Sally lives in Pennant Hills and she is employed full-time as an actuary at a firm in Sydney CBD. During the 2019/20 year of income, she incurs travel expenses of $2500 in her daily commute between home and the firm. She receives a salary of $130,000 in the 2019/20 year of income, from her actuary job. Sally’s employer also provides her with a laptop computer (valued at $3000) to use for her work. Sally is an Australian resident for tax purposes. In addition to her full-time job, Sally also works as an indoor tennis coach at a local community college in Chatswood during the week, in the evenings. She travels from the firm in Sydney CBD, to the college in Chatswood to teach. During the 2019/20 year of income, she incurs travel expenses of $2,000 in travelling from the firm to the college in Chatswood. She receives $25,000 from coaching indoor tennis at the college during the 2019/20 income year. In December 2019, Sally also entered the National Women’s Indoor Tennis Competition, where she won $20,000 in prize money, and a top-of-the- range dishwasher (valued at $5,000). In January 2020, Sally took a few weeks off work. While exploring the New Year sales, Sally came across an excellent bargain and purchased a 130-year old, antique bedroom furniture set for $1,550 (comprising a bed (value $450), 2 bedside tables (value $350 each) and a chest of drawers (value $400)). A few weeks later she received an offer of $4,400 for the set. She negotiated with the purchaser and sold each item separately ($2,000 for the bed, $700 for each bedside table, and $1,000 for the chest of drawers). A few years ago, Sally purchased a holiday home in Avoca in October 2018 for $1 million. (She paid a 10% down payment and borrowed the balance of the purchase price from BigBank at market rates.) She incurred legal fees and transfer (stamp) duty in relation to the purchase of $10,000. At the time of acquisition, the property was in serious need of repair. A number of roof tiles were broken and parts of the gutters had deteriorated and were falling apart. In November 2018, Sally incurred $3,000 in repairing the broken roof tiles and parts of the guttering, to get the property ready for the summer season. In March 2019, she commenced construction of a garage on the property. The construction is complete in October 2019 at a total cost of $50,000, paid on completion. In April 2020, Sally is approached by a developer who wishes to build a multi-storey complex on the site of Sally’s holiday home. In May 2020, Sally enters into a contract to sell the property to the developer for $1.3 million plus a unit in another holiday complex (market value of the unit is $400,000). Sally incurs legal fees of $1000 in relation to the sale. The sale will be completed in July 2020, at which time Sally will receive the cheque for $1.3 million and the title to her new unit. Assume that over the time Sally owned the property, she paid interest totalling $100,000 in relation to the BigBank loan. Assume none of the expenses in relation to the Avoca property are deductible. 

Required: Advise Sally regarding any relevant tax implications arising from the above facts in relation to the 2019/20 income year. In your answer, make sure that you apply the HIRAC methodology and refer to any relevant cases, legislative provisions, tax rulings and principles of tax law, and include any relevant calculations.

Answer rating: 100% (QA)

Sallys travel expenses for her daily commute between home and her fulltime job are not tax deductibl... View the full answer