case study.

With respect to each task:

• Review relevant case law and legislation (ITAA1936,ITAA1997)
• Apply the law to the facts of the casestudy
• Reach a conclusion/ give practical advice to yourclient.

Details

Himanshu Patel, a resident taxpayer aged 59, runs a sole trading business selling imported food items. His business is registered for GST.

He also works on a casual basis as an import/export agent at Blue Marlin Pty Ltd (ABN: 89 125 678 968).

He has a rental property in Lakemba, Sydney. Himanshu is not covered by a private hospital cover.

His spouse is Hayali Patel who received $9 200 disability pension from Centrelink for the 2022/23 tax year. She has no deductions to claim for the 2022/23 tax year.

Income/Expense Information

Himanshu and Hayali have a joint term deposit account at ANZ. Total interest received from the joint account was $500 for the 2022/23 financial year.

Himanshu has paid $400 to a registered tax agent for preparing his tax return for 2021/22 tax year. Himansu also had the following payments to the Australian Taxation Office

• Additional tax on anamendedassessment$400
• Fine for the late lodgement of 2021/22taxreturn$760

In addition to the above, the following information relates to: his employment (Part A),

his business income/expenses (Part B) and his rental receipts/payments (Part C).

All expenses have been substantiated unless it states otherwise.

Part A: Regarding his employment

Employer: Blue Marlin Pty Ltd (ABN: 11 235 365 874)

Gross wages for the 1stof July 2022 to the 30thof June 2023: $7,800 (PAYG withheld: $200)

He also received $2,000 shift allowance and $800 reimbursement for work related software fees from his employer.

Himanshu received a car from employer as a fringe benefit (showing as reportable in his PAYG summary, valued $60,000)

Work related allowable deductions to claim (telephone & stationery) $300

Part B: Regarding his Business

During the year, Himanshu has had the following transactions in relation to sales, purchases, and inventory (trading stock). Himanshu did not choose Small Business Entity option nor low value pool.

Cash received from accounts receivable for credit sales	$85,000
Cash paid to accounts payable for purchases of trading stock	$43,000
Inventory (trading stock) on 1 July 2022	$7,100
Inventory (trading stock) on 30 June 2023
- at cost	$8,400
- at marketselling	$8,600
- atreplacement	$8,500

Himanshu has taken home some food items from the stock purchased for consumption by his family at total value of $2,500

Ledger balances were asfollows

	1 July 2022	30 June 2023
Accounts receivable	$17,600	$19,800
Accounts payable	$5,280	$5,830

The additional cash receiptsare:

• Volume rebatesfromsuppliers $3,500
• Insurance recovery from the insurance company due to extensive damage caused by a hailstorm andincluded
• Compensation for lossofincome $7,900
• Repairs carried out on shop caused by storm damage$2,700
• Medical costs incurred by Himanshuforminjuries $900
• Capital contributed by Himanshu to expand the business$10,000

Additional cash payments are:

• Cash Drawingsby Himanshu $3,000
• Fines for breach of Australian ConsumerLawregulations $900
• Net wagestoemployees $12,000
• PAYG withheld from employees and paid totheATO $2,900
• Superannuationforemployees $1,230
• Superannuationguaranteecharge $190
• Fringe benefittax paid $850
• Lease payments on shop fittings andplantequipment $940
• PAYG instalments for Himanshu's personal taxcommitments$2,500
• Fee for maintenance of computer systems-

Covering the period 1/4/2021to30/9/2022 $1,680

• Other tax deductibleoperatingexpenses $9,200
• Decline in value (seenote1) $?

Other information regarding Himanshu's Business

Himanshu uses plant and equipment in his business as follows. Himanshu wishes a maximum deduction for 2022/23 tax year. Ignore SBE concessions.

You must show the decline value deduction for this year and the closing adjustable value balance for each asset in a table in your report.

Assets	Cost ($)		Purchase date	Effective life	Adjustable vale (30/6/2022)	Business usage	DIV method
Mobile phone	3,000		1/6/2021	4 years	2,188	60%	Diminishing Value
Office Furniture	15,000		1/6/2021	10 years	13,375	100%	Prime Cost
Laptop Computer	4,000		1/8/2022	3 years		100%
Printer	150		1/8/2022	2 years		100%

Part C: Regarding his Rental property

Himanshu purchased a house as a residential investment property on the 1stof July 2019.

Purchase price of the property was $300,000. All amounts include GST where applicable.

• Landandbuildings $300 000
• Depreciable assets installed by Himanshu on 1st of July2019
• Carpets $5,000
• Hot watersystemelectric $1,200
• Ceilingfans $1,600
• Barbecue(fixed) $1,400
• Windowblindsinternal $8,000
• Windowcurtains $6,000

The previous owner provided a statement to Himanshu certifying that the property was constructed and completed on the 1stof January 1996 at a construction cost of

$100,000. The house was in good condition except that the outside walls required complete repair.

See Note 1 for information to create the schedule

Himanshu recorded the following receipts and payments for the 2022/23 tax year in respect of the rental property:

Receipts

Rent received (net of agent commission withheld $1,250) by 28 June 2023 $23,750 Compensation from Rental bond board for tenants who left and

did not pay the rent they owed (seenote2) $1,300Rent in advance from new tenants on 29 June for the period 1 July to 30 July2023

$3,000

Insurance recovery for storm damagetoroof $2,100

Payments

Mortgage repayments to Westpac Bank-principal $4,500

- interest $23,800

Loan application fees to Westpac Bank for a 10-year mortgage loan

refinance - paid on approval of the loan 1August2022 $825Council &Water rates $3,400

BuildingInsurancepremium $850

Payment to solicitors - for leasepreparationfees $150

- to eject tenants for non-paymentofrent $375Repairs - to paint the outside walls of the house, carried out on 10 July 2022$1,100 Construction costs of brick room to store garbagebins

and gardening equipment, carried out on 1May2023 $6,000Garden hoseandattachments $165

Travel costs to the rental property for inspections (seeNote3) $830Pest control costs to eliminatecockroachinfestation $280

Notes - Other information

Note 1) Himanshu will use the Commissioners estimate of effective life for calculation decline in value which can be found on the ATO website

Note 2) The rental bond board were only able to pay part of the money owed by the tenants. A further amount of $650 is outstanding. Himanshu is attempting to recover this amount by legal means.

Note 3) Himanshu lives in Sydney, he went to Brisbane by aeroplane to inspect the property and meet with the real estate agents and tenants.

Required

Himanshu wishes to minimise his income tax for 2022/23.

1. Prpare written report for Himanshu for the 2022/23 tax year explaining your analysis and include relevant section numbers as per ITAA36/ITAA97 for all inclusions, exclusions andcalculations.

In your report you must also create tables showing:

• The taxable income or loss from the business, including the DIVschedule
• The DIV schedule for the rentalproperty
• The overall taxable income or loss from the rentalproperty

1. Calculate Hinanshu's taxable income and the final balance of his assessment, including Medicare Levy, any other charges and all applicable taxoffsets.