California Proposition Essay

California Proposition Essay.

What is proposition 13?

Property taxes in California have been a controversial issue for very many years. In mid 1978, approximately ⅔ of voters in California passed proposition 13. Before it had been passed, property taxes increased almost annually according to the assessed value of the property. In the 1970s, there was a remarkable growth in the real estate market and the value of homes rapidly went up. Property values were escalating substantially since assessors had to keep assessed values current. On the other hand, increments in the evaluated value were not made annually.

Therefore, this led to a huge tax shock for homeowners after every few years. After Proposition 13 was passed, there are several things that have taken place. The cap of property tax rates was set at 1 percent.

This implies that one is supposed to pay property taxes of only up to one percent of the evaluated value of their home. The evaluated value of homes cannot surpass the evaluate value between 1975 and 1976.

Also, it can increase in excess of two percent annually according to the Consumer Price Index (CPI). If the ownership of a home changes or modification is made, another evaluation is done according to the current market value. The new value should increase annually at a maximum of two percent every year. Various local agencies have been forced to look for alternative sources of funding due to the reduction in property taxes as a gross percentage of the evaluated value of houses. The aim of Proposition 13 was to safeguard taxpayers from unexpected rises in property taxes, to make it a requirement for voters to approve any increases in taxes, and to allow efficient tax relief.

How Does Proposition 13 Affect California’s Economy?

In 1994, Money Magazine published an article that portrayed the way through which Proposition 13 ruined the economy of California. The article claimed that the snowballing effects of Proposition 13 led to the reduction in family incomes, the loss of around 600,000 jobs, and the recession in the 90s (Cashill, 2007). According to the article, the proposition had a huge impact on the poor performance of California’s economy. Reducing family incomes, leading to the loss of 600,000 jobs and the recession, if brought about by the proposition, are elements that would have a significant impact on the economy of any state. Barely a year after Proposition 13 came into effect, revenue form property taxes reduced by 57 percent. In addition, from when the proposition was passed, up to 1994, the total amount of reduction in property taxes was approximated at $200 billion (Reeves, 1994). This was a lot of money that could have otherwise been used to make positive contributions to the state. Since revenues were reducing, it went without saying that spending had to reduce.

This had a significant effect on the development of the state since things such as important public services did not have sufficient funds to operate at their best. This negatively affected sectors such as medical care, education, and public safety. Marginal tax rates significantly affect the impact that taxes have on an economy. New owners of property pay the highest marginal tax rates whereas those who have owned property for decades pay very low taxes, thus negatively affecting California’s economy. How Does Proposition 13 Effect the Real Estate in California? The U.S. Supreme Court made the decision that Proposition 13 was constitutional in 1992. Furthermore, the proposition is included in the constitution of California. In the proposition, the part that caps real estate taxes is the one that has the most significant impact on the real estate in California. According to the proposition, 1% of the total value of a property is the highest rate of taxation that can be charged (Buffett, 2003).

That one percent should be collected by the various counties and shared among the respective districts as per the law. The proposition requires that the assessed value of a property is raised to an upper limit of two percent yearly. However, this may change if the property changes hands. The proposition has created an imbalance in the real estate market in California when compared to other states. For instance, in 2003, Warren Buffet claimed that he paid only 0.056% or $2,264 in property taxes for his $4 million home California, whereas he paid 2.9% or 14,410 for his $0.5 million home in Nebraska (Buffett, 2003). For investors, this means that California is a preferred location since they are likely to pay very low taxes on their property.

Advantages of Proposition 13

As much as Proposition 13 has received criticism, it still has its advantages. The proposition has increased stability in the community and allowed predictability for property owners. Progressive income tax has an impact on higher incomes, whereas property tax affects those in the lower income bracket. Therefore, high property taxes affect those that have highly valued property, but earn low incomes. Reducing property taxes for such people is a great advantage to them.

Furthermore, the proposition has enabled Californian taxpayers to save billions of dollars over the years (Smith, 1998). Those who support the proposition have suggested that the volatility of funding for municipalities has reduced as a result of capping tax increments for previously owned homes. Also, they assert that property tax revenue before the proposition was more volatile. The older generation perceives Proposition 13 as very beneficial to them. This is primarily because it allows them to pay very low taxes for the property they have owned for very many years. For the people who have owned property for many decades, they have been able to save a lot in terms of taxes as compared to other people in different states (Smith, 1998).

