Information is presented below for Tim Brown, an Australian resident taxpayer, for the 2019 income year. Using this information, you need to prepare Tim's 2019 income tax return and to explain how the issue is treated for tax purposes. When writing up your responses, your team needs to justify your treatment of the issues, citing relevant legislative provisions and/or case authorities. You also need to cross-reference your response to the related item number that you are completing in the tax return.

Background information

Timothy Robert Brown lives with his wife, Jessica Anne Brown, in an apartment located at 32/4 Riverbark Avenue, East Perth, 6004. Tim and Jessica bought the property in 2016, financing it with a loan from National Australia Bank, and are currently paying off their mortgage through principal and loan repayments of $650 per week.

Tim works as a human resources officer at BluSteel Limited, an Australian resources company (ABN 97828425147). Tims tax file number is 874 124 882 and his date of birth is 26 April 1987.

Jessica works as a legal secretary. Jessicas tax file number is 889 347 219 and her date of birth is 8 July 1988. Jessicas adjusted taxable income is $68,000.

Neither Tim nor Jessica currently have private health insurance.

Information provided by Tim for the preparation of his 2019 tax return

A A copy of Tims payment summary for the year ended 30 June 2019 is available here.

In addition to salary, BluSteel pays Tim two allowances. The clothing allowance is for expenditure on protective clothing worn when visiting mine sites. The entertainment allowance is for meetings held with recruitment agents and prospective employees.

B Tim and Jessica have a joint bank account at the Commonwealth Bank. The details are as follows:

BSB No: 084-971

Account No: 06978425

Account Name: T.R. & J.A. Brown

During the financial year, the account earned total (gross) interest of $520. As they had not initially notified the bank of their tax file numbers, tax of $61.10 was withheld by the bank from the first interest payment.

If Tim is to receive a tax refund this year, he would like it to be paid into this account.

C On 18 June 2019, Tim paid his annual membership fee (for the financial year commencing on 1 July 2019) of $475 to the Australian Human Resources Institute, a national association representing human resource and personnel management professionals.

D Tim provides you with receipts for the following items, which he is seeking to claim as deductions:

• Steel-capped boots $210
• Hard hat $75
• Sunscreen expenses $28
• Business suit $800
• Dry cleaning of business suit $76

$1,189

E In May 2019, Tim travelled to Sydney to attend a 2-day human resource management conference. Although Tims employer does not require Tim to attend such events, Tim feels it is important to keep up-to-date with developments in his field. Tim has receipts for the following costs:

Conference fees $1,500 Airfares $836 Hotel accommodation (3 nights) $780 Taxi fares (to and from Perth airport: $60, $52) $112 Taxi fares (from and to Sydney airport: $58, $64) $122 Taxi fares (to and from conference venue: $30, $34, $28, $33) $125 Meals $188 $3,663

F Tim has also kept receipts of meal expenses incurred when meeting with recruitment agents and prospective employees, which he seeks to claim against his entertainment allowance. These meetings were conducted in the casual setting of a cafe or restaurant. The meal expense totals are as follows:

Meals for himself $484 Meals for entertaining clients $1,792

G During the year, Tim made donations of $200 to Princess Margaret Hospital and $100 to The University of Western Australia. He also gave $50 to a struggling pensioner living in his street. Tim estimated that he spent a further $100 on buskers throughout the year.

H In October 2018, Tim paid a registered tax agent $280 to prepare and lodge his 2018 tax return.

I Tim and Jessica have an investment property located at 28 Diamond Avenue, North Perth, which is rented out to a long-term tenant. The property is managed for them by Professionals Property Managers. Tim provides you with the following details for the property during the financial year:

• Rent received ($300 per week) $15,600.00
• Property management fees (Professionals) $998.40
• Council rates $884.00
• Water rates $634.22
• Landlord insurance (QBE Insurance) $396.20
• Mortgage interest (National Australia Bank) $16,348.00
• Painting $2,600.00

The painting expenses relate to the walls and ceilings in the main living areas of the house. The work involved fixing superficial cracks in the plaster and painting the walls in more modern colours.

