Joseph and Amy are a couple. They have been in a permanent relationship for the past...

Transcribed Image Text:

Joseph and Amy are a couple. They have been in a permanent relationship for the past seven years and they have been living in a riverfront unit in Brisbane for the past five years. They are not married. Joseph is a tax adviser with his own private practice, Joseph Smith Tax Advisory Services. For the 2016-2017 income year his practice's tax records show the following (exclusive of Goods and Services Tax, 'GST'): Turnover, services provided to clients, assessable income Tax deductible expenses: Rent, council rates and taxes, electricity and telephone Tax deductible expenses: Salaries paid to staff Tax deductible depreciation: Division 40 capital allowances on computers, furniture and other assets used in the business Joseph also received the following assessable investment income during the income year: Bank interest $1,230,000 HINTS: During the income year, Joseph transferred PAYG payments of $60,000 to the ATO as prepayment of his 2016-2017 income tax liability. $235,000 $650,000 $45,000 Amy works part-time as a waitress and earned $32,000 in gross wages during the 2016-2017 income year. PAYG of $1,200 was paid to the ATO on her behalf by her employer. Rent received, assessable income, income from property, s 6-5 Tax deductible expenses, deductible under s 8-1 $40,000 Amy owns five properties around Brisbane that she rents out. Her tax records for her rental properties reveal the following net rental property loss for the 2016-2017 income year: Tax deductible Division 43 capital works allowances on the construction cost of the properties ('tax depreciation for certain buildings') Joseph and Amy did not have any private patient hospital insurance during the income year. You are required to: Calculate the taxes payable by Joseph and Amy for the 2016-2017 income year. Show all calculations and provide reasons for your answer. See the hints below that will assist you in preparing your answer. Consider if Joseph's business is separate from him. Consider whether they are a family for tax purposes. $70,000 ($20,000) ($60,000) Start off by calculating taxable income for Joseph by using the income tax equation: Assessable income less deductions. Start off by calculating taxable income for Amy by using the income tax equation: Assessable income less deductions. Remember that Joseph and Amy can have three sources of income in their taxable income: income from employment, income from carrying on a business, income from property. Consider if Joseph's business is an SBE. What effect does that have on his taxes payable? Joseph and Amy are a couple. They have been in a permanent relationship for the past seven years and they have been living in a riverfront unit in Brisbane for the past five years. They are not married. Joseph is a tax adviser with his own private practice, Joseph Smith Tax Advisory Services. For the 2016-2017 income year his practice's tax records show the following (exclusive of Goods and Services Tax, 'GST'): Turnover, services provided to clients, assessable income Tax deductible expenses: Rent, council rates and taxes, electricity and telephone Tax deductible expenses: Salaries paid to staff Tax deductible depreciation: Division 40 capital allowances on computers, furniture and other assets used in the business Joseph also received the following assessable investment income during the income year: Bank interest $1,230,000 HINTS: During the income year, Joseph transferred PAYG payments of $60,000 to the ATO as prepayment of his 2016-2017 income tax liability. $235,000 $650,000 $45,000 Amy works part-time as a waitress and earned $32,000 in gross wages during the 2016-2017 income year. PAYG of $1,200 was paid to the ATO on her behalf by her employer. Rent received, assessable income, income from property, s 6-5 Tax deductible expenses, deductible under s 8-1 $40,000 Amy owns five properties around Brisbane that she rents out. Her tax records for her rental properties reveal the following net rental property loss for the 2016-2017 income year: Tax deductible Division 43 capital works allowances on the construction cost of the properties ('tax depreciation for certain buildings') Joseph and Amy did not have any private patient hospital insurance during the income year. You are required to: Calculate the taxes payable by Joseph and Amy for the 2016-2017 income year. Show all calculations and provide reasons for your answer. See the hints below that will assist you in preparing your answer. Consider if Joseph's business is separate from him. Consider whether they are a family for tax purposes. $70,000 ($20,000) ($60,000) Start off by calculating taxable income for Joseph by using the income tax equation: Assessable income less deductions. Start off by calculating taxable income for Amy by using the income tax equation: Assessable income less deductions. Remember that Joseph and Amy can have three sources of income in their taxable income: income from employment, income from carrying on a business, income from property. Consider if Joseph's business is an SBE. What effect does that have on his taxes payable?

Answer rating: 100% (QA)

ANS WER Joseph s taxable income is 1 230 000 235 000 650 000 45 000 300 000 Amy s taxable income is ... View the full answer