Lewis is a professional graphic artist with his own business in Sydney. He conducts his activities as a sole trader. He employs a receptionist by the name of Mary and an assistant named Jennifer, who is his mother. He received fees from many private clients during the year. Some clients paid in cash after the consultation and some paid later after receiving a bill in the mail. Lewis received the following amounts of cash during the year ended 30 June 2019:

• Total fees paid by clients immediately after a consultation                                 $300,000
• Total fees paid by clients later after receiving a bill                                              $80,000

As at 30 June 2018, Lewis had billed clients for $15,000 which were unpaid. As at 30 June 2019, he had clients with unpaid bills of $20,000.

During the year ended 30 June 2019, Lewis had the following expenses:

• Non-capital graphic design equipment (such as printer toner, paper etc.)                             $16,000
• Computer acquired on 1 July 2018 used 80% for business                                                  $15,000
• Rental of the building for his business                                                                                    $60,000
• Tuition fees for his wife’s five-week course on water color painting                                     $20,000
• Travelling expenses to make visits to clients’ offices                                                            $25,000
• Speeding fine while travelling to see a client when he was running late                                      $900
• Graphic design conference in Berlin, Germany on the latest developments in graphic design $15,000

• Salary to Mary (his receptionist)                                                                                            $75,000
• Salary to Jennifer (his assistant)                                                                                          $105,000

A typical assistant doing Jennifer’s work would normally be paid a salary of $80,000.

During the year ended 30 June 2019 Lewis received the following amounts from his investments:

• Dividends franked to 50% paid by Watpac Limited                                                              $70,000
• Interest paid by a local Bank                                                                                                $23,000
• Proceeds from the sale of Dim Limited shares he purchased for $150,000 in 1984         $285,000

Lewis wants to use the diminishing value method of depreciation and all depreciable assets have an effective life of 4 years.

Required:

What is Lewis’s assessable income for the year ended 30 June 2019?

Answer rating: 100% (QA)

Calculation of assessable value of Lewis for the year ended 30 June 2019 1 Lewis is a professional a... View the full answer