus GST. Wholesaler sells the goods to retailer for $260,000 (GST exclusive) plus GST.

$200 000*15% $260 000*15% GST to pay IRD iii.

$21 000 GST receivable $30 000 GST payable $30 000-$21 000= $9 000

$30 000 GST receivable $39 000 GST payable $39 000 -$30 000 = $9 000

Retailer purchases goods from wholesaler for $260,000 (GST exclusive) plus GST. Retailer sells goods to customer for $320,000 (GST exclusive) plus GST. $260 000*15% $320 000*15% GST to pay IRD

$39 000 GST receivable $48 000 GST payable $48 000 -$39 000 = $9 000

Part (b) A summary of transactions undertaken by Wellworth Stores during the month of January 2018 follows: Date Transactions 2/1 Credit purchases form Allan Enterprise $72,000 (GST inclusive) 3/1 Credit sales to Jacky $36,000 (GST inclusive) 5/1 Cash sales $8,100 (GST inclusive) 7/1 Received from debtors for credit sale made in December 2017 $18,000 (GST inclusive) 11/1 Paid Allan Enterprise for credit purchases made on 2/1/2018 (GST inclusive) 14/1 Cash purchases $45,000 (GST inclusive) 16/1 Paid wages $27,000 20/1 Paid for advertisement $19,800 (GST inclusive) 21/1 Cash sales $63,000 (GST inclusive) 22/1 Paid insurance premium $4,050 (GST inclusive) 23/1 Cash sales received by EFTPOS card $90 (GST inclusive) 25/1 Purchased of office equipment by cash $2,070(GST inclusive) 26/1 Credit purchase $34,500 (GST inclusive) 28/1 Office rent for next 6 months paid in advance $37,800 29/1 Cash drawings by owner $4,590 30/1 Bank charges for the month of January $1,530 31/1 Cash sales $27,000 (GST inclusive) Required: Determine GST receivable or payable to the Inland Revenue Department if Wellworth Stores used: i.

The payment basis

GST Collected =$8,100*3/23 GST Collected=$18,000*3/23 GST on purchases = $45,000*3/23 GST on purchases =$19,800*3/23 GST Collected =$63,000*3/23 GST purchases =$4,050*3/23 GST collected =$90*3/23 GST on purchased =$2,070*3/23 GST on purchases =$37,800*3/23 GST collected $27,000*3/23 Total GST purchases Total GST collected

$1 056.52 GST input $2 347.83 GST input $5 869.57 GST output $2 582.61 GST output $8 217.39 GST input $528.26 GST output $11.74 GST input $270 GST output $4 930.43 output $3 521.74 GST input $14 180.87 $15 155.22

ii. The invoice basis GST on purchases =$72 000*3/23 GST Collected =$36 000*3/23 GST Collected =$8,100*3/23 GST on purchases = $45 000*3/23 GST on purchases =$19 800*3/23 GST Collected =$63 000*3/23 GST purchases =$4 050*3/23 GST collected =$90*3/23 GST on purchased =$2 070*3/23 GST on purchases =$34 500*3/23 GST on purchases =$37 800*3*23 GST collected $27 000*3/23 Total GST purchases Total GST collected

$9 391.30 GST output $4 695.65 GST input $1 056.52 GST input $5 869.57 GST output $2 582.61 GST output $8 217.39 GST input $528.26 GST output $11.74 GST input $270 GST output $4 500 GST output $4 930.43 output $3 521.74 GST input $28 072.17 $17 503.04

iii.

The hybrid basis – used for both sales (same as invoice basis) and purchases (same as payment basis) GST Collected =$8,100*3/23 $1 056.52 GST input GST Collected=$18,000*3/23 $2 347.83 GST input GST on purchases = $45,000*3/23 $5 869.57 GST output GST on purchases =$19,800*3/23 $2 582.61 GST output GST Collected =$63,000*3/23 $8 217.39 GST input GST purchases =$4,050*3/23 $528.26 GST output GST collected =$90*3/23 $11.74 GST input GST on purchased =$2,070*3/23 $270 GST output GST on purchases =$37,800*3/23 $4 930.43 output GST collected $27,000*3/23 $3 521.74 GST input Total GST purchases $14 180.87 Total GST collected $15 155.22 GST on purchases =$72 000*3/23 GST Collected =$36 000*3/23 GST Collected =$8,100*3/23 GST on purchases = $45 000*3/23 GST on purchases =$19 800*3/23 GST Collected =$63 000*3/23 GST purchases =$4 050*3/23 GST collected =$90*3/23 GST on purchased =$2 070*3/23 GST on purchases =$34 500*3/23 GST on purchases =$37 800*3*23 GST collected $27 000*3/23 Total GST purchases Total GST collected

$9 391.30 GST output $4 695.65 GST input $1 056.52 GST input $5 869.57 GST output $2 582.61 GST output $8 217.39 GST input $528.26 GST output $11.74 GST input $270 GST output $4 500 GST output $4 930.43 output $3 521.74 GST input $28 072.17 $17 503.04

Part (c) Determine when a GST registered business must file GST return along with any payment due for the following categories of 2 Monthly GST Return Periods in 2018: i.

Category A covering periods ending on the last day of January, March, May, July, September and November

Category A 01/12/2017 – 31/01/2018 01/02/2018 – 31/03/2018 01/04/2018 – 31/05/2018 01/06/2018 – 31/07/2018 01/08/2018 – 30/09/2018 01/10/2018 – 30/11/2018

ii.

GST Return and Payment Due Date 28/02/2018 07/05/2018 28/06/2018 28/08/2018 28/10/2018 15/01/2019

Category B covering periods ending on the last day of February, April, June, August, October and December = Category B GST Return and Payment Due Date 01/01/2018 – 28/02/2018 28/03/2018 01/03/2018 – 30/04/2018 28/05/2018 01/05/2018 – 30/06/2018 30/07/2018 01/07/2018 – 31/08/2018 28/09/2018 01/09/2018 – 31/10/2018 28/11/2018 01/11/2018 – 31/12/2018 28/01/2019...