Scenario: Assume Gordon's assessable income is $365,500 and deal with the following additional information (which is relevant for the year ending 30 June 2023 unless otherwise stated) to determine Gordon's taxable income and income tax payable including Medicare levy for the year ending 30 June 2023. Interest paid on loans over all Gordon's rental properties was $25,000. On 1 May 2023, Gordon borrowed money over 25 years to purchase a new rental property in Marion, south of Adelaide. In taking out this loan, the bank charged a $900 application fee. Stamp duty (paid to the South Australian government) on the loan was $250. The Marion property cost $500,000 to purchase. Gordon regularly travels to inspect his properties. He spent $1,500 on such travel during the 2023 financial year. In November 2022, Gordon paid you (as his registered tax agent) $400 to complete and lodge his 2022 income tax return. In February 2023, one of Gordon's tenants complained that the roof leaked during a heavy rainstorm. Gordon arranged for the roof to be inspected for the cause of this leak. During the inspection, it was noticed that there had been considerable damage to the roof from falling tree branches and other wear and tear that had occurred over the many years that Gordon had owned the property. This damage was in the form of numerous broken or cracked tiles. While these tiles could be replaced, the builder who inspected the roof said that cracks may easily appear in other tiles and recommended that the entire roof be replaced with either new tiles or a with a different material such as iron sheets. Gordon chose to have iron sheets installed at a cost of $2,500 since iron would reflect heat and lead to significant energy savings over time. Other expenses, which may be taken as deductible, were $5,000. Hint: this amount is designed to cover other expenses that a rental property owner will have that I do not wish to focus on in this assignment or the law for which is beyond the scope of this course. You may deduct this amount without argument. Gordon's PAYG Instalments for 2023 were $9,000. He has private health insurance including hospital cover. Please ignore the private health insurance rebate. 

 

Required: Calculate Gordon's taxable income and tax payable (including the Medicare levy) for the income year ending 30 June 2023. Since you are a tax professional, you must justify your answers with reasonably argued positions based on relevant tax laws. To do this, please use the 'cite, describe, apply' approach as demonstrated in the course materials. Please ignore all small business entity concessions and offsets. 

 

I would require help with citing, describe and apply. I have done the calculation, but not really sure about the relevant laws.

 

Reference: UNIVERSITY of SOUTH AUSTRALIA ACCT 5017 (12989) TAXATION 

Answer rating: 100% (QA)

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