Gordon Smith lives in Adelaide where he owns numerous residential rental properties. The following information relates to Gordons tax affairs for the income tax year ending 30 June 2023. Gordon is not a tax expert, so he has asked you to complete his tax return.

Rent received from tenants $87,000

Prepaid rent at 30 June 2022 2,500

Prepaid rent at 30 June 2023 3,500

The rental agreement between Gordon and his tenants provides that tenants must pay their rent one calendar month in advance. All rental agreements are for a fixed term and cannot be cancelled unless by mutual agreement between Gordon and the tenant.

In April 2023, Gordon sold one of his rental properties for $897,000. This property was purchased in January 2012 at a total cost of $450,000. The property was not fit for renting out at that time due to requiring certain repairs to meet building and safety standards, but Gordon thought that he might be able to fix the property for a reasonable cost and sell it later. He sought advice from a real estate agent regarding the propertys location and whether it constituted a good investment. The agent confirmed that the location made the property a wise investment if the repair costs could be kept to a minimum. Unfortunately, due to rising building costs, demands from the local council, and the property requiring more repair work than expected, the repairs became quite expensive. To offset these costs, Gordon rented the property between 2015 and 2023 while he waited for an offer from a purchaser that he was prepared to accept. The repairs eventually cost $156,000. Costs to sell the property (including advertising and real estate agent commission) totalled $12,500.

Required In your own words and based on the information provided, calculate Gordons assessable income for the year ended 30 June 2023. Gordon is NOT registered for the Goods and Services Tax since residential rent is not considered to be turnover for GST registration purposes.

Note: this assignment part is only concerned with assessable income. It is not concerned with income tax deductions.

Since you are a tax professional, you must justify your answers with reasonably argued positions based on relevant tax laws. To do this, please use the cite, describe, apply approach as demonstrated in the course materials. For the purposes of this assignment part, you should assume Gordon is an Australian individual tax resident. This means that his tax residency status is not an issue that needs to be discussed. You may also assume that he is NOT in business. Renting properties does not constitute a business activity. You do not need to discuss this issue either