Kylie lives in Epping and commutes daily to the accounting firm in Sydney CBD where she is employed full-time as an accountant. She receives a salary of $100,000 in the 2020/21 year of income, from her accounting job. Kylies employer also provides her with a laptop computer (valued at $3000) to use for her work. Kylie is an Australian resident for tax purposes.

For the 2020/21 year of income, Kylie pays $700 membership fees for her membership of the Association of Chartered

Accountants, Australia & New Zealand. She also pays $120 for an annual subscription to a prominent accounting magazine in 2020/21.

Kylie is required, by her employer, to wear all black clothing while working as she often meets with clients. During the 2020/21 year of income, she spends $700 on all black skirts, trousers, and tops

to wear to client meetings. In October 2020 she takes a client out for lunch at a restaurant in The Westin hotel to discuss a work matter. The lunch costs $350. She is so busy working at the accounting firm that she often has to bring work home on weekends. She completes this work using

her work laptop at a small table in the kitchen while her housemates are cooking and washing dishes. During the 2020/21 year of income, the heating and lighting costs for the kitchen are $500.

Kylie is very hardworking and in addition to her full-time job, she also teaches art classes at a community college in Ryde during the week, in the evenings. She travels from the accounting firm in

Sydney CBD, to the college in Ryde to teach. During the 2020/21 year of income, she incurs travel expenses of $2,000 in travelling from the accounting firm to the college in Epping. She receives $15,000 from teaching at the college during the 2020/21 income year. In December 2020, Kylie sees an advertisement in an Art Teachers magazine about an art

competition for art teachers. Kylie decides to enter as she has previously won several prizes in art competitions. Over the next few weeks Kylie paints a beautiful landscape of the south coast and

submits her painting in the competition. She wins a cash prize of $30,000 and an annual pass to exhibitions at the Art Gallery of NSW. While exploring some local sales in January 2021, Kylie came across a bargain and purchased a 120-year old, antique, hand-painted, porcelain tea set for $1,130 (comprising a teapot (value $450), 4 cups with saucers (value $120 per cup with saucer), and a milk jug (value $200)). A few weeks later she received an offer of $1,800 for the set. She negotiated with the purchaser and sold each item separately ($700 for the teapot, $200 per cup with saucer, and $300 for the milk jug).

Several years ago, Kylie purchased a house near the beach which she only makes available for use by her relatives. Kylies friend suggested that she should place an advertisement for tenants in the newspaper occasionally and claim tax deductions for the property expenses. The purchase price was $800,000 and Kylie was required to pay $40,000 stamp duty on the transfer. She borrowed money from a bank to fund the purchase price and paid $100,000 in interest on the loan. In February 2021, she also paid $40,000 to a builder to renovate the bathrooms. In addition she paid $20,000 in legal fees to block a proposed development nearby which would have obstructed the houses picturesque beach views. On 7 June 2021 Kylie entered into a contract of sale of the property to a third party at market value of $1,200,000. Settlement occurred in August 2021.

Required:

Advise Kylie regarding any relevant tax implications arising from the above facts in relation to the

2020/21 income year. In your answer, make sure that you apply the HIRAC methodology and refer to any relevant cases, legislative provisions, tax rulings and principles of tax law, and include any relevant calculations.