problem: Wesley is a self-employed website designer. He designs manuals and websites. He is not registered for GST. He is as well employed part-time as a book keeper for a manufacturing company. His payments and receipts for the year ended 30 June 2013 are as shown below:
a) $252,000 Fees
b) 30,000 total Salary (after employer had withheld tax installments of $15,000).
c) 18,230 Rental income from the investment property.
d) 6,000 Dividend franked to 60% received from an Australian resident public company.
e) 1,000 Medical expenditure refunds from the Medicare.
$3,000 Rates and Insurance on income producing the property.
16,000 Interest on the money borrowed to buy the income producing property.
4,569 Cost of hospital, dental expenditures for Wesley and his wife May Ling.
1,000 Dentist fees paid for the Wesley’s son who is 23 years of age and a full-time university student. Son has income of $7,000.
30,000 Repairs to the leasing property, which comprised of $10,000 to paint outside of the house and $20,000 to improve the kitchen with better fittings. The painting was due to normal wear and tear.
5,000 Borrowing expenditures relating to a new loan on the rental property that is used exclusively for income producing purposes? The loan is for 6-years and start on 1 November 2012.
1,500 Travel to and from work by train.
2,000 Rates on family home (utilized 10% for work purposes).
1,000 Legal fees paid to the solicitor to gather outstanding trade debts from his business.
2,000 Donations ($1,000 to the Red Cross and $1,000 to the Collingwood Football Club).
1,000 Paid to his wife for 2 hrs work. The normal pay for such a job is $275.
36,547 Purchase of materials, inks and so on to produce manuals.
a) His trading stock of the manuals on hand at the end of the year was valued at $27,000 (at cost price), $28,000 (at replacement price) and $29,000 (at market selling value). The opening stock of manuals was valued at $30,000.
b) The Tax Depreciation Schedule for existing assets as at 30 June 2013 exhibits depreciation of $22,000.
c) The given assets were purchased throughout the year:
Printer $2,569 on 12 February 2013. Its effectual life is 5-years.
Apple Mac $3,590 on 23 September 2012. Its effectual life is 3-years.
On the basis of information given you and supposing that there are no other conditions affecting his tax liability, describe the accessibility or deductibility of the above receipts or expenses and find out Wesley taxable income for the 2012/13 income tax year.
In your answer you should provide references to the relevant parts of the ITAA 1936 and ITAA 1997, case law, Tax Rulings or Tax Determinations. You must avoid the possible incidence of GST while answering the above needs.