Disadvantages of Proposition

Proposition 13 has led to the reduction in funds meant to support public schools. This has not been taken positively by many people in California since it has led to a reduction in the quality of education. Long ago, California was known to have one of the best education systems in the U.S. However, nowadays the level of education has dropped since many students are performing poorly. Funding and control of schools has shifted from the local community to the state and many people have claimed that this has a negative impact on education (Campbell, 1998). Proposition 13 has encouraged older people to continue staying in their homes rather than selling them since they can still afford to continue paying for the taxes. Consequently, their homes are not revalued by assessors, thus additional tax revenue is not produced for the local community. This has a negative impact on younger families since they have less of a chance to occupy homes at an affordable cost (Campbell, 1998).

Conclusion

Proposition 13 was implemented in California in 1978 and has been controversial over the years. The proposition was implemented with the main aim of capping property taxes in California. Many people have blamed the proposition for the poor performance of California’s economy. Also, it has been said that it has created an imbalance in the real estate market in the state. However, it has its advantages and disadvantages. One of the advantages is that is has increased stability in the community and allowed predictability for property owners. On the other hand, one of the disadvantages is that it has led to the reduction in funds meant to support public schools.

References
Buffett, W. E. (2003). Warren Buffett Criticizes Journal Reporting. Wall Street Journal, 3, 15. Campbell, B. C. (1998). Tax revolts and political change. Journal of Policy History, 10 (1), 153–178 Cashill, J. (2007). What’s the Matter With California?: Cultural Rumbles from the Golden State and Why the Rest of Us Should Be Shaking. New York: Simon and Schuster. Reeves, R. (1994). THE TAX REVOLT THAT WRECKED CALIFORNIA Schools, services and criminal justice are failing for lack of funds. It is a warning for America. Money. Retrieved August 28, 2012 from http://money.cnn.com/magazines/moneymag/moneymag_archive/1994/01/01/88570/index.htm> Smith, D. A. (1998). Tax Crusaders and the Politics of Direct Democracy. New York: Routledge.

California Proposition Essay

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What Is GST? Essay

What Is GST? Essay.

* GST is a comprehensive tax on manufacture, sale and consumption of goods and services at a national level and aimed to remove the cascading effect of tax, standardise the procedural aspect and create a single, unified Indian market to strengthen the economy. * Its effective implementation would change the tax administration and the manner of conducting business in India. In short, the GST is likely to be a game changer for the industry.

ITS APPLICABILITY

* GST is a tax on supply of goods and services.

* It is proposed to implement dual GST in India.
* GST would be applicable to all the industry except alcohol, petroleum products and power. * However, gradually, these sectors may also be included within the ambit of GST.

WHEN IS GST LIKELY TO BE IMPLEMENTED?

* Considering the progress made till date, implementation before 1st April 2013 seems unlikely. * The Industry expects the Finance Minister to come up with a certain date for implementation of GST in the Union Budget 2012-13.

WHAT COULD BE THE RATE OF GST?

* The objective of GST was to have one single rate across the country for all goods and services. * However, after constant deliberation between the States and the Centre, it was decided to have two rates for goods i.e. concessional and standard rate along with a list of exempted goods. * The standard and concessional rate of GST on goods for the first three years from the date of implementation of GST would be Services are however likely to be taxed @16% (8+8) under the GST regime.

DIFFERENCE BETWEEN GST AND THE CURRENT INDIRECT TAX REGIME?

* With the introduction of GST, the taxable event would shift to supply of goods and services. Thus, even branch transfers would be subject to GST. * Under GST, the cascading effect, that is, tax on tax, would be removed. The base for calculating SGST and CGST would remain the same unlike currently where VAT is payable on sale price plus the excise duty.

WHAT ARE THE TAXES THAT ARE LIKELY TO BE SUBSUMED IN GST?

