Cedric Gosper is a Chartered Accountant with his accounting practice in the form of the sole proprietor. The receipts and payments (excluding GST) for the year ended 30 June 2022 are to be as follows:

Receipts

Professional fees: $180,000

Income from part-time teaching at a university: $30,000

Interest on bank deposits: $500

Rental income from an investment property: $26,000

Fully franked dividends received from an Australian resident company: $700

Payments

Office rent: $20,000

Salary paid to a part-time secretary: $30,000 Electricity: $2,000

Office sundry expenses: $8,000

Train fares from home to work: $500

Entertainment: $10,000

Interest paid on loan to acquire the investment property: $15,000

Council rate and water for the investment property: $2,000

Cost of repairing roof tiles of the investment property: $10,000

Cost of extending a bathroom in the investment property: $20,000

Cedric Gosper has a carry forward past year tax loss of $5,000.

He was single and did not have private hospital insurance from 1 July 2021 to 30 June 2022.

REQUIRED

Assuming Cedric Gosper is a resident of Australia for tax purposes, calculate his assessable income, allowable deductions, taxable income, and tax liability for the year ending 30 June 2022.

With reference to case law and statutory law, explain whether the aforesaid receipts are assessable income and payments are allowable deductions under the Australian tax law in the Part B calculations.

Answer rating: 100% (QA)

Part A Assessable income Professional fees 180000 Income from parttime teaching at a university 30000 Interest on bank deposits 500 Rental income from an investment property 26000 Fully franked divide... View the full answer