Question 1: Prepare an income tax return form for the following taxpayer
- Personal details: David Lucas: 13 Marina Street, Sydney NSW 2017.Date of birth: 12 February 1971.Occupation: Accountant; TFN-124 765 230.
- Salary: $55 630 PAYG tax paid $ 10 560; Allowances $230; Reportable fringe benefits$4000.Employer's ABN: 22 222 222 222.
- Unit trust distribution was 2264, which had franking credit of $ 113. There was also a gross capital gain of $260 that was fully discountable.
- David earned a $47 interest from an overseas bank account but he only received $40 after they subtracted a foreign tax credit of $7.
- Other income: bank interest $84; fully franked dividends $240; unfranked dividends $50.
- He received refunds of $450 from Medicare and his health insurer (Code BUPA) over the year. His membership number is 426780 and he had no children.
- David owns an investment property that earned $13 240 rent. The expenses were: interest $10700, agent commission $910, repairs $128, rates $930 and advertising $45. When he bought it three years ago, the building itself cost $ 212 000 and at the end of last year the appliances had a WDV of $ 1285 in the low value pool.
- During the year David drove his 2.5 -litre car 85 km on work- related travel. He also spent $320 on union fees, $42 on laundering his grey trousers, $400 on Internet access (half of which related to his work), $45 on a text book, $80 on donations to the Red Cross and $2380 on hospital/doctors' bills. Private health insurance cost $1230 and he did not receive any upfront Government contribution for his health insurance premium.
Required:
1. Prepare income tax return for Mr. David Lucas and advise him about his income tax liabilities or refund (if any).
2. Use all appropriate forms and worksheets to complete your return. If you are not certain about what forms to use, please discuss with your class teacher.
3. Use current tax rates available in the e-learning.
Please note that to be able to get competent you need to show all relevant calculations, correctly fill out the necessary forms and worksheets, use correct tax rates and advise the client about this tax liability/refunds.
Question 2
Leila Karim is a doctor who made the following payments during the year:
Doctor union fee 450
Laundering of compulsory uniform 90
Jacket when working night shifts 85
Stethoscope 120
Text book -Diabetes management 70
Text book -Law for doctors 65
Taxi fares when called in at short notice 70
Plain watch 60
Phone calls to check shifts 8
Shoes 85
Scissors to cut surgical gauze 15
a) Advise which of these are deductible for tax purpose and cite relevant legislation.
b) If according to your opinion, any of the expenses are not deductible, briefly mention the reasons to the client.
c) Explain the substantial requirements that she will need to satisfy.