Task 1 Preparation of Instalment Activity Statement (IAS)

Task 1 Preparation of Instalment Activity Statement (IAS)

The following information relates to your client THE SAMUEL FAMILY TRUST.

The Trust is NOT registered for GST.

The Trust is registered for PAYG Withholding.

The Trust pays FBT Instalments.

The Trust earns investment income.

The Trust lodges an Instalment Activity Statement (IAS) quarterly.

The Trust instalment income for the March 2019 quarter is below:

Residential rental income $ 4 620

Interest on cash invested $ 3 479

Commercial rental income $10 000

Instructions from your client:

The Trust wants to choose the Pay-As-You-Go Instalment option that will result in the lowest amount payable in the IAS.

Option 1 Instalment amount printed at T7 on the IAS: $1314

Option 2 Instalment rate printed at T2: 4.5%

The Trust paid Fringe Benefits Tax totalling $26,000 in the previous financial year and has therefore been advised that the quarterly instalments will be $6500. The Trust estimates that this liability will decrease to $20,000 this financial year and therefore wish to vary the FBT Instalment.

The business employs staff and paid the following ages in the March quarter:

Total gross wages paid to employees $12500

PAYG Withholding deducted from gross wages $3000

Calculate what PAYG Instalment they should payBased on the information above, which option should be chosen (Option 1 or Option 2)?

Calculate the varied FBT Instalment payable.

Calculate figures to be reported in the PAYG Withholding section of the Activity Statement

Complete the Instalment Activity Statement below, sign and date it as the authorised person. (Make sure you fill out each of the required fields.)

Online students print the pages, complete the IAS, then scan and upload as Task 1

Task 2

Printed below is the GST [Detail - Accrual] report for Bean There Coffee for the period 01/04/18 to 30/06/18.

Check the report and identify three (3) transactions that appear to have been allocated to the incorrect tax code. (An example has been done for you on the report)

Choose one (1) of the errors you found above. Explain why you think it is incorrect.

What further information would you ask for to confirm your query?

A credit error occurs if you have paid too much GST on a previous activity statement. What is the time limit for correcting a credit error on a later activity statement?

A debit error occurs if you have underpaid your GST on a previous activity statement. This can also be corrected on a later activity statement but only if the error is within the applicable time limit and below the dollar limit. For a business with an annual turnover of $550,000 what are these limits?

48209202583180Likely error; should use tax code GST for BP Caloundra.

00Likely error; should use tax code GST for BP Caloundra.

6000752886710

Task 3

Dan has worked as a full-time employee for Harris Hardware for 15 years. He has decided to take early retirement (early retirement scheme) on 23rd April 2019. Dan was a casual worker for 5 years, before becoming permanent.

Which Government authority would you contact to seek advice if you were unsure whether Dan is entitled to be paid Long Service Leave on termination?

Calculate the correct Gross Pay and Pay-As-You-Go withholding to be deducted from Dans payment on termination. Dan is due to receive:

His regular weekly wage payment is $1,180 (he is claiming the tax-free threshold and has advised his TFN).

$2,320 in unused annual leave, plus $406 leave loading.

$6,942 in unused long service leave.

Payment received Gross Pay

$ PAYGW

$

Summary of Dans last pay:

Gross Payment $

PAYG Withholding$

Net payment$

Task 4 - Amending a Business Activity Statement (BAS)

Aussie Replica Engines Limited (ABN 12 345 678 910) is registered for GST on an accrual basis. The company has lodged the BAS for the quarter ended 30 September 2019 and paid the outstanding liability of $36,480.

The following month an error was discovered in which the following invoice was found to have the wrong tax code used:

15.09.19 Sale: New Zealand Train Tours1 steam engine $220,000 GST (including $20,000 GST)

This sale was an export sale and should have been recorded with the tax code EXP, and no GST included in the amount.

Invoice should have been recorded as $220,000 EXP ($0 GST)

Instructions:

Aussie Replica Engines Limited wishes to lodge an amended BAS immediately to recover the overpaid GST. Listed below are the original values recorded at the different labels on the September BAS.

Complete the BAS labels in the Amended September BAS column to show the new (amended) figures should be.

BAS Label September BAS lodged Amended September BAS

G1 1760000 G2 0 G10 55000 G11 1358720 1A 160000 8A 160000 1B 123520 8B 123520 9 36480

Task 5

Reports Provided:

GST Accrual Detail - Bean There Coffee Van - June 2019

Payroll Summary report for the year ended 30th June 2019

Profit & Loss Statement for the year ended 30th June 2019

Balance Sheet as at 30th June 2019

Superannuation Accrual by Fund (Summary) for June 2019 not required/not supplied3 Individual Payment Summaries

Using the attached reports:

Use the attached GST Detail (Accrual) Report and Payroll Summary report to prepare the attached Business Activity Statement for Bean There Coffee Van

Reconcile Gross Wages and Superannuation with the following comparisons:

Wages, Salaries & Allowances Profit & Loss $

Wages Expense Payroll Summary Report$

Total salary, wages and other payments W1 BAS$..........................................

Superannuation Expense Profit & Loss$

Superannuation Expense Payroll Summary Report$

Balance Sheet PAYG Withholding Liability$............................................

3 x Individual Payment Summaries Total tax withheld$............................................

Payroll Summary Report Taxes PAYG Withholding$............................................

