Question 2(5marks): Jenny Jones is a freelance architect and commenced business in August 2019. She operates her business from her home in Jolimont and uses two rooms in the six-room house for work. Most of her work has been in relation to small clients. In March 2020 Jenny was offered a large consulting job with the Victoria Government worth $150,000. Consequently, in March 2020 Jenny employed Jon Jonson, a recent university graduate, at a cost of $45,000 to help her with the work. Jon was employed part time on a three-day per week basis. Because of the demands of the government job, it is likely that Jenny will need to take on more support staff or reduce her other private client work. Taxation Law LAW301 For the year ending 30 June 2020 Jenny earned the following income: o $110,000 - cash o $30,000amount owing by customers (including the Queensland Government). Her home and other expenses were: Rates: $3,000 Interest on mortgage: $24,500 Insurance: $1,250 Utilities: $4,500 Salaries: $15,000 Local advertising: $2,400 Desk, computers and printers: $12,000 CarToyota Corolla: $24,000 (acquired 1 August 2019). It has travelled 11,000 kilometres of which 60% was work related. Running costs excluding depreciation were $5,800. 1) Determine Jennys taxable income for the year ending 30 June 2020. 2) On 15 May 2020 Jennys accountant suggested she form a company for her work in order to protect her liability and for advantageous tax reasons. Required Advise Jenny whether this would raise any tax issues with the ATO. Topics covered in this question Assessable income, Deductions and Alienation of income