Amy a transitional tax resident in New Zealand, has been a client of yours, supplies you with the following information regarding her tax affairs for the year ended 31 March 2021. All amounts are in New Zealand dollars.

i. Amy is a cleaner who works in the ER Department of Auckland Hospital. Her annual salary is $52,000 for which $8,620 income tax is deducted. The expenses Amy incurs to carry out her job are uniform cleaning costs of $150 and car parking costs of $1,000. The Auckland Hospital did not reimburse her for this expense.

ii.	Amy contributes to income protection insurance. In August 2020 she had an accident and was hospitalised. The Insurance company paid $400 to compensate her for lost income.

After recovery from the accident to enable her to come to work, the Hospital sent her 10 taxi vouchers valued $50 each.

iii.	Amy purchased shares in Kiwi Fisheries Ltd for $8,000. She organised a loan in order to assist her to purchase these shares. The loan cost her $ 150 in interest during the year but she received in her bank account $ 400 dividend on the shares. This dividend was fully imputed.

iv. Amy earned gross interest from the ASB Bank amounting to $400. She forgot to give her IRD number to the bank and the bank assumed she was on the top marginal tax rate. 

v. During the whole year Amy used to help her elderly neighbours with their household jobs for few hours every Saturday and they paid her $80 each week.

vi. Amy has a bank account in Canada and earned gross interest $200. Canadian withholding tax rate is 10%.

vii. Amy also receives rental income of $21,000 from a rental property that she owns in Auckland. During the income year, she carried out minor repairs and maintenance to the property of $1,200, all of which is deductible. She also incurred deductible rates and interest expenditure on a mortgage over her rental property of $8,800.

viii. Amy was awarded compensation under the Employment Relations Act 2000 amounting to $3,000, from her former employer of a restaurant - the owner abused her publicly for opening a door when he told her to close it.

ix. Amy received cash payment of $2,700 from a television quiz show. She also received goods worth $400.

x. Amy enjoys making jams and Chutneys throughout the year. During the year she received $35,000 from selling jars of jams and Chutneys at Sunday Farmers Market. Amy purchased materials for jams and chutneys costing $16,500 during the year. A room at her home is used to store these supplies and other gear required to make and sell jams and chutneys.

The room occupies 15% of the total house. Amy provides receipts for house outgoings amounting to $24,000 for the year. The kitchen occupies 10% of the total house and she used 20% of the kitchen to make jams and Chutneys. She estimates the trading stock he held at the end of 31 March 2021 is $4,800. She estimated the trading stock he held at the end of 31 March 2020 had a cost of around $3,000.

On 29 October 2019, Amy purchased a second-hand van to use for her jams and chutney business, and for her own private use. The logbook shows that the van usage is 30:70 between private use and jams and chutney business purposes. The van costs $16,000 excluding GST (Inland Revenue’s DV depreciation rate 24%) and she is able to provide you with receipts for van outgoings amounting to $5,500 for the year. On 24 January 2021, the van was stolen and the insurance company paid Amy $9,500 for the claim. On 28 January 2021 Amy purchased a new van for $36,000 excluding GST.

xi. She owns shares in IBM Ltd, USA, and received a gross dividend of $300 on which 10% non-resident withholding tax was deducted. The net dividend amount was credited to her bank account during the year.

xii. Provisional tax of $4,200 was paid by Amy during this tax year.

xiii. Amy paid you $400 for preparing her tax return

Required:
Calculate Amy’s income tax liability for the year ended 31 March 2021, showing all workings and indicating clearly the appropriate tax treatment of all items (i – xii) including, statutory references. 

Question no

Item

Statutory reference

Excluded/ Exempt Income

Assessable Income