Revision Question 2- Eric the Mechanic Eric is a mechanic who is employed by Mechano Pty Ltd. He earns an annual salary of $45,000 plus overtime. During the 2019 tax year in addition to his salary he also worked 50 hours overtime at $70 per hour. 10 of these hours were performed in the last week of June 2019 and were not paid to him until 14 July 2019. In addition to his salary he also received a Tool Purchase and Maintenance Allowance of $1,500. On 15 December 2018 Eric bought himself a new set of tools worth $950. During the 2019 tax year he also bought miscellaneous spanners, screwdriver etc. for a total of $800. None of the miscellaneous spanners etc. cost more than $300 and were generally to replace items he had lost or that were no longer working properly. Eric also bought overalls for work which cost $340 to purchase (these were only expected to last a year) and a further $100 in laundry expenses during the year. Eric received franked dividends of $2,200 which had franking credits of $300 attached. In addition, Eric received a lump sum legacy of $80,000 from his grandmother who died during the year. Eric owned a rental property from which he received rent of $11,000 ($1,000 per month) for rent from 1 July 2018 to 31 May 2019 inclusive. On 1 June 2019 the tenant prepaid rent for 12 months. Expenses in relation to the rental property were rates and taxes of $560 and interest of $15,000. A commission of 10% of all rent collected was paid to the real estate company which managed the rental property. On 1 June 2019 Eric took out a small loan to assist with some repairs he intended to carry out on the property. There was stamp duty of $200 paid on the loan and loan application fee of $50. These were all paid on 1 June 2019. The loan was to be repaid in 3 years. No interest was paid in the current year. Two years ago, Eric had sold a number of assets which resulted in a net capital loss of $33,000. No other assets had been sold since that time. Eric was required during the year to travel to the homes of some clients and carry out services on their cars. He had to take with him his full toolkit to enable him to properly carry out the work. This travel fell into the following categories: Travel from Eric's home to clients' homes $200 Travel from clients' homes to work $180 Travel from work to clients' homes $300 Return to work from client's homes $300 Assume all depreciating assets, if any, have an effective life of 5 years and Eric wants to minimise his taxable income. Required: Calculate Eric's taxable income for the income tax year ended 30 June 2019. Revision Question 2- Eric the Mechanic Eric is a mechanic who is employed by Mechano Pty Ltd. He earns an annual salary of $45,000 plus overtime. During the 2019 tax year in addition to his salary he also worked 50 hours overtime at $70 per hour. 10 of these hours were performed in the last week of June 2019 and were not paid to him until 14 July 2019. In addition to his salary he also received a Tool Purchase and Maintenance Allowance of $1,500. On 15 December 2018 Eric bought himself a new set of tools worth $950. During the 2019 tax year he also bought miscellaneous spanners, screwdriver etc. for a total of $800. None of the miscellaneous spanners etc. cost more than $300 and were generally to replace items he had lost or that were no longer working properly. Eric also bought overalls for work which cost $340 to purchase (these were only expected to last a year) and a further $100 in laundry expenses during the year. Eric received franked dividends of $2,200 which had franking credits of $300 attached. In addition, Eric received a lump sum legacy of $80,000 from his grandmother who died during the year. Eric owned a rental property from which he received rent of $11,000 ($1,000 per month) for rent from 1 July 2018 to 31 May 2019 inclusive. On 1 June 2019 the tenant prepaid rent for 12 months. Expenses in relation to the rental property were rates and taxes of $560 and interest of $15,000. A commission of 10% of all rent collected was paid to the real estate company which managed the rental property. On 1 June 2019 Eric took out a small loan to assist with some repairs he intended to carry out on the property. There was stamp duty of $200 paid on the loan and loan application fee of $50. These were all paid on 1 June 2019. The loan was to be repaid in 3 years. No interest was paid in the current year. Two years ago, Eric had sold a number of assets which resulted in a net capital loss of $33,000. No other assets had been sold since that time. Eric was required during the year to travel to the homes of some clients and carry out services on their cars. He had to take with him his full toolkit to enable him to properly carry out the work. This travel fell into the following categories: Travel from Eric's home to clients' homes $200 Travel from clients' homes to work $180 Travel from work to clients' homes $300 Return to work from client's homes $300 Assume all depreciating assets, if any, have an effective life of 5 years and Eric wants to minimise his taxable income. Required: Calculate Eric's taxable income for the income tax year ended 30 June 2019