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 1st of July 2019 to the 30th of 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	$85,000
Cash paid to accounts payable for purchases of trading stock	$43,000
Inventory (trading stock) on 1 July 2019	$7,100
Inventory (trading stock) on 30 June 2020
- at cost	$8,400

- at market selling	$8,600
- at replacement	$8,500

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)

	1 July 2019	30 June 2020
Accounts receivable	$17,600	$19,800
Accounts payable	$5,280	$5,830

Additional cash receipts included:

• Volume rebates from overseas suppliers $3,500
• 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
• Capital contributed by Himanshu to expand the business $10,000

Cash payments included:

• Cash Drawings by Himanshu $3,000
• Fines for breach of Australian Customers regulations $900
• Net wages to employees $12,000
• PAYG withheld from employees and paid to the ATO $2,900
• Superannuation for employees $1,230
• Superannuation guarantee charge $190
• Fringe benefit tax $850
• Lease payments on shop fittings and plant equipment $940
• PAYG instalments for Himanshus personal tax commitments $2,500
• Fee for maintenance of computer systems

Covering the period 1/4/2020 to 30/9/2020 $1,680

• Other tax deductible operating expenses $9,200
• Decline in value (see note 1) $ ? Rest of the question is uploaded in second question with tittle Remaining Part Sorry for Inconvenice