Taxes proposed to be subsumed under SGST and CGST are

* Purchase tax: The food grain-producing states felt that they are getting substantial revenue from purchase tax and, therefore, it should not be subsumed under GST, while others were of the contrary view. THE FOLLOWING CENTRAL TAXES SHOULD BE BEGIN WITH, SUBSUMED UNDER THE GOODS AND SERVICES TAX .

* (i) Central Excise Duty
* (ii) Additional Excise Duties
* (iii) The Excise Duty levied under the Medicinal and
* Toiletries Preparation Act
* (iv) Service Tax
* (v) Additional Customs Duty, commonly known as
* Countervailing Duty (CVD)
* (vi) Special Additional Duty of Customs – 4% (SAD)
* (vii) Surcharges, and Cesses.

FOLLOWING STATE TAXES AND LEVIES WOULD BE, TO BEGIN WITH

* subsumed under GST:
* (i) VAT / Sales tax
* (ii) Entertainment tax (unless it is levied by the local * bodies).
* (iii) Luxury tax
* (iv) Taxes on lottery, betting and gambling.
* (v) State Cesses and Surcharges in so far as they
* relate to supply of goods and services.
* (vi) Entry tax not in lieu of Octroi.

HOW WILL GST BENEFIT INDUSTRY, TRADE AND AGRICULTURE?

* As GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. * The transparent and complete chain of set-offs will help widen tax base, achieve better tax compliance, lower tax burden on an average dealer in industry, trade and agriculture.

KEY FEATURES OF INDIAN GST STRUCTURE

* Comprehensive coverage of supply of goods and services except few exempted goods and services
* Similar tax treatment for goods and services
* Identical tax treatment for inter-state and intra-state supplies
* Common classification by Center as well as all states
* Export & Supply to SEZ (Processing area) zero rated
* Same taxable value base for computing Central and State GST hence no cascading impact of tax.
* Similar compliance for Central & State GST.
* Uniform returns and collection procedure for central and State GST
* Cross Credit not allowed between Central GST and State GST
* Check post at state boundaries may continue but will become irrelevant in due course with IGST.
* The GST will be levied on imports with necessary Constitutional Amendments. Both CGST and SGST will be levied on import of goods and services into the country.

CAN IT BE THE GAME CHANGER FOR THE GOVT. ?

Yes ,it can be the Game Changer because of the Following Facts and Figures……. * It is estimated that the GST will add about $500 billion to India’s GDP over the next 10 years. * Estimated that it will increase India’s GDP by about 0.9% to 1.7% a year once implemented. * It will bring a large portion of India’s unreported economy into the tax net and will lower the incidence of tax on the legitimate economy. * By eliminating area based exemptions and distorting state taxes, it will enable larger single location investments and will improve the efficiency of capital.

What Is GST? Essay

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Corporate Tax Case Study Essay

Corporate Tax Case Study Essay.

You are a CPA with an office in NearLakes City and clients consisting primarily of professionals, entrepreneurs, and small business owners. John Smith, Esq. , a practicing attorney with offices near yours, walks in your office and wants advice from you relating to a recent influx of cash he received as a result of winning a large jury verdict on behalf of his client in a personal injury case. His wife Jane Smith accompanies him during your meeting because she has some additional tax planning advice to ask of you.

After reviewing John and Jane Smith’s points of view, it will be your turn as a tax professional to decide on the best course of action from a tax perspective on their issues. Prepare a three page memo (at least 900-1,500 words per page) to John and Jane Smith addressing the issues presented. PLAYERS: JOHN SMITH ESQ. “I worked on this case for over two years. The jury awarded my client $2,000,000 in damages, of which my fee was $300,000 plus recovery of expenses paid up front in the amount of ,000.

How is the $300,000 taxed? What about the $25,000?

What can I do to minimize the tax consequences of each? Also, I am thinking about buying the building that I currently lease my office space in. My current lease is $3,500 per month. How is this lease reported on my income tax returns (either personally or for my business which is a separate law practice established as an LLC)? Do I get better tax benefits for paying the lease or for buying the building? What are the differences? ” PLAYERS: JANE SMITH-PROFESSIONAL “I think that the fees would be better used for paying off our house and buying a new, bigger house that I’ve had my eye on.

