During the 2019 tax year, Frank recorded the following entries in his tax return Earned employment salary $80,000 Received an Expense Payment Fringe Benefits 64,000 Received unfranked dividends 20,000 Received profits from selling hand painted tea towels which he does as a hobby 750 Incurred allowa...

Taxable Income Taxable income is the portion of an individuals or a companys income used to calculat ...

During the 2019 tax year, Frank recorded the following entries in his tax return: Earned employment salary

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Question:

During the 2019 tax year, Frank recorded the following entries in his tax return:

Earned employment salary	$80,000
Received an Expense Payment Fringe Benefits	64,000
Received unfranked dividends	20,000
Received profits from selling hand-painted tea towels which he does as a hobby	750
Incurred allowable deductions in relation to his employment	10,000
Incurred expenses related to his hand-painted tea towels	100
Made a donation to the RSPCA (a DGR)	15,000

Additional Information:

Furthermore, during the 2020 tax year, Frank sold an investment property for $1.4m which he inherited from his parents on 10 January 1994. At the time he inherited the property, it had a market value of $120,000. Frank had no other income or deductions for the 2020 financial year.

Required:

Answer the following questions:

(a) Calculate and explain Frank’s taxable income for the 2019 tax year (also explain amounts that were excluded). Refer to sections in the Tax Acts.

(b) Calculate and explain the Capital Gains Tax consequences of selling his investment property during the 2020 tax year using the Indexation Method. Refer to sections in the Tax Acts and show all calculations.