You are employed as a tax accountant with Azure Beach Accountants and Financial Services. Your client (use your own name as the client's name) is employed as a project manager with the LLJ, a national property company which manages multiple locations across all capital cities. The taxpayer usually works in the George St office in the Sydney CBD but is required to travel to properties that are managed by LLJ on a regular basis. Sometimes the taxpayer will spend the whole day in the George St office, but they may be required to travel to multiple property locations in one day. Work location and travel is determined by tenant demand and is at the direction of the taxpayer's manager. The taxpayer's main work activities involve face-to-face meetings and phone with lessees, gathering documentation and assessing lease applications, and managing ongoing tenancy arrangements where clients have fallen behind with their rent.

The employer provides each employee with a basic set of uniform items consisting of 2 x pants/skirts, 2 x shirts, 1 tie/scarf, and 1 x blazer. Employees can purchase additional uniform items from the employer at their discretion. All uniform items clearly display the LLJ logo. Wearing of the uniform is not compulsory for all frontline employees, however the design is registered with AusIndustry. Each employee is responsible for the laundering or dry cleaning of their uniform.

Employment income

The payment summary from the employer, LLJ ltd ABN 98 223 443, shows the following:

Gross Salary (includes tax withheld below) $130,000

• Transport/Travel Allowance $5,000*
• Entertainment Allowance $2,000*
• Tax Withheld $31,042
• Reportable Fringe benefits $4,000*

*See additional information

Other income

Interest earned on bank accounts. All accounts are held in the taxpayer's name, apart from the joint account, which is held jointly with the taxpayer's spouse:

• Eastpac Bank Joint Account number 004 445 921 $50
• Eastpac eSaver Account number 004 6600 214 $400
• Bank of Perth Bonus Saver number 122 345 764 $275

The taxpayer and their spouse hold a small joint share portfolio. During the year they received the following dividends:

• CPW fully franked $1,000
• OIR 80% franked $1,200
• AFJ unfranked $562

There were no share sales during the year.

In November 2022, the taxpayer won $10,000 in Lotto.

In May 2023, the taxpayer received compensation of $25,000 for medical costs incurred in a traffic accident.

Property

Land in Shellharbour

The taxpayer purchases this land for $230,000 in July 2018 Stamp Duty and legal fees on purchase was $17,000. At the time of the purchase the taxpayer intended to build a house on the land, but this never eventuated the taxpayer also incurred $12000 on Council rates and $3,000 on maintenance during the period of ownership. The property was sold under a contract entered on 14 April 2023 for $450,000. Agent's commission and legal fees on sale amounted to$ 5,500.

The land was funded by a loan from East Pac. The taxpayer paid $22400, interest over the life of the loan on the land

Property in Leura NSW.

The second property is a house located at 24 Blaxland Place, Leura NSW. The taxpayer paid $600,000 on 4 July 2013. They paid $1,500 for legal fees and $11,440 for stamp duty at the time of purchase. The property is funded by a loan from GNI Bank. Interest of $22,000 was paid during the 2023 tax year.

The taxpayer lived in this property before moving to Sydney in June 2018. The property has been rented to tenants since the taxpayer moved.

In July 2018 the taxpayer engaged a quantity surveyor who advised that the building was constructed in 2003 and the construction cost for the house owned by the taxpayer was estimated to be $125,000.In September 2022 the tenants moved out of the property, and it was vacant for a period of 4 weeks, even though the agent had advertised for tenants for 2 weeks prior to the old tenants vacating and continued to advertise until suitable tenants were found.The taxpayer decided to take advantage of the vacancy to replace the kitchen, curtains and the major appliances and paint the interior of the property as all had deteriorated over the period of ownership, and particularly since the property had been rented. The new kitchen cabinets cost $18,000, electric stove $6500 and dishwasher $860. The internal painting cost $10,800. The taxpayer travelled to Leura to oversee the renovations. Fares and accommodation for the trip cost $3,200. The renovations were finished just in time for the new tenants to move in on 15November 2022.

The annual statement from the agent who manages the property appears below (HINT: The Letting fee, Management fee and Postage & Petties are fees charged by the agent & the Rental Bond Board holds residential bonds in trust for release to either the tenant or the landlord at the end of the tenancy period, depending on the condition of the property at that time).