Does it make better tax sense for us to pay off the mortgage, sell the house, and buy a new house, or should we just use the money to buy the new house after selling the old house? Also, I sell handcrafted jewelry which earned me $20,000 last year. Do my business activities constitute a trade or business for federal income tax purposes? Or, is this just a hobby? Should I establish a separate trade or business to get tax benefits on these earnings? Does it make any difference that I use my car primarily for transporting my jewelry to different shops around town?

Finally, I think I can earn more money if John were willing to invest $15,000 for new jewelry making equipment since my original equipment, which cost $10,000 five years ago, is almost obsolete. Does this make sense from a tax perspective? ” Given the scenario, your role and the information provided by the key players involved, it is time for you to make a decision. If you are finished reviewing this scenario, close this window and return to this week’s You Decide item, in your course window, to complete the activity for this scenario. You can return and review this scenario again at any time.

Prepare a three-page memo (at least 900-1,500 words per page) to John and Jane Smith addressing the issues presented: 1. John Smith tax issues: a. How is the $300,000 treated for purposes of federal tax income? b. How is the $25,000 treated for purposes of federal tax income? c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? d. Is it more beneficial to continue leasing the business space or to buy the building? 2. Jane Smith tax issues: a. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for federal income tax purposes? b. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John’s case? c. Does Jane have a business or hobby? Why is this distinction important? d. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry-making activities? e. What tax benefits would John realize if he invested $15,000 in Jane’s jewelry making? f. Can Jane depreciate her vehicle or jewelry-making equipment? How? 3. John and Jane Smith tax issue: a. Should John and Jane file separate or joint tax returns?

You Decide: It’s your turn as a tax professional to decide on the best course of action from a tax perspective on their issues as presented above. For each issue, begin by restating the issue and numbering as shown above [i. e. , 1(a), 1(b), etc. ]. Next, explain and discuss the tax rules that apply to the issue, which you gleaned from your tax research. Then, conclude with a definitive answer to the issue, supported by citations to the sources used. So for each issue, you should 1. state the issue; 2. explain and discuss the applicable law (IRC sections, regulations, court decision, and so forth); and 3. present your answer in the form of a concluding paragraph that refers to specific language from the IRC sections, regulations, court decisions, and other sources (if applicable) to support the conclusion. *A template has been provided for your use in preparing this activity. Please use it! Citations Citations are required. You must provide citations whenever you refer to the sources of tax law used in this memorandum. You may cite your sources in numbered footnotes, numbered endnotes, or in parentheses immediately after the sentence mentioning the cited source.

Grading Rubric Category Points Description Superior 100–125 Content and subject: Easily identifiable, clear; meets or exceeds page or word-length requirement; all required citations are provided Structure: Apparent, understandable, and applicable; excellent flow and well structured Analysis: Interesting and novel; provides different perspectives; demonstrates critical thinking and critical analysis at a high level  Mechanics: Virtually devoid of errors in grammar, syntax, punctuation, and spelling Achieving 80–99

Content and subject: Concrete overall, but may be slightly unclear; meets or exceeds page- or word-length requirement; some citations missing Structure: Generally clear and appropriate Analysis: Evidence relates to the content; evidence may lack some clarity; critical analysis and critical thinking apparent Mechanics: Good sentence structure (syntax), grammar, punctuation, and spelling, with minor errors Average 65–79 Content and subject: Fairly easy to read and understand, but paper meanders from topic or lacks cohesion or content; meets page- or word-length requirement; missing most citations Structure: Overall good, with minor shortfalls

Analysis: Some critical thinking, but minimal or no analysis or further discussion by the adult learner Mechanics: Sentence structure has some errors relative to syntax, grammar, punctuation, and spelling Below Average < 65 Content and subject: Often unstructured and vague; content not totally applicable to the paper’s requirements or introduces substantial material not relevant to the assignment and/or the relevant discussion points; no citations provided for tax law research  Structure: Mostly unclear and difficult to visualize

Analysis: Very limited with no analysis or further discussion by the adult learner that demonstrates adult learner critical thinking/analysis Mechanics: Numerous mistakes in sentences, paragraph formatting, spelling, and grammar that subtract from the content of the paper; writing errors suggest minimal likelihood that paper was proofread for errors prior to submission; writing not at graduate level

Corporate Tax Case Study Essay

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Basic Vat Techniques Essay

Basic Vat Techniques Essay.

