John Citizen, an Australian resident for tax purposes residing at 123 Happy Lane, Perth, TAS 7300...
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John Citizen, an Australian resident for tax purposes residing at 123 Happy Lane, Perth, TAS 7300 attends your offices seeking advice with respect to their current year tax return. John is particularly interested in what transactions will constitute assessable income and what deductions they would be entitled to. Following a comprehensive initial meeting with John you determine the following. • John is a management consultant who works for BIG Consult Pty Ltd (ABN: 31 064 241 809) (BIG). . John's end of year income statement from BIG reade Gross payments: Tax withheld: Overtime meal allowance: Laundry allowance: ABC Ltd DEF Ltd GHI Ltd tel:31%20064%20241%20809 • John received dividends from 3 companies (all non-BRE's), John took out a loan on 1 July CY to invest in these companies. The principal amount of the loan was $100,000. Borrowing costs associated with the loan were $2,500 with the loan term being 7 years. Interest on the loan in the present year amounted to $3,000. $175,000 $85,000 $1,500 $6,000 First rented out on 27 February 2016. John lived in the house and considered it his main residence up to this point. Yearly rental income: 19,000 Interest paid on loan in CY: 13,000 $10,000 franked to 100% $85,000 franked to 60% $1,500 franked to 90% John own(ed) two rental properties located at 456 Happy Lane, Perth, TAS 7300 and 789 Perth, TAS 7300. Details in respect of each property below: 456 Happy Lane 789 Happy Lane Purchased: 10 January 2007 for $260,000 Purchased: 1 March 2016 for and stamp duty of 23,000 $560,000 and stamp duty of 53,000 First rented out on 20 March 2018. John lived in the house and considered it his main residence up to this point. Yearly rental income: 26,000 Interest paid on loan in CY: 30,000 No further items to depreciate. Depreciable items include: • New carpet (OAV:10,000) acquired 30 March CY New Fridge (OAV:3,500) acquired 1 January CY On 30 September CY John sold 456 Happy Lane, Perth, TAS 7300 for $650,000 and incurred the following expenses in making the sale: advertising fees (4,000), stamp duty (19,000). Sales Opening stock Purchases • . On 1 September CY John decided to replace some of the fly screens at 789 Happy Lane. Those on the front and back of the house were equipped with security mesh, while those on the side were repaired with normal mesh. The cost of security flyscreens was $1,300 and the normal mesh $560. Closing stock • • • John also regularly pays a Gardener to maintain both the properties. The cost for 456 Happy Lane was $150 per visit and $200 per visit for 789 Happy Lane. The Gardener attended each property 6 times this year. Cost price • Market value • Replacement cost New dishwasher (OAV:2,500) acquired 10 July CY. • In PY, John commenced business as a sole trader. The business involves buying and selling water bottles. John has kept the following accounts: Note: a shipment of water bottles (amounting to $1,500) was still on board a vessel at the end of the CY. The terms of the shipment were FOB destination. $10,000 $5,000 $12,000 $4,000 $3,500 $3,750 • John leased a premises to store his water bottles. This cost $700 per month. John held this lease and made payments each month for the entire CY. John would also frequently travel from his management consulting job to the warehouse. John estimates the total km's traveled between these two destinations over the course of the year to be 3600 km. Required Prepare a letter of advice for John. John Citizen, an Australian resident for tax purposes residing at 123 Happy Lane, Perth, TAS 7300 attends your offices seeking advice with respect to their current year tax return. John is particularly interested in what transactions will constitute assessable income and what deductions they would be entitled to. Following a comprehensive initial meeting with John you determine the following. • John is a management consultant who works for BIG Consult Pty Ltd (ABN: 31 064 241 809) (BIG). . John's end of year income statement from BIG reade Gross payments: Tax withheld: Overtime meal allowance: Laundry allowance: ABC Ltd DEF Ltd GHI Ltd tel:31%20064%20241%20809 • John received dividends from 3 companies (all non-BRE's), John took out a loan on 1 July CY to invest in these companies. The principal amount of the loan was $100,000. Borrowing costs associated with the loan were $2,500 with the loan term being 7 years. Interest on the loan in the present year amounted to $3,000. $175,000 $85,000 $1,500 $6,000 First rented out on 27 February 2016. John lived in the house and considered it his main residence up to this point. Yearly rental income: 19,000 Interest paid on loan in CY: 13,000 $10,000 franked to 100% $85,000 franked to 60% $1,500 franked to 90% John own(ed) two rental properties located at 456 Happy Lane, Perth, TAS 7300 and 789 Perth, TAS 7300. Details in respect of each property below: 456 Happy Lane 789 Happy Lane Purchased: 10 January 2007 for $260,000 Purchased: 1 March 2016 for and stamp duty of 23,000 $560,000 and stamp duty of 53,000 First rented out on 20 March 2018. John lived in the house and considered it his main residence up to this point. Yearly rental income: 26,000 Interest paid on loan in CY: 30,000 No further items to depreciate. Depreciable items include: • New carpet (OAV:10,000) acquired 30 March CY New Fridge (OAV:3,500) acquired 1 January CY On 30 September CY John sold 456 Happy Lane, Perth, TAS 7300 for $650,000 and incurred the following expenses in making the sale: advertising fees (4,000), stamp duty (19,000). Sales Opening stock Purchases • . On 1 September CY John decided to replace some of the fly screens at 789 Happy Lane. Those on the front and back of the house were equipped with security mesh, while those on the side were repaired with normal mesh. The cost of security flyscreens was $1,300 and the normal mesh $560. Closing stock • • • John also regularly pays a Gardener to maintain both the properties. The cost for 456 Happy Lane was $150 per visit and $200 per visit for 789 Happy Lane. The Gardener attended each property 6 times this year. Cost price • Market value • Replacement cost New dishwasher (OAV:2,500) acquired 10 July CY. • In PY, John commenced business as a sole trader. The business involves buying and selling water bottles. John has kept the following accounts: Note: a shipment of water bottles (amounting to $1,500) was still on board a vessel at the end of the CY. The terms of the shipment were FOB destination. $10,000 $5,000 $12,000 $4,000 $3,500 $3,750 • John leased a premises to store his water bottles. This cost $700 per month. John held this lease and made payments each month for the entire CY. John would also frequently travel from his management consulting job to the warehouse. John estimates the total km's traveled between these two destinations over the course of the year to be 3600 km. Required Prepare a letter of advice for John.
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Your Name Your Address City State Postal Code Date Mr John Citizen 123 Happy Lane Perth TAS 7300 Australia Dear Mr Citizen Re Taxation Advice for the Current Year I hope this letter finds you well Fol... View the full answer
Related Book For
South Western Federal Taxation 2014 Comprehensive Volume
ISBN: 9781285180922
37th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young
Posted Date:
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