The amount recorded at W1 on the Business Activity Statement (BAS) is different to the total Wages on the Payroll Summary Report and Profit and Loss Statement. Explain why they are different amounts.

Look at the organisational policies and procedures (see below). Explain the actions to be taken if there were discrepancies in the payroll reconciliations.

Appendix A

Bean There Coffee Van

304809144000

POLICIES AND PROCEDURES MANUAL

2413033401000

97714430 / www.shutterstock.com / shutterstock.com

Bean There Coffee Van

Extract from POLICIES AND PROCEDURES

Personnel

Normal hours

Standard working hours for a fulltime employee are 37.5 hours per week. Full time employees work between 8.30am and 5.00pm with a one hour unpaid lunch break.

Casual employees work up to 30 hours per week on any day between 8am and 9.00pm.

Overtime

Overtime will be paid to full time staff who works more than 37.5 hours in any week. A 30 minute unpaid meal break must be taken before commencing overtime hours on a weekday. Overtime on weekdays is paid the rate of time and a half for the first three hours then double time for any additional hours after that. Overtime at double time will be paid for all hours worked by full time employees on weekends.

Casual employees do not receive overtime rates.

Salaried employees do not receive overtime rates.

Annual Leave

Full time employees are entitled to 4 weeks paid annual leave per year. Annual Leave Loading is also paid to all employees who are entitled to Annual Leave at the rate of 17.5% of Annual Leave payable.

Casuals are not entitled to annual leave or Annual Leave Loading.

Any annual leave outstanding at the end of the year carries over to the following year.

An Application for Annual Leave is to be completed by employees prior to taking Annual Leave. This is to be submitted for approval at least 2 days prior to the first day of leave. An employee may request to have leave paid in advance for absences or more than 5 days. The authorised delegate to approve leave is as follows:

For Shop Assistants and Delivery staff: The Manager (Joan Bosswell)

For the Manager: The Director (John Smith)

Personal Leave

Full time employees are entitled to 2 weeks sick leave per year.

Casual employees are not entitled to sick leave.

Any sick leave not taken at the end of June each year carries over to the following year.

An absence for Personal Leave should be notified to the Approving officer by email of telephone as soon as possible once the need arises.

An Application for Personal Leave is to be completed by employees on the day they return to work following leave. The authorised delegate to approve leave is as follows:

For Shop Assistants and Delivery staff: The Manager (Joan Bosswell)

For the Manager: The Owner - Jane Smith

Uniform Allowance

All employees other than the manager are required to wear a uniform and are entitled to a uniform allowance. Full time employees receive $40 per fortnight uniform allowance while casual employees receive $20 per fortnight uniform allowance. Uniform allowance is to be paid to full time employees while they are on leave; however it is only paid to casual employees in weeks that they actually work. Tax to be withheld if required by the PAYG legislation.

Motor Vehicle Allowance

All employees who use their own vehicles for deliveries will be paid a motor vehicle allowance in accordance with the ATO rates. That is:

number of kilometres travelled x applicable rate per kilometre

Tax to be withheld if required by the PAYG legislation.

Superannuation Guarantee

All employees are entitled to Superannuation Guarantee at the prescribed rate.

Payment of wages

Payment is made electronically to all employees.

Timesheets

All employees not paid on a salary basis are required to complete a timesheet on the specified form. It should indicate start and finish times, normal hours worked and any overtime worked for each day the employee worked. The timesheet should also indicate any leave claimed including the type of leave and number of hours. If an employee is claiming Annual Leave in advance they should complete a timesheet in advance for the period they will be away and submit it on the last payday before payment is required. Timesheets are to be signed and dated on the last working day each week and submitted to be checked, totalled and authorised by the Manager (Joan Bosswell).

Finishing time on a Friday can be estimated if after 12.00pm and an adjustment to pay made the following week if needed with the Managers approval.

Payroll processing

Payment of wages is made weekly on a Friday by 4.00pm. The responsible officer is the Manager (Joan Bosswell).

Timesheets must be submitted to the Manager by 12.00pm on Friday for pays to be processed.

Salaried employees are not required to submit a timesheet.

Relevant leave applications must also be submitted by 12.00pm on Friday to be taken into account in pay processing.

The payroll officer is required to process the payroll, print and distribute payslips, and prepare payroll reports.

Payroll reconciliations and discrepancies

Regular reconciliations of the payroll records to be completed. The reconciliations are to be checked and signed by the Manager, Joan Bosswell. If there are any discrepancies found during the reconciliation process these are to be referred to the Manager, Joan Bosswell.

Payroll enquiries

Payroll enquiries should be responded to by the responsible officer within 48 hours and in accordance with relevant privacy legislation.

Payroll records

All payroll records are to be maintained in accordance with legislative requirements and confidentiality respected at all times.

Computer access to payroll records is to be limited to payroll staff and the Manager through the use of passwords which should be changed regularly.

Paper based records are to be stored in a locked filing cabinet in the Managers office and the key left with the manager. This includes:

Employment Contracts, Employment Declarations, Employee Details forms to be filed in each employees Permanent file

timesheets which are to be filed in a folder for each employee by date order immediately after processingleave application forms to be filed in each employees Annual fileother employee documents to be filed in employees Annual filesWeekly , monthly and annual payroll report to be filed in the Bean There Coffee Payroll file

ATO Documentation and LodgmentsThe owner Jane Smith is the authorised signatory for all documentation and must approve any payments made by the business.