At the retail level, sellers are charged the statutory VAT rate (currently 14% for all commodities except gold which is zero-rated so pays no VAT) and receive a rebate for the tax revenue paid on intermediate inputs. The net payment is the statutory VAT rate applied to only the value added for that commodity. This tax collection method encourages “self-policing”— producers are more likely to purchase intermediates from sellers who can verify that they have paid the value added taxes due. When the VAT was initially introduced, there were concerns that it could not replace the GST as a source of government revenue.

In addition, a VAT may affect producers’ input choices. When the VAT is administered with rebates for intermediate inputs, there is, in effect, a subsidy for intermediate input use. Producers may substitute intermediates for primary factors (land, labor and capital), affecting the return to factors and income distribution. Another concern is that the VAT, because it is an indirect tax that works through the price system, puts a larger burden of the tax on low-income households.

VAT CONCEPTS Zero-rated items| Zero-rated items are goods or services which are taxed at a rate of 0%, e. g. milk, brown bread, maize, fruit, etc. VAT-exempted items| These items involve services that are not subject to VAT at either the standard rate or zero rate, e. g. childcare services, educational services, etc. | Standard rate| In South Africa Standard-rated supplies are taxed at the rate of 14%. | VAT-able items| These items are goods or services that are subject to VAT. | VAT Output | VAT paid on items purchased and can be claimed back from SARS. It is VAT, which your company would charge on items, which it, sells. Thus a company could wish to sell an item and added to the amount a standard rate tax would be charged. VAT Input| VAT on Sales and income and must be paid over to SARS. It is VAT that you pay on all your business expenses and for which you have a tax invoice. It also relate to VAT that is paid on other goods and services bought or rented for the business. | VAT Control | Is a summary of the VAT Input and Output and shows whether the business owes SARS money or whether SARS owes the business money. | VAT CALCULATIONS How to add VAT (Value Added Tax) to a price (14%) This is the calculation you need to use when you know a PRICE BEFORE TAX (THE NET PRICE) but want to find out the PRICE AFTER TAX (THE GROSS PRICE). VAT rate of 14%. |

Net price| Multiplied by| 1. 14| = Gross price| Price before tax| Multiplied by| 1. 14| = Price after tax| Calculations: The VAT standard rate is rate of 14% First, get the multiplier: 14 100% = 0. 14 0. 14 + 1 = 1. 14 The multiplier is 1. 14 So… | Net price| Multiplied by| 1. 14| = Gross price| Price before tax (Net price)| Multiplied by| 1. 14| = Price after tax (Gross price)| E. g. : | | | | R100| Multiplied by| 1. 14| = R114| R100 + Tax| | | = R114 inc Tax| How to deduct VAT from a price – (14%) People can often add VAT to a figure, but when it comes to taking it off it is a problem. So here it is… Taking-off VAT (Tax) from a price

This is the calculation you need to use when you know a PRICE AFTER TAX (THE GROSS PRICE) but want to find out the PRICE BEFORE TAX (THE NET PRICE). VAT rate of 14%. | Gross price (price after tax)| Divided by| 1. 14| = Net price| Price after tax | Divided by| 1. 14| = Price before tax (Net price)| Calculations: The VAT standard rate is rate of 14% First, get the divisor: 14 100% = 0. 14 0. 14 + 1 = 1. 14 The divisor is 1. 14 So the back calculation for 14% VAT is … | Gross price| Divided by| 1. 14| = Net price| Price after tax| Divided by| 1. 14| = Price before tax| E. g. | | | R114. 00| Divided by| 1. 14| = R100|

R114. 00 inc Tax| | | = R100 + Tax| THREE BOOKKEEPING ACCOUNTS For the purposes of Value Added Tax (VAT) records, three bookkeeping accounts must be kept. 1. The VAT on inputs account. 2. The VAT on output (transactions) account. 3. VAT Control (Debit and Credit) account. * The VAT on Inputs Account –This account will usually show a debit (the VAT SARS “owe” you money for the VAT you have paid and you are entitled to receive from them). * The VAT on Output (Transactions) Account –This account will usually show a credit (the VAT SARS are “entitled” to receive the VAT from you that you have collected on their behalf.

