Sam Ryan is a self-employed accountant and registered for GST. His receipts and payments (not including GST) for the year ended 30 June 2022 are as follows:

Receipts

$

240,000 Professional accounting fees

25,000 Sales of Do-It-Yourself Superannuation guides

8,000 Income from part-time military service (note 1)

24,000 Net salary received from part-time lecturing at the University

($6,000 in PAYG W) (note 2)

2,000 Refunds from Government Medicare System for medical expenses

5,000 Interest on Bank Deposits

20,000 Rental income from an investment property

2,000 Profit on sale of office equipment (note 3)

100,000 Gambling wins (note 4)

Payments

$

24,000 Office rent

50,000 Salary paid to employees

290 Purchase of a new calculator

1,400 Cost of meals and entertainment for himself and clients

1,200 Train fares for travel to and from work

2,200 Rates on family home

900 Electricity for family home

1,000 Tax agent’s fees for preparing tax returns for Sam and his wife

5,000 Gross medical expenses for Sam and his wife.

2,000 Rates paid on abovementioned investment property

15,000 Interest paid on loan to acquire the investment property

5,000 Cost of painting the investment property immediately after purchasing the property

1,000 Cost of replacing roof tiles on the investment property after the roof was damaged in a severe storm in February 2022

15,000 Cost of extending the bathroom in the investment property

Notes

(1) The part-time military income is exempt.

(2) Sam received the sum of $30,000 as gross income but the University had deducted $6,000 as income tax under the PAYG Withholding system).

(3) Profit on sale of office equipment. The office equipment was purchased on 1 July 2017 for $10,000. Sam estimated its effective life for taxation purposes at the time of purchase at 10 years. He used the prime cost method.

Sale proceeds – sale date 30 June 2022 $5,000

Net book value based on accounting depreciation 3,000

Profit 2,000

(4) Sam laid 602 bets on horses during the 2021-2022 income year totalling $100,000. He financed much of his lifestyle from his gambling winnings. He did not maintain an office nor employ staff for his betting activities. His betting approach, which involved reading the racing section of the daily newspapers, yielded consistent profits. He kept records of every bet and results of successful wagers. He attended one racecourse per week and placed not more than one bet on each race. On other days he placed his bets at his local betting office.

(5) Sam has a carry forward past year tax loss of $12,000.

(6) Sam is married. His wife, Le Chien, works full-time and earns assessable income of $92,282 per year. They have 2 children. Neither Sam nor Le Chien are eligible for Family Tax Benefit Part B.

(7) Neither Sam nor Le Chien have private hospital insurance.

REQUIRED

Calculate Sam’s tax liability for the year ended 30 June 2022 and his tax payable.