Leura Property Management Specialists

5/30 Leura Mall, Leura NSW, 2450

Property Address:24 Blaxland Place, Leura. SW

Annual Rental Statement: 1 July 2022 - 30 June 2023

Table 12 - Annual rental statement

Detail	$
Income
Rental Income Received	20,500
Water Rates Reimbursed by tenant	266
Other
Total	20,766
Outgoings
Advertising	325
Council Rates	3,100
Cleaning	275
Insurance	11,00
Mowing & Garden Maintenance	660
Pest control	242
Repairs
Replace Hot Water System thermostat	165
Water Rates	805
Retained by agent
Letting Fees	900
Management Fees	1,402
Postage & Petties	90
Total	9,064
Net paid to owner	11,702

Additional information provided by the taxpayer:

The taxpayer is a member of the Australian property association and paid annual membership fees $890.

Reportable Fringe benefits of $6,000 arose from the provision of a motor vehicle for private purposes.

The employer has paid an Entertainment Allowance of $2,000. This is paid to employees who must entertain prospective and existing tenants. The taxpayer spent this allowance on coffees and lunches with the prospective and existing tenants.

The taxpayer incurred $120 on dry-cleaning work jackets. These jackets do not have the LLJ logo.

All other uniform items are 'wash and wear', and they are laundered once each week with other clothing. He/she also purchased 2 additional uniform work shirts (which have the LLJ logo) at $70 each and a pair of leather dress shoes for $255.

The taxpayer is often required to travel to various properties to meet with customers and attend meetings. On the days he/she works in the George Street branch he/she uses public transport to travel to and from work. When required to work at alternative locations, often located at shopping centres in outer Sydney suburbs, they use their private motor vehicle, a Mazda CX5 (registration CG-35-XY). They have not kept a full logbook, but diary records maintained to claim a travel allowance from their employer show that they travelled 5,4000kms for work purposes during the period from 1 July to 31 March. This includes travel from home to alternative work location, travel between managing properties, and return trips to their home. Travel between managed properties made up 3125 kms of the kms recorded.

• the taxpayer donated to the salvation army of $50
• the taxpayer incurred $480 on a speeding fine and $80 on parking fees whilst travelling for work
• the taxpayer donated $20 to red nose day and received a red nose
• the taxpayer made an additional superannuation contribution of $15,000 to Their complying superannuation fund. The taxpayer has given notice in the approved form to the superannuation fund.

Superfund details Name of Fund: LLJ superfund Account number 312567

Fund ABN 00145698213

Fund tax Number 831900421

• the taxpayer is studying a masters of property management and incurred $4,500 on textbooks and travelling
• the taxpayer took 4 weeks of annual leave during year. The trip to Leura to oversee the rental property renovations was taken during the time they were on leave
• the taxpayer's date of birth is 26 November 1993
• the taxpayer's residential address is 42 Harrington St Hurstville 2220
• the taxpayer has a property economics degree and an outstanding HELP debt of $4,500 on June 30 2023
• the taxpayers TFN is 000000001
• the taxpayer's spouse was born on 15 March 1994. The spouse works as a tax accountant and earns gross income from this occupation of $110,000 during the 2023 financial year. They cannot claim any deductions. They have not earned any interest or dividend income other than from joint investments mentioned above
• the taxpayer and their spouse have Private Health 'Extras' Insurance with BUPA, Policy Number BP754988, but it does not include private hospital cover. They do not have any children.

Task 1: Written questions

Read each question carefully. Follow the suggested word count when you answer each question.

1. Using an Excel Spreadsheet, prepare a set of work papers.

The spreadsheet should be indexed with a separate tab for each category with the following tab names.

• Work Related Income
• Other Income
• CGT Calculation
• Rental Statement
• Total Assessable income
• Deductions
• Income for surcharge purposes
• Tax Payable
• Email to client
• Tax audit notification.

Organise your work papers so that amounts are appropriately grouped to allow direct transfer to items on the Income Tax Return and provide cross references to the tax return item number where the amount is reported. You must show formulae for all calculations, Excel functions should be used to perform calculations.

1. Download the most recent Income tax return and supplementary from ATO website. Note: 2023 tax return may not be available in Semester 1 of 2023.
2. Use the form to prepare the income tax return, including all relevant schedules, for the year ended 30 June 2023.
3. Finalise your workpapers by adding cross references to tax return labels, and reconciling depreciation information and calculation of tax payable.
4. write email to your client covering:

• instructions about the steps required to lodge the income tax return
• the importance of establishing client on tax agent's portal
• client review, signoff, authorisation and lodgement due date
• ATO Notice of Assessment, payment due date and late fees
• the estimated net tax payable or refundable.

In April 2024, the taxpayer calls you and advises that he has been selected for a Taxation Office Audit.

Research the ATO Taxpayer's Charter (If you are subject to review or audit) to seek guidance concerning your clients responsibilities during the audit.

1. List 5 matters that you will advise/discuss with the taxpayer, about their responsibilities during a taxation office audit