In this question, all amounts exclude GST. Stevie Nicks and John Mitchell are a couple. In 2013, Stevie and John opened a bookstore in Coorparoo, a suburb of Brisbane. They operate the business as a partnership, running the business from their family home that they own as joint tenants. The business occupies the ground floor, which is 50% of the floor space of the property. They live on the first floor. The bookstore has always specialized in selling first edition and collectors’ editions of books. The partnership business does not apply the provisions of Div 328. The partnership business has a low-value pool. The partnership agreement between Stevie and John states they are each entitled to a salary of $120,000 per year. Stevie is entitled to an annual bonus of $20,000 for managing the business. The partnership pays for John’s annual membership fee to the Coorparoo Golf Club where he often conducts business meetings. During the 2021–2022 income year, this fee totaled $2,000. They share the remainder of the profits 50:50.

At the height of the COVID-19 pandemic in Brisbane in February 2021, Stevie and John ‘took their business online and they were able to maintain the same sales revenue levels in their 2020–2021 income year as before the pandemic, achieving their goal, which was for the business to survive the income year. The value of closing trading stock on 30 June 2021 totaled $280,000.

In this income year, the partnership business expands the range of books they sell online, to include fiction, recipe books, and children’s books. The partnership rents a small warehouse in Woolloongabba, a neighbouring suburb to Coorparoo, as there is insufficient storage space for the new stock items on the ground floor of Stevie and John’s home.

These are the other relevant transactions for the 2021–2022 income year:

The value of closing trading stock of fiction, recipe books and children’s books on 30 June 2022 is:

Cost price	$1,823,000
Market selling value	$2,295,000
Replacement value	$1,973,000

The value of the closing trading stock of first edition and collectors’ editions of stock items on 30 June 2022 is:

Cost price	$273,000
Market selling value	$227,000
Replacement value	$500,000

Sales revenue for the year totals $12,238,500.

The business purchased the trading stock of the first edition and collectors’ edition items at a cost totaling $1,289,000.

The business imported trading stock of fiction, recipe books, and children’s books at a cost totaling $3,567,000. Import duties payable on the importation of these stock items totaled $356,700.

To manage the foreign currency risk associated with the importation of these items, the business entered into forwarding exchange contracts with a bank. The bank charged the business commission totaling $3,000 for these.

The business purchased packaging and postage material at a cost totaling $35,000. These are used to send goods sold online to customers via mail and courier services. On 30 June 2022, packaging materials on hand were valued at $7,770.

The business incurred legal fees of $4,000 on 1 February 2022, in successfully blocking a competitor’s application made to the Brisbane City Council, to open a similar bookstore in the suburb of Coorparoo. This was the third application that the partnership has successfully blocked in as many years.

On 1 April 2022, the partnership gifted a valuable first edition book to QSTA, the Queensland Steam Train Association, a deductible gift recipient. QSTA sold the book and other donated items on auction at a gala fundraising dinner held on 15 April 2022. All of the funds raised went towards the restoration of a steam locomotive manufactured in 1910. The cost price of the book was $3,500 and its market selling value was $18,800. The book was sold for $65,000 at the auction. Stevie attended the gala dinner and her personal bid of $6,500 for a painting was accepted. QSTA issued all successful bidders and donors with the necessary tax receipts. Stevie hung the painting in the bedroom of the couple’s home until 25 June 2022 when she sold it for $7,000.

The value of the partnership’s low-value pool as of 1 July 2021 was $8,000.

On 1 October 2021, the partnership purchased a computer for $1,200. Stevie used it from that date to surf the Internet to find stock for the bookstore (60% of the time) and to keep in contact with her friends on Facebook (40% of the time). The effective useful life of the asset is 3 years.

On 1 December 2021, the partnership purchased a printer for $250 to print customer orders. The effective useful life of the asset is 3 years.

On 1 March 2022, the partnership purchased a small delivery truck that costs $65,000. During the income year, Stevie used a logbook to record all her trips taken with this vehicle. The logbook reveals the following:

Trips to collect trading stock purchases	890 km
Trips to deliver trading stock sold to Australia post or directly to customers	3,490 km
Trips between the couple’s home and the warehouse	1,200 km

The partnership pays for the following ongoing expenses in relation to the truck:

Fuel	$8,510
Vehicle registration	$720
Insurance	$1,250
Stevie’s truck driver’s license renewal	$800

The partnership employs casual staff to work in the bookstore and pack online orders:

Wages paid them totaled	$360,000
Overtime wages payments totaled	$23,500
Superannuation guarantee contributions totaled	$36,433

The general business expenses of the partnership were as follows:

Stationery and printing expenses	$16,580
Advertising	$9,800
Telephone, internet, and website maintenance	$18,950
Postage and delivery	$119,370
Rent for warehouse	$60,000

In March 2022, Stevie and John were again forced to close the bookstore in Coorparoo when the greater Brisbane area was placed in snap lockdown after a number of COVID-19 cases were detected. Stevie and John struggled to cope with the emotional impact of another lockdown. Their accountant suggested they appoint one of the firm’s senior accountants to manage the bookstore for one month so that they can take a holiday to Byron Bay. Stevie and John took the advice, and the firm charged the partnership $12,000 to second the senior accountant to the business.+

Stevie and John’s Brisbane City Council statements for their property revealed the following costs:

Council rates	$5,500
Water charges	$1,000
Sewage and refuse removal	$300

Stevie and John had not yet paid off their mortgage home loan. During this income year, they incurred interest on the mortgage loan totaling $35,000.

Calculate Stevie’s taxable income for the 2021–2022 income year. Show all your calculations and provide reasons for your answer. Your answer should reference relevant sections and divisions of the Income Tax Assessment Acts, relevant case law, or rulings from the Australian Taxation Office.