Ashwin purchased an investment property in Brisbane on 1 July 2021 for $450,000. The house was listed immediately for rental with a local real estate agent and is currently rented for $450 per week.

Ashwin incurred the following expenses during the year ended 30 June 2022 in respect of the house:

Legal fees of $1,100 and stamp duty of $9,000 on purchase of the property on 1 July 2021;

Ashwin paid a quantity surveyor to estimate the construction cost of the building. The report cost $600 on 28 May 2022 and estimated the original construction costs for the building was $225,000.

Loan establishment fees of $600 on taking out the loan used to purchase the property on 1 July 2021. Interest on the loan for the year totalled $13,500.

Real estate agent commission for the year totalled $2,100.

A new smoke alarm was purchased by Ashwin and installed in the apartment at a cost of $285 on 14 July 2021.

The hot water system was leaking and needed replacing. On 1 December 2021 Ashwin purchased a new hot water system for $1,380 and paid $320 for an electrician to install it.

At the time Ashwin purchased the house, the decking was in good condition. It was damaged in the February 2022 floods. Work was required to replace water-damaged timber boards. Once the carpenter began work, he concluded that more boards needed replacing. The timber boards were replaced with a different product that gives the appearance of timber decking but is less likely to rot in wet weather. This cost $8,000 on 1 March 2022.

Ashwin required legal advice due to the real estate agent breaching the property management agreement Ashwin had signed when he appointed the real estate agent. Ashwin incurred $1,450 in legal fees to recover unpaid rent from the real estate agent on 30 April 2022.

Ashwin travelled 80 kilometres in his car during the income year to inspect his rental property. You can assume that any depreciating assets have an effective life of 10 years and that Ashwin use the prime cost method of depreciation when relevant.

Required:

Discuss the income tax consequences of the information above for the year ended 30 June 2022 under any section of the Income Tax Assessment Acts. Support your discussion with reference to legislation, case law and taxation rulings.