Remaining Part : Case Study: Comprehensive Individual Tax Return

The previous owner provided a statement to Himanshu certifying that the property was constructed and completed on the 1st of January 1996 at a construction cost of $100,000. The house was in good condition except that the outside walls required complete repair.

Himanshu recorded the following receipts and payments for the 2019/20 tax year in respect of the rental property:

Receipts

Rent received (net of agent commission withheld $1,250) by 28 June 2020 $23,750

Compensation from Rental bond board for tenants who left and

did not pay the rent they owed (see note 2) $1,300

Rent in advance from new tenants on 29 June for the period 1 July to 30 July 2020 $3,000

Insurance recovery for storm damage to roof $2,100

Payments

Mortgage repayments to Westpac Bank principal $4,500

interest $23,800

Loan application fees to Westpac Bank for a 10-year mortgage loan

to buy the house paid on approval of the loan 1 July 2019 $825

Council & Water rates $3,400

Building Insurance premium $850

Payment to solicitors for lease preparation fees $150

to eject tenants for non-payment of rent $375

Repairs to paint the outside walls of the house, carried out on 10 July 2019 $1,100

Construction costs of brick room to store garbage bins

and gardening equipment, carried out on 1 May 2020 $6,000

Garden hose and attachments $165

Travel costs to the rental property for inspections (see Note 3) $830

Pest control costs to eliminate cockroach infestation $280

Payment to a registered tax agent preparing 2017/18 tax return $170

Payments to the Australian Taxation Office

• Additional tax on an amended assessment $400
• Fine for the late lodgement of 2017/18 tax return $760

Other information

Note 1) Himanshu will use the Commissioners estimate of effective life for calculation decline in

value which can be found under Residential Property Operators.

Note 2) The rental bond board were only able to pay part of the money owed by the tenants. A further amount of $650 is outstanding. Himanshu is attempting to recover this amount by legal means.

Note 3) Himanshu lives in Sydney, he went to Brisbane by aeroplane to inspect the property and meet with the real estate agents and tenants.

Required

Himanshu wishes to minimise his income tax for 2019/20. Calculate Himanshus taxable income for 2019/20. You are required to enter income and deduction details where applicable in the tax return form provided in the excel sheet.

Submit all workings of EACH income & deductions of calculations and any tax offsets available for Himanshu in a word format (written report) including relevant section numbers as per ITAA36/ITAA97. In your report, clearly advise whether Himanshu is eligiable to claim a dependant tax offset (Invalid and invalid carer tax offset).