Question

Daniel Murphy is a freelance journalist based in Brisbane and a sole business owner. He has an Australian Business Number, and qualifies as a Small Business Entity under the category: turnover below $10 million. All amounts in this question exclude GST. Daniel provides you with the following information for the 2016-2017 income year:

1. Invoices sent to various news corporations for articles that Daniel wrote which were published totalled $40,000. As at 30 June 2017, $4,000 of these invoices remained unpaid.

2. Daniel received advertising income of $12,000 from a blog that he writes and owns the domain name to.

3. A voluntary repayment of $500 on a HELP debt loan made on 30 June 2017. On 1 July 2016, Daniels outstanding HELP debt was $14,000 from the undergraduate degree in journalism that he completed at the University of Queensland.

4. Wages Daniel took for running the business totaled $30,000.

5. Short-hand notebooks, pens and printer cartridges purchased for $380. Daniel used these to write and produce articles.

6. Daniel owns a rental property. He received $16,000 in rent during the income year. He uses a property management company to manage the property, collect rent and attend to minor repairs. The property management company charged him $1,200 during the year. During the income year he paid landlords insurance that cost him $400. Daniel financed the purchase of the property through a mortgage loan. During the income year, interest repayments totaled $1,500. His Division 43 capital works tax deduction (tax depreciation) for the property for the 2016-2017 income year is $8,000.

YOU ARE REQUIRED TO:

Calculate Daniels taxable income for the 2016-2017 income year.

Show all calculations and provide reasons for your answer. Your answer should reference relevant sections of the Income Tax Assessment Acts, relevant case law, or rulings from the Australian Taxation Office.