A case scenario with the tax issues identified is provided. You are required to state your conclusion for each tax issue listed and to provide the reasoning underlying each conclusion. The reasons provided should be well supported by the legislation and other sources where appropriate. All sources must be clearly cited and referenced; they do not form part of the word limit imposed. No marks are awarded if your reasoning is not provided. Please note that "justify your answer" means that you are required to defend your answer by giving reasons for arriving at your conclusion Ten (10) marks are awarded for overall presentation. Please note that you will lose marks if: - a reference list is not provided; - less than three different sections of the Income Tax Act 2007 are provided for each issue (see last page for guidance); - no workings/calculations are provided to support your answer - your reasonings are written in such a way that it is not easy to read or follow; - in-text citation is not set out in accordance to the guidelines for Assignment 1 placed on Stream. Other criteria are shown on page 1. Please note that: - All amounts are expressed in New Zealand currency. - All taxpayers are New Zealand tax residents. - Where relevant, the taxpayers have a standard balance date of 31 March. - The scenario is hypothetical and is set up for the purpose of this assignment. - The word limit guideline is about: 1,000-1,500 words. Note: A quality tax explanation and justification is the result of thorough resear careful interpretation of the sources of information, application of the sources to facts, and clear communication of your research analysis. What FACTS: For the 2020 income year, Peter Pan has the following income and expenditure: Salary of $150,000. Rental income and expenses from several properties: (a) A residential rental property in Mt Eden with a rental income of $51,000 p.a. Property management fees are $4.000 p.a. Other deductible expenses that relate to this property are $109,000 p.a. (e.g. rates. interest, etc). (b) A residential rental property in Mt Taranaki with a rental income of $40,000 p.a. Property management fees are $2,000 p.a. Other deductible expenses that relate to this property are $30,000 p.a. (e.g. rates, interest, etc). (c) A commercial property in Mt Wellington (used predominantly as a business premise) with a rental income of $100,000 p.a. Property management fees of $3,000 p.a. Other deductible expenses that relate to this property are $98,000 p.a. (e.g. rates, interest, etc). Peter Pan lives in a three-bedroom home in Wellington which he owns, and he occasionally lists one of his bedrooms on Airbnb to generate some extra income. During the 2020 Income year, the room was rented out for 40 nights, charging $100 per night. Peter Pan worked out the portion of expenses that relate to the provision of the accommodation to be $41 a night (includes utilities, costs, etc). Peter Pan works full time for Tinkerbell Ltd. The shares in Tinkerbell Ltd are held 90% by Peter Pan Family Trust and 10% by Peter Pan. Peter Pan is the settlor of the Peter Pan Family Trust. During the year 2019-20, Tinkerbell Ltd provided an interest free loan to Peter Pan's Family Trust as well as a laptop that costs $6,000 for Peter Pan to use at work and at home. ISSUE 1A (40 marks) Is Peter Pan able to offset any losses he incurs in relation to all his rental properties against his salary? Assume that none of the properties are revenue account property. (You are required to show all calculations for the net rental income or loss for his rental properties). CONCLUSION REASONING ISSUE IB (20 marks) Will Peter Pan be taxed on the income he derives from providing the Airbnb accommodation? (You are required to show all calculations). CONCLUSION REASONING A case scenario with the tax issues identified is provided. You are required to state your conclusion for each tax issue listed and to provide the reasoning underlying each conclusion. The reasons provided should be well supported by the legislation and other sources where appropriate. All sources must be clearly cited and referenced; they do not form part of the word limit imposed. No marks are awarded if your reasoning is not provided. Please note that "justify your answer" means that you are required to defend your answer by giving reasons for arriving at your conclusion Ten (10) marks are awarded for overall presentation. Please note that you will lose marks if: - a reference list is not provided; - less than three different sections of the Income Tax Act 2007 are provided for each issue (see last page for guidance); - no workings/calculations are provided to support your answer - your reasonings are written in such a way that it is not easy to read or follow; - in-text citation is not set out in accordance to the guidelines for Assignment 1 placed on Stream. Other criteria are shown on page 1. Please note that: - All amounts are expressed in New Zealand currency. - All taxpayers are New Zealand tax residents. - Where relevant, the taxpayers have a standard balance date of 31 March. - The scenario is hypothetical and is set up for the purpose of this assignment. - The word limit guideline is about: 1,000-1,500 words. Note: A quality tax explanation and justification is the result of thorough resear careful interpretation of the sources of information, application of the sources to facts, and clear communication of your research analysis. What FACTS: For the 2020 income year, Peter Pan has the following income and expenditure: Salary of $150,000. Rental income and expenses from several properties: (a) A residential rental property in Mt Eden with a rental income of $51,000 p.a. Property management fees are $4.000 p.a. Other deductible expenses that relate to this property are $109,000 p.a. (e.g. rates. interest, etc). (b) A residential rental property in Mt Taranaki with a rental income of $40,000 p.a. Property management fees are $2,000 p.a. Other deductible expenses that relate to this property are $30,000 p.a. (e.g. rates, interest, etc). (c) A commercial property in Mt Wellington (used predominantly as a business premise) with a rental income of $100,000 p.a. Property management fees of $3,000 p.a. Other deductible expenses that relate to this property are $98,000 p.a. (e.g. rates, interest, etc). Peter Pan lives in a three-bedroom home in Wellington which he owns, and he occasionally lists one of his bedrooms on Airbnb to generate some extra income. During the 2020 Income year, the room was rented out for 40 nights, charging $100 per night. Peter Pan worked out the portion of expenses that relate to the provision of the accommodation to be $41 a night (includes utilities, costs, etc). Peter Pan works full time for Tinkerbell Ltd. The shares in Tinkerbell Ltd are held 90% by Peter Pan Family Trust and 10% by Peter Pan. Peter Pan is the settlor of the Peter Pan Family Trust. During the year 2019-20, Tinkerbell Ltd provided an interest free loan to Peter Pan's Family Trust as well as a laptop that costs $6,000 for Peter Pan to use at work and at home. ISSUE 1A (40 marks) Is Peter Pan able to offset any losses he incurs in relation to all his rental properties against his salary? Assume that none of the properties are revenue account property. (You are required to show all calculations for the net rental income or loss for his rental properties). CONCLUSION REASONING ISSUE IB (20 marks) Will Peter Pan be taxed on the income he derives from providing the Airbnb accommodation? (You are required to show all calculations). CONCLUSION REASONING