Question 1:

You are to calculate the income tax payable/refundable for Betty for the 2018 income year based on the following information.

You are to show all workings out, including the use of indexation and discount methods where appropriate for comparison. CGT asset treatment needs to be fully explained for each asset.

Item 1:

Betty buys a block of land on 10 January 1992 for $100,000. The legal costs associated with the purchase amounted to $900.

She incurs the following expenditure on the land:

10 March 1992 Connection of services (water, electricity etc.) $3,000

20 February 1996 Construction of fences $3,500

10 Jan 92 to 10 Nov 17 Total municipal rates paid $12,650

She sells the land for $225,000 on 10 November 2017, incurring selling expenses of $1,960.

Item 2:

Betty also sells the following assets:

ITEM DATE OF COST DATE OF DISPOSAL

AQUISITION DISPOSAL PROCEEDS

(1)1972 Porsche car 15/4/99 $16,000 01/09/17 $125,600

(2)Principal residence 02/12/93 $112,000 01/10/17 $485,650

(3)ANZ shares 02/05/87 $1,000 10/12/17 $10,980

(4)Stamp collection 02/12/03 $16,000 10/04/18 $11,500

(5)Caravan 12/07/97 $16,500 01/05/18 $12,000

(6)Antique table 01/09/83 $1,800 03/06/18 $12,500

Other Income:

Gross wages from Australia (PAYG Withheld $13,400) $65,000

Gross Wages from China (Tax Withheld $4,000) $30,000

Interest Income $ 550

Fully Franked Dividend $ 200

Child Maintenance Payments $ 5,200

Deductions:

Deductions relating to Australian wages $ 1,500

Deductions relating to Chinese wages $ 500

Betty has adequate private health insurance

required: calculate the income tax payable/refundable for Betty for the year 2018

show all workings including indexation and discount methods for comparison

CGT asset treatment needs fully explain