Question 5 Individual Tax Liability (10 marks) Nikki Spencer is a New Zealand tax resident who has been a client of yours for some years. Nikki supplies you with the following information, regarding her tax affairs for the year ended 31 March 2020. All amounts are in New Zealand dollars. 1. Nikki works for Ace Distributers Limited (ADL) as a sales manager. Her gross annual salary is $80,000 from which $17,320 tax was deducted. 2. Nikki's bank statement shows you that she earned net interest from ANZ Bank of $410. Resident Withholding Tax (RWT) of 33% was deducted. 3. Nikki received $20,000 as a gift from her grandmother in June 2019. 4. Nikki holds shares in Meridian Energy Ltd. Her bank statements show that for the year ended 31 March 2020 she received cash dividends of $1,340. The dividends were fully imputed, and the necessary RWT was deducted. 5. Nikki enjoys baking cakes and pastries. From April 2019 she decided to spend her Saturdays baking cakes and pastries that she sold at a weekly Sunday market stall. She made gross sales of $20,000 during the year. Nikki purchased ingredients costing $8,000 during the year. She also purchased baking utensils in April 2019 for $480. A room at her home is used as an office for her business and for packing etc. The room makes up 10% of the total house area. Nikki provides receipts for the house outgoings amounting to $18,000 for the year. 6. In appreciation for her service ADL contributed $2,000 towards Nikki's trip to the UK to see her family. 7. Nikki paid premiums of $2,400 for income protection insurance. 8. Nikki won $500 in the ADL Melbourne Cup Sweepstake. 9. Nikki used the bus to travel to and from work at an annual cost of $1,840. 10. Nikki paid you $500 for preparing her tax return. Required: (a) Calculate Nikki's income tax liability for the year ended 31 March 2020 showing all workings. Round all calculations to the nearest dollar. Provide legislative references for each transaction. (9 marks) (b) Provide explanations for transactions not included in your calculations with appropriate legislative references. (1 mark)