J During the year, Tim sold some of his shares through the internet broker ComSec. The following table summarises the number of shares sold and selling price per share:

Company	Date sold	No. of shares sold	Selling price per share
Reynolds Corporation Ltd	2 February 2019	1,000	$8.00
Braxton Mining Ltd	16 September 2018	500	$13.00
Braxton Mining Ltd	17 June 2019	250	$12.00

Tim had purchased 2,000 shares in Reynolds Corporation Ltd on 1 April 2010 for $4.25 per share. Brokerage fees amounted to $40.00 and stamp duty was $26.00.

Tim had purchased 1,000 shares in Braxton Mining Ltd on 1 June 2015 at a cost of $14.00 per share. Brokerage amounted to $65.00 and stamp duty was $42.00.

Brokerage for each sales transaction was $30.00.

K Tim received dividends from his shareholding in Reynolds Corporation Ltd. Reynolds paid two dividends during the 2018/19 year: a final fully franked dividend of 16 cents per share (paid on 01/10/18), and an interim dividend of 12 cents per share franked to 80% (paid on 11/03/19). Braxton Mining Ltd paid no dividends.

PAYG payment summary - individual non-business Payment summary for year ending 30 June 2019 Payee details BROWN, Timothy Robert 32/4 Riverbark Avenue EAST PERTH WA 6004 NOTICE TO PAYEE If this payment summary shows an amount in the total tax withheld box you must lodge a tax return. If no tax was withheld you may still have to lodge a tax return. For more information on whether you have to lodge, or about this payment and how it is taxed, you can: refer to TaxPack phone 13 28 61 between 8.00am and 6.00pm (EST), Monday to Friday, or visit www.ato.gov.au Day/Month/Year Day/Month/Year 01/07/2018 Period during which payments were made to 30/06/2019 Payee's tax file number 874124882 TOTAL TAX WITHHELD $ 38,158 Lump sum payments Gross payments $ 127,400 CDEP payments Other income $ 2,500 $ 4,258 ES Reportable fringe benefits amount FBT year 1 April to 31 March Reportable superannuation contributions $ 12,103 Is the employer exempt from FBT under section 57A of the FBTAA 1986? INO Other income Clothing allowance Entertainment allowance $500 $2,000 Payer details Payer's ABN or withholding payer number 97828425147 Branch number Payer's name BluSteel Limited Signature of authorised person J. Smith Date 02/07/2019 NAT14363-01.2006 PAYG payment summary - individual non-business Payment summary for year ending 30 June 2019 Payee details BROWN, Timothy Robert 32/4 Riverbark Avenue EAST PERTH WA 6004 NOTICE TO PAYEE If this payment summary shows an amount in the total tax withheld box you must lodge a tax return. If no tax was withheld you may still have to lodge a tax return. For more information on whether you have to lodge, or about this payment and how it is taxed, you can: refer to TaxPack phone 13 28 61 between 8.00am and 6.00pm (EST), Monday to Friday, or visit www.ato.gov.au Day/Month/Year Day/Month/Year 01/07/2018 Period during which payments were made to 30/06/2019 Payee's tax file number 874124882 TOTAL TAX WITHHELD $ 38,158 Lump sum payments Gross payments $ 127,400 CDEP payments Other income $ 2,500 $ 4,258 ES Reportable fringe benefits amount FBT year 1 April to 31 March Reportable superannuation contributions $ 12,103 Is the employer exempt from FBT under section 57A of the FBTAA 1986? INO Other income Clothing allowance Entertainment allowance $500 $2,000 Payer details Payer's ABN or withholding payer number 97828425147 Branch number Payer's name BluSteel Limited Signature of authorised person J. Smith Date 02/07/2019 NAT14363-01.2006