QUESTION 1 20 Marks

Your client, Amy Jones owns a clothes shop in Sydney. She operates as a sole trader. The business is known as the 'High Street Clothes' and Amy has an ABN, a registered business name and is also registered for GST. Amy also has other investment income which she owns herself. The following figures are as at the end of the financial year, 30 June 2024 and do not include GST. (Do not make any adjustments for GST)

Receipts $

366,200 Sale of books and related products

3,400 Interest on Bank deposits.

12,400 Salary from CQU for tutoring in Accounting (PAYGW $2,200)

12,500 Exempt income from part-time military service

2,500 Private Health fund refunds

136,000 Inheritance from her grandmother

37,500 Rent from her investment property

6,220 Refund from the ATO for the last year's tax return

64,800 Net capital gain from the sale of shares held for 5 years.

160,000 Lottery win - Amy was just very lucky.

4,450 Value of a holiday to Bali given to her by a clothes manufacturer

7,000 A franked dividend from ABC Ltd - imputation credit $3,000

Payments

67,000 Rent on her store in Sydney

5,400 Body Corporate fees on income producing property.

125,000 Employee salaries

20,000 Superannuation contribution for employees

22,600 Interest on borrowing to purchase the income producing property.

5,500 Insurance, local council rates and land tax for the investment property

2,500 Fees paid to a registered Tax Agent

28,800 New counter and shelving

2,000 Travel to and from work to home

4,500 Rates on her principal residence where she lives with her family.

2,400 Doctors fees for Amy and her family

2,265 University fees for Amy's daughter

18,445 Personal Superannuation contribution for Amy

35,800 Purchase of a new Ford Motor car for private use by the family

(a) Amy Jones is accounting for her taxation liability as a Small Business Entity (SBE)

(b) On 1 July 2023 the opening depreciation pool balance for the SBE pool was $15,000. During the year Kay purchased 1 new depreciating assets used 100% for business purposes in the bookshop. This is recorded in the payment's information listed above. The depreciation deduction has not been included in the above figures.

(c) Amy has a carry forward tax loss from an earlier income year of $15,000. This was due to the impact of COVID 19 on her business.

(d) Amy and her family are members of a private health fund and have private hospital insurance.

(e) Amy has paid $45,000 in PAYG Instalments during the financial year ending 30 June 2024.

(f) The investment apartment was purchased new on 1 July 2023 for a total cost of $535,000 and is part of a hotel complex in Sydney. The real estate agent advised Kay that the construction cost of the apartment was $348,000 and this was confirmed by the builder.

REQUIRED

Calculate Amy's personal tax liability for the year ended 30 June 2024. You should explain your treatment of each item in this question. Figures must be rounded to the nearest dollar and do not include cents in your calculations.

Your answer should be in the correct format of Assessable Income less Allowable Deductions along the lines of the income tax formula. This gives you Taxable Income and you multiply this by the different marginal tax rates plus Medicare levy. This gives you tax payable less any tax offsets. The terms 'Payments' and 'Receipts' are not part of the Tax Formula and are not appropriate for taxation accounting.