The money is not yours and it is only temporarily in your possession until the due date for the payment of VAT. * The VAT Control (Debit and Credit) Account. This is the account to which the 2 first accounts are posted. The account balance may show a credit, when the periodic report to the VAT is for a payment to be made, or it may show a debit when the periodic report shows that that money is to be returned. VALUE ADDED TAX: CALCULATIONS| Notes, Assessment Tasks and solutions| Learning OutcomesPerform elementary VAT calculations: Calculation. |

Value Added Tax is a tax on the supply of goods and services which is eventually borne by the final consumer, but which is collected at each stage of the production and distribution chain. Currently the Standard rate of VAT in South Africa is 14% and this is the rate to be used when answering all questions. QUESTION 1 On 17 March, Tilly sells goods to the four customers shown in the table. The value of the goods is also shown. VAT has not yet been included in the invoice price of the goods. Calculate the value of VAT in each case and the total value of the invoice to be sent to each customer.

CUSTOMER | VALUE OF GOODS SOLD| VAT | INVOICE TOTAL| Nina | R 54. 67| | | Khentsane | R 132. 91| | | Phuti | R 17. 54| | | Bongi | R2 381. 92| | | QUESTION 2 On 4 September, Harry receives invoices for goods that he purchased. The invoices show the total price of the goods including VAT. Calculate the value of goods that Harry received and the amount of VAT added to this to produce the invoice total. SELLER | INVOICE TOTAL | VALUE OF GOODS PURCHASED | VAT| Cindi | R 325. 76| | | Xolani | R 54. 22| | | Tenyeko | R4 571. 09| | | Azwindini | R 72. 77| | | NB.

The most difficult calculation involving VAT is encountered when cash discount is involved. QUESTION 3 Fill in the gaps. Two types of discount are used in the business world: a. __________ is a reduction in price when goods are supplied to other businesses (usually in the same line of business). This reduced price is not available to the general public. This type of discount is generally shown on the invoice (source document), but is not included in the double-entry records. b. __________ is an allowance that can be deducted from the total amount charged for goods if the debt is settled within a time specified by the supplier.

This type of discount is only recorded when advantage is taken of the reduction. QUESTION 4 Bernard sells goods valued at R2 760 to Aileen. Aileen is allowed a 25% trade discount. Calculate: a) The amount that Bernard will show on his sales invoice for the goods sold and the amount that he will enter in his sales journal b) The amount that Aileen will enter in her purchases journal Notes: CASH DISCOUNT One of the trickiest calculations that you will come across during your accounting studies involves the calculation of VAT on goods that are subject to both trade and cash discount. Learn it and practice it several times.

He allows Mapule 25% trade discount and 3% cash discount for settlement within 30 days (invoice no. 1,235). Also, on 4 October Maleka sells goods to Bongani with a catalogue price of R518. Bongani’s order is subject to 50% trade discount and a cash discount of 1% if the debt is settled by the end of the month (invoice no. 1,236). Calculate: a the total of the sales invoice sent to Pierre b the total of the sales invoice sent to Mapule c the total of the sales invoice sent to Bongani d Prepare the entries in Maleka sales journal. Maleka: sales Journal | Date| Particulars| Invoice no. Sales| Vat| Invoice total| 3 October| Pierre| 1 234| R| R| R| 4 October| Mapule | 1 235| | | | 4October| Bongani | 1 236| | | | SOLUTIONS QUESTION 1 Calculate the value of VAT in each case and the total value of the invoice to be sent to each customer. CUSTOMER | VALUE OF GOODS SOLD| VAT | INVOICE TOTAL| Nina | R 54. 67| R 7. 65| R 62. 32| Khentsane | R 132. 91| R 18. 61| R 151. 52| Phuti | R 17. 54| R 2. 46| R 20. 00| Bongi | R2 381. 92| R333. 47| R2 715. 39| QUESTION 2 Calculate the value of goods that Harry received and the amount of VAT added to this to produce the invoice total.

