Dear Mike, I had a meeting today with a new client Dr. Louis Litt. Hes a cardiologist and the CEO of a heart specialist centre, HealthyHeart Pty Ltd, in Adelaide CBD. The CFO of HealthyHeart Pty Ltd has recently resigned, and Dr. Litt is currently filling in the role of acting CFO. However, he has very limited knowledge about tax law, and is seeking our advice on tax implications of the following situations. Issue #1: HealthyHeart Pty Ltd has recently signed up to a Federal Government program that involves training nurses in cardiac procedures. The specialist centre is receiving $50,000 a year from the Federal Government per nurse there are currently six nurses. Issue #2: Dr. Litt had a registrar called Rachel Zane. Rachel was so good in her job, that Dr. Litt has recently offered her a permanent position as a cardiac doctor at HealthyHeart Pty Ltd. Rachel lives an hour away from the specialist centre. HealthyHeart Pty Ltd has purchased a car valued at $70,000 (GST included) on 1st August 2021 from a GST-registered car dealer, and provided the car to Rachel on the same day. Rachel uses the car for travelling between home and work as well as for personal use. During the period in use, the car incurred operating costs of $12,000 (this includes running costs, insurance and registration). Rachel has maintained log- book records, suggesting that 40% of the car is used for work purposes, while the remaining is for personal use. Dr Litt is interested to know the tax consequences relevant to this car for both HealthyHeart Pty Ltd and for Rachel. Issue #3: Dr Litt is also seeking some advice from our firm regarding his personal finances and implications of certain receipts and payments on his individual income tax. Dr Litt is married, with no children. He did not have any private health insurance during the tax year 2021-2022. Dr Litt has an annual income of $650,000 from working at HealthyHeart Pty Ltd. Included in this income is PayG withholding of $20,000 per month. Issue #4: Dr. Litt is also currently licencing a procedure he developed to GlobHeartz Ltd. for a fixed fee of $10,000 per month, GlobHeartz then licences the right to use the procedure to several hospitals. He is interested to know how these payments might be assessed. Issue #5: Dr. Litt wants to give $10,000 to his long-term secretary, Ms Donna, who is retiring this month. I understand that they have worked together for a number of years and that she has been a great personal friend of Dr. Litt. The payment is intended to be a thank you for her loyal friendship. This is highly unusual as he has never previously given a non-performance related bonus to an employee. Dr. Litt wonders whether this payment, that he is paying from his personal account, will constitute an assessable income for Ms Donna? Issue #6: Dr. Litt has also recently sold his family home in Norwood. He and his wife had bought this house on 1 February 2001 for $800,000 and sold it for $2 million in February of this year. He and his family have lived in this home continuously except for the period between 1 July 2003 and 1 July 2006, where the property was leased to tenants whist, he was working at Harvard Medical School. Dr Litt is interested to know the tax consequences of this sale. Issue #7: While working in USA, Dr. Litt had opened a savings account at a bank in USA. He earns an annual interest of $10,000 (AUD) from this savings account. The amount is net of foreign tax withheld of $2,000. Dr Litt is unsure whether he will have any tax liabilities arising from this in Australia? Issue #8: Dr. Litt also has an investment property in Brighton. The property is rented out for a monthly rent of $820. Issue #9: Dr Litt has accepted a new job in the UK. He will resign from his job at HealthyHeart Pty Ltd, effective 1 July 2023, and move permanently to the UK with his wife. He has already sold his family house. He is contemplating on selling the investment property at Brighton, in the tax year 2023. The property was purchased 4 on 9 March 2007, for $480,000. He would like to know the tax consequences of a) selling the property before he moves overseas; and b) continuing renting out this property while he moves overseas permanently with his wife. Issue #10: Dr Litt was taken by surprise when it was mentioned that after he moves overseas, he may still have to pay taxes in Australia. He is keen for a list of items that are most likely to be included in his assessable income for Australian tax purposes for the tax year 2023, once he has permanently moved overseas. Could you please prepare a letter of advice for me to send to Dr. Litt explaining any tax consequences in relation to the above matters? In addition to the tax consequences, Dr Litt has also requested an estimation of his income tax payable for the tax year 2022. He has kept invoices for $7,500 of work related expenses that can be claimed as general deductions. If you could email that to me by Monday morning. Sincerely, Harvey Specter Phone: 038 123 4567 Email: harvey.specter@hltadvisory.com.au Hyde & Lye Tax Advisory