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Question 1 Augustine was made redundant from her employment on 15 March 2020. He is a motor car enthusiast, and so decided to take this opportunity to indulge his hobby. On 1 April 2020, Jane took out a bank loan of Rs 750,000 at an annual interest rate of 10%, rented a workshop for twelve months at a rent of Rs 4,000 month, and purchased high precision equipment at a cost of Rs 235,000. On 10 April 2020, Augustine purchased four dilapidated motor cars for Rs 80,000 each. The restoration of the four motor cars was completed on 10 May 2020 at a cost of Rs 120,000 per motor car. Augustine immediately sold all the motor cars for a total of Rs 2,000,000. Augustine was then offered employment elsewhere in the country commencing on 1 July 2020. He therefore sold the equipment for Rs 150,000 on 20 June 2020, repaid the bank loan on 30 June 2020. As he has been indulging his hobby, Augustine believes that the disposal of the motor cars during the year ended 30 June 2020 should be exempt from tax. He had no other income during that fiscal year ending June 2020 and is entitled to deductions in respect of 3 dependents. Required: a) Discuss whether or not Augustine is likely to be treated as canying on a trade in respect of his motor car activities. b) Calculate Augustine's income tax liability for the year ended 30 June 2020, if he is treated as carrying on a trade in respect of her motor car activities. Question 1 Augustine was made redundant from her employment on 15 March 2020. He is a motor car enthusiast, and so decided to take this opportunity to indulge his hobby. On 1 April 2020, Jane took out a bank loan of Rs 750,000 at an annual interest rate of 10%, rented a workshop for twelve months at a rent of Rs 4,000 month, and purchased high precision equipment at a cost of Rs 235,000. On 10 April 2020, Augustine purchased four dilapidated motor cars for Rs 80,000 each. The restoration of the four motor cars was completed on 10 May 2020 at a cost of Rs 120,000 per motor car. Augustine immediately sold all the motor cars for a total of Rs 2,000,000. Augustine was then offered employment elsewhere in the country commencing on 1 July 2020. He therefore sold the equipment for Rs 150,000 on 20 June 2020, repaid the bank loan on 30 June 2020. As he has been indulging his hobby, Augustine believes that the disposal of the motor cars during the year ended 30 June 2020 should be exempt from tax. He had no other income during that fiscal year ending June 2020 and is entitled to deductions in respect of 3 dependents. Required: a) Discuss whether or not Augustine is likely to be treated as canying on a trade in respect of his motor car activities. b) Calculate Augustine's income tax liability for the year ended 30 June 2020, if he is treated as carrying on a trade in respect of her motor car activities