SELLER | INVOICE TOTAL | VALUE OF GOODS PURCHASED | VAT| Cindi | R 325. 76| R 280. 15| R 45. 61| Xolani | R 54. 22| R 46. 63| R 7. 59| Tenyeko | R4 571. 09| R3931. 14| R639. 95| Azwindini | R 72. 77| R 62. 58| R 10. 19| QUESTION 3 Fill in the gaps. A. Trade discount B. Cash discount QUESTION 4 Bernard sells goods valued at R2 760 to Aileen. Aileen is allowed a 25% trade discount. a) R2 060 b) R R2060 QUESTION 5 (a) (b) (c) A. Pierre| B. Mapule| C. Bongani| R7 500. 00| R376. 0| R 581. 00| Less Trade discount 2 497. 50| Less Trade discount 94. 00| Less Trade discount 259. 50| 5 002. 50| 282. 00| 259. 50| Less discount 125. 06 | Less Cash discount 8. 46 | Less Cash discount 2. 59 | 4877. 44| 273. 54| 256. 1| Add VAT 882. 84 | Add VAT 38. 30 | Add VAT 35. 90 | Total value of invoice 5560. 28| Total value of invoice 311. 64| Total value of invoice 292. 31| d Prepare the entries in Maleka sales journal for 3 and 4 October. Maleka: sales Journal | Date| Particulars| Invoice no. | Sales| VAT| Inv. Total| 3 October| Pierre| 1 234| R 4677. 44| R 682. 84| R 5560. 28| 4 October| Mapule | 1 235| 273. 54| 38. 30| 311. 64| 4October| Bongani | 1 236| 256. 41| 35. 90| 292. 31|

Basic Vat Techniques Essay

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Australian Income Tax Guidance Notes Essay

Australian Income Tax Guidance Notes Essay.

However, there is a catch; you can only treat it as your main residence for 6 years. Hence nearing the end of the 6 year period you would need to move back into the house and re-establish it as your main residence.

Put simply, you can only have one tax free house at any one time that has to be established as your main residence and if you move out you only have 6 years for it to continue to be your main residence. Topic 5 Annuities and Foreign Pensions Topic 6 Termination payments Topic 7 Small Business Entities

Valuation of trading stock (S9-180) The three bases to value the trading stock are as following: * Cost (S9-190) * Market selling value (S9-220) * Replacement value (S9-225) 08. 1. 1 Methods used to work out the cost of trading stock (S9-200) The commissioner accepts the following valuation methods: * FIFO: The first items purchased are assumed to be disposed of first and the cost of trading stock on hand at the end of the year is the cost of the items most recently acquired.

Where shares cannot be specifically identified, taxpayers must normally use the FIFO method to value trading stock. * Average cost: the cost of each item of a particular type on hand at the end of the year is the weighted average of the cost of all such items that were on hand at the beginning of the year and all those acquired during the year. * Standard cost: a predetermined standard cost per unit is used. The following valuation methods are not acceptable: * LIFO: Late in first out * Base stock: 08. 1. 1. 1 Trading stock on hand taken into account

Where a taxpayer carries on business, all trading stock on hand at the start of the income year and all trading stock on hand at the end of the year are taken into account in working out the taxpayer’s taxable income. Where trading stock is acquired ‘not at arm’s length’, the market value is used. The taxpayer is required to include the market value as assessable income. 08. 1. 1. 2 Disposal not in the ordinary course of business (S9-290) * When trading stock is sold in the ordinary course of trading, gross sales less the cost of production are brought to account by the ordinary trading stock accounting method.

Where an item of trading stock (with or without other business assets) is disposed of outside the ordinary course of a taxpayer’s business, the taxpayer is required to bring to account as assessable income the market value of the stock on the date of disposal. * The taxpayer takes out stock from his/her business and used it privately is required to bring to account as assessable income the market value of the stock on the date of drawing. Topic 9 General Deductions 09. 1 Deductions for business-related expenditure

Australian Income Tax Guidance Notes Essay

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