Question 6

15 marks

Harley is a single, resident taxpayer who works as an electrician, earns $94,550 per annum. Harley has the

following as expenses: Travel from home to work $4,000. Harley carries 25kg of equipment in his van as there is no secure space for him to keep his tools. Tools and equipment $500. Harley uses these tools 50% for private use. Child care expenses $8,000. Harley operates on a 24-7 emergency basis, and as such he has had to hire expensive overnight babysitters at times. Tax agent fees $500

Harleys grandmother passed away during the financial year. She left Harley her house with a market value of $750,000. He sells the house 5 months later for $785,000. Costs associated with the sale included $2,000 for agent fees.

Harley also sold a painting he purchased for $30,000 in September 1992 for $35,000. Harley has a HECS debt of $15,000 and does not hold private health care cover.

a) Calculate Harleys CGT implications (5 marks)

b) Calculate Harleys taxable income (5 marks)

c) Calculate Harleys tax payable (5 marks)