On 30 June 2017, Kylie sold her investment apartment for $580,000. The apartment had been purchased on 1 March 2005 for $360,000. At the time of acquiring the holiday apartment Kylie incurred $5,000 in stamp duty, $4,000 in valuation costs. On 1 July 2007 Kylie incurred costs of $15,000 in renovating the kitchen in the apartment. On 1 February 2009, Kylie spent $40,000 adding a second bathroom to the apartment. At settlement she incurred legal expenses of $2,000 and real estate agents commission of $8,000 in relation to the sale. a) On 1 January 2017 Kylie granted a $10,500 three month option to purchase the property for $540,000 to a local property developer. The option lapsed on 31 March 2017. Kylie retained the $10,500. Her solicitor charged her $500 legal fees to prepare the option contract. b) On 25 May 2017 Kylie sold a stamp collection for $25,000. She had purchased the stamp collection for $22,000 in 2001. c) On 16 September 2016 Kylie purchased shares in BHP for a total price of $45,000. She sold those shares on 28 May 2017 for $65,000. d) Kylie has a carryforward capital loss of $20,000 from the sale of shares in the 2007-2008 income year. She also has a carryforward capital loss of $5,000 from the sale of a coin collection from the 2010-2011 income year. During the 2016-2017 income year Kylie earned $40,000 as a part-time school teacher but she made a loss of $20,000 from the operation of a gymnasium that she owns. The gymnasium has made a taxable profit in every one of the ten years Kylie has owned the gymnasium except the 2016-2017 income year. REQUIRED Calculate Kylies taxable income for the income year ending 30 June 2017. You are not required to calculate the tax payable. (20 marks)

QUESTION TWO

Salvador Ryan is an accountant and the Director of his accounting practice, Darwin Taxation Services Pty Ltd. The following figures do not include GST. The company receipts and payments for the year ended 30 June 2017 are as follows: Receipts $ 600,000 Professional accounting fees 25,000 Sales of Do-It-Yourself Superannuation guides 17,000 Dividend received from an Australian company franked to 50% 5,000 Interest on Bank Deposits 10,000 Rental income from an investment property 2,000 Profit on sale of office equipment (note 1) 850 Dividend from shares in IBM (USA) (3) Payments $ 14,000 Office rent 10,000 Cost of Do-It-Yourself Superannuation guides (note 2) 38,000 Salary paid to employee secretary 1,000 Train fare for travel to and from work 1,000 Legal fees for preparing a new lease of the office 2,000 Rates paid on abovementioned investment property 15,000 Interest paid on loan to acquire the investment property 5,000 Cost of painting the investment property immediately after purchasing the property 1,000 Cost of replacing roof tiles on the investment property after the roof was damaged in a severe storm in February 2017 15,000 Cost of extending the bathroom in the investment property 136,000 Cost of a new BMW for Salvador to use 100% for business purposes Notes (1) Profit on sale of office equipment. The office equipment was purchased on 1 July 2015 for $10,000. Salvador estimated its effective life for taxation purposes at the time of purchase at 10 years. He uses the prime cost method. Sale proceeds sale date 30 June 2017 $5,000 Net book value based on accounting depreciation 3,000 Profit 2,000 (2) The Opening stock value for tax purposes was $19,000. The FIFO Method however produces the following results for the Do-It-Yourself Superannuation guides at the end of the year: $ Cost Price 12,000 Replacement Price 9,000 Market Selling Value 14,000 (3) Withholding tax of $150 was paid in the US. (4) The company has a carry forward past year tax loss of $42,000. (5) The company has made PAYG Instalments of $150,000 during the year. REQUIRED Calculate Companys tax payable for the year ended 30 June 2017.

They are seperate identical questions.