Case Study: Comprehensive Individual Tax Return

Himanshu Patel, a resident taxpayer aged 59, runs a sole trading business selling imported food items. His business is registered for GST. He also works on a casual basis as an import/export agent at Blue Marlin Pty Ltd (ABN: 89 125 678 968). He has a rental property in Lakemba, Sydney. Himanshu is taking care of his wife Hayali Patel, who has lost eye sight in her left eye 9 months ago, on the 1st of October 2018 as a result of a car accident. Himanshu is solely taking care of Hayali.

Personal Information

Name: Himanshu Patel

TFN: 300 001 000

Date of Birth: 15 July 1974

Address: 23 Market Street, Newtown NSW 2200 Contact: 0456 587 987 (Work: 02 9578 3648)

Bank account: BSB 225887 Account 378458 Himanshu is not covered by a private hospital cover.

Spouse: Hayali Patel

Date of Birth: 30 July 1989

Currently receives disability pension from Centrelink $9,200 for the 2020 tax year. She has no deductions to claim for the 2020 tax year.

Income/Expense Information

Himanshu and Hayali have a joint term deposit account at ANZ. Total interest received from the joint account was $500 for the 2020 financial year.

Himanshu has paid $400 to a registered tax agent for preparing his tax return for 2019 tax year.

In addition to the above, the following information relates to his employment (Part A), business income/expenses (Part B) and rental receipts/payments (Part C). All expenses have been substantiated unless it states otherwise.

Part A: Regarding his employment

Employer: Blue Marlin Pty Ltd (ABN: 11 235 365 874)

Gross wages for the 1stof July 2019 to the 30thof June 2020: $7,800 (PAYG withheld: $200)

He also received $2,000 shift allowance and $800 reimbursement for work related software fees from his employer.

Himanshu received a car from employer as a fringe benefit (showing as reportable in his PAYG summary, valued $60,000 not exempt from FBT)

Work related allowable deductions to claim (telephone & stationery) $300

Part B: Regarding his Business

During the year, Himanshu has had the following transactions in relation to sales, purchases, and inventory (trading stock). Himanshu did not choose Small Business Entity option nor low value pool.

Cash received from accounts receivable for credit sales Cash paid to accounts payable for purchases of trading stock Inventory (trading stock) on 1 July 2019 Inventory (trading stock) on 30 June 2020 LAW6001 Assessment 2: Individual Case Study P38310f10 LAUREATE INTERNATIONAL UNIVERSITI ES' - at market selling 58,600 5m Himanshu has taken home some food items from the stock purchased for consumption by his family at total value of $2,500 Ledger balances were as follows (GST inclusive) Accounts receivable Accounts payable Additional cash receipts included: 0 Volume rebates from overseas suppliers $3,500 0 Insurance recovery from the insurance company due to extensive damage caused by a hailstorm and included - Compensation for loss of income $7,900 - Repairs carried out on shop caused by storm damage $2,700 - Medical costs incurred by Himanshu form injuries $900 0 Capital contributed by Himanshu to expand the business $10,000 Cash payments included: a Cash Drawings by Himanshu $3,000 1- Fines for breach of Australian Customers regulations $900 0 Net wages to employees $12,000 a PAYG withheld from employees and paid to the ATO $2,900 a Superannuation for employees $1,230 0 Superannuation guarantee charge $190 0 Fringe benet tax $850 a Lease payments on shop fittings and plant equipment $940 I PAYG instalments for Himanshu's personal tax commitments $2,500 0 Fee for maintenance of computer systems Covering the period 1/4/2020 to 30/9/2020 $1,680 0 Other tax deductible operating expenses $9,200 1- Decline in value (see note 1) $ ? Other information regarding Himanshu's Business Note 1) Himanshu uses plant and equipment in his business as follows. Himanshu wishes a maximum deduction for 2019/20 tax year. Ignore SBE concession. You must show clearly decline value to claim this year and closing adjustable value balance of the each asset in the word report. Assets Cost ($) Purchase Effective Adjustable Business DIV date life vale usage method (30/6/2019) FumItu re Other information regarding Himanshu's Business Note 1) Himanshu uses plant and equipment in his business as follows. Himanshu wishes a maximum deduction for 2019/20 tax year. Ignore SBE concession. You must show clearly decline value to claim this year and closing adjustable value balance of the each asset in the word report. Assets Cost (5) Purchase Effective Adjustable Business DIV date life vale usage method (30/6/2019) Fumltu re LAW6001 Assessment 2: Individual Case Study P33210f10 LAUREATE INTERNATIONAL UNIVERSITIES' Laptop m 100% _ Part C: Regarding his Rental property Himanshu purchased a house as a residential investment property on the 1St ofJuly 2019. Purchase price of the property was $300,000 comprised of the following payments. All amounts include GST where applicable. 0 Land and buildings $276,800 a Depreciable assets adjustable value on the 1St ofJuly 2019 (See Note 1) - Carpets $5,000 - Hot water system electric $1,200 - Ceiling fans $1,600 - Barbecue (xed) $1,400 - Window blinds internal $8,000 - Window curtains w $300,000 The previous owner provided a statement to Himanshu certifying that the property was constructed and completed on the 1St ofJanuary 1996 at a construction cost of $100,000. The house was in good condition except that the outside walls required complete repair. Himanshu recorded the following receipts and payments for the 2019/20 tax year in respect of the rental property: Receipts Rent received (net of agent commission withheld $1,250) by 28 June 2020 $23,750 Compensation from Rental bond board for tenants who left and did not pay the rent they owed (see note 2) $1,300 Rent in advance from new tenants on 29 June for the period 11uly to 30 July 2020 $3,000 Insurance recovery for storm damage to roof $2,100 Payments Mortgage repayments to Westpac Bank - principal $4,500 - interest $23,800 I.oan application fees to Westpac Bank for a 10-year mortgage loan to buy the house paid on approval of the loan 1 July 2019 5825 Council 8: Water rates $3,400 Building Insurance premium 5850 Payment to solicitors - for lease preparation fees $150 - to eject tenants for non-payment of rent $375 Repairs - to paint the outside walls of the house, carried out on 10July 2019 $1,100 Construction costs of brick room to store garbage bins and gardening equipment, carried out on 1 May 2020 $6,000 Garden hose and attachments 5165 Travel costs to the rental property for inspections (see Note 3) $830 Pest control costs to eliminate cockroach infestation 5280 Payment to a registered tax agent - preparing 2017/18 tax return $170 Payments to the Australian Taxation Ofce - Additional tax on an amended assessment S400 - Fine for the late lodgement of 2017/18 tax return $760