This question is about Jane Smith, an Australian resident individual. In preparing your answer to this question you should use the course material for Topics 1 to 7. Therefore, you are not required to undertake further independent research to prepare your answer to Question 1.

These are the facts relevant to Janes 20202021 income year:

Jane owned a small residential housing complex comprising three townhouses. During May 2021, she sells all three of the townhouses. These are the sales details, the details about the total capital works deductions up to the date of sale for each townhouse and the details of the rent that she received for each townhouse during the 20202021 income year: Townhouse Selling price Total of all Div 43 ITAA97 capital works deductions claimed up to 30 June 2020 Div 43 ITAA97 capital works deductions for the 20202021 income year Rent received during the 20202021 income year

Number 1 $650,000 $75,000 $5,000 $31,200 Number 2 $750,000 $80,000 $6,000 $36,000 Number 3 $600,000 $70,000 $4,000 $27,800

Jane originally purchased the vacant block of land upon which this complex is situated in July 2011 for $250,000. She obtained permission from the Brisbane City Council to develop and build a small residential housing complex on the land comprising the three townhouses.

Jane entered into a contract with a large construction company that built the townhouses for her. The construction was completed in December 2011 at a total construction cost of $1 million. Directly after the construction was completed, she immediately advertised the townhouses for sale as planned. Unfortunately, she was unable to find buyers for the townhouses so that she could return a profit. Consequently, in June 2012, she put all her attempts to sell the townhouses on hold. She did not claim an immediate deduction for the costs that she incurred during the 20112012 income year against her assessable income. She was then able to find tenants for all three townhouses and commenced renting these out from 1 July 2012, claiming Div 43 capital works deductions from that date as set out in the table above.

In April 2021, she decides to advertise the townhouses for sale again. This time around, she is able to easily find buyers for the townhouses due to the property boom in Brisbane, paying $50,000 in sales commission to a real estate agent in relation to the sale of all of the townhouses.

These are the other facts relevant to Janes 20202021 income year:

On 1 July 2020 Jane sells the retail shopping centre that she owns for $15 million. This shopping centre is situated in Greenslopes, a suburb of Brisbane.

Jane originally purchased the vacant block of land on which the shopping centre was built in April 1992 for $2 million. The land remained vacant until February 2001 when Jane entered into a contract with a large construction company to build the retail shopping centre for her. The construction was completed on 30 June 2002 at a cost totalling $5 million that comprise the following items:

Building construction cost $4,500,000

Sealed roads and sealed car parks $350,000

Landscaping $150,000

All of the retail spaces in the shopping centre were tenanted from 1 July 2002. She claimed the relevant tax allowances on this complex from this date until 30 June 2020.

On 31 January 2021 Jane sells all of her shares in OzBitcoin Ltd for $1,675,000. This company is listed on the ASX. Jane originally purchased the shares on 15 April 2020 for $500,000. She paid $10,000 in brokerage fees when she purchased the shares, and $15,000 in brokerage fees when she sells the shares. The reason why Jane sells the shares is because the company has not declared any dividends and the most recent directors report indicates that the company will also not pay any dividends in the next financial year.

Jane purchased a grand piano in April 2020 for $12,500. She wanted to learn how to play the piano as a hobby. On 1 February 2021, the piano is severely damaged by water leaking from a pipe in the ceiling above the piano in Janes home. Her insurance company informs Jane that the piano has no market value and that it was written off because it was too expensive to repair. Jane receives an amount of $8,000 from her insurance company on 13 March 2021 in settlement of her claim. The piano was specified as a valuable item in her insurance policy, and she spent a total of $800 on insuring the piano against loss and damage.

On 31 May 2021 Jane sells her first edition stamp collection for $30,000. She purchased this stamp collection from her brother on 1 April 2017 for a nominal value of $50. The market value of the stamp collection was $12,000 on 1 April 2017. Janes brother sold the stamp collection to her when he sold all of his belongings in Australia, purchased a yacht, and embarked on a solo voyage around the world.

On 30 June 2021 she sells a painting that hung in her home for $5,000. She originally purchased the painting five years ago for $25,000.

On 1 July 2020 Jane has unapplied capital losses carried forward from previous income years totalling $1,000,000. These capital losses arose when Jane sold share in a private company at a loss.

You are required to:

Advise Jane on the income tax implications of all these events and transactions in reference to her 20202021 income year. To do so, you have to prepare and present the calculation of Janes taxable income for the 20202021 income year. Aim to minimise her taxable income. Show all your calculations and provide reasons for your answer. Your answer should reference relevant sections and divisions of the Income Tax Assessment Acts and relevant case law, meeting the criteria as described in the relevant topic study guides. Do not use footnotes in preparing your answer to Question 1. Present your answer in a table format using the example below. (30 marks)

Townhouse Selling price Rent received during the 2020-2021 income year Total of all Div 43 ITAA97 capital works deductions claimed up to 30 June 2020 $75,000 $80,000 $70,000 Div 43 ITAA97 capital works deductions for the 2020-2021 income year $5,000 $6,000 $4,000 Number 1 Number 2 Number 3 $650,000 $750,000 $600,000 $31,200 $36,000 $27 800 You are required to: Advise Jane on the income tax implications of all these events and transactions in reference to her 2020-2021 income year. To do so, you have to prepare and present the calculation of Jane's taxable income for the 2020-2021 income year. Aim to minimise her taxable income. Show all your calculations and provide reasons for your answer. Your answer should reference relevant sections and divisions of the Income Tax Assessment Acts and relevant case law, meeting the criteria as described in the relevant topic study guides. Do not use footnotes in preparing your answer to Question 1. Present your answer in a table format using the example below. (30 marks) $ Townhouse Selling price Rent received during the 2020-2021 income year Total of all Div 43 ITAA97 capital works deductions claimed up to 30 June 2020 $75,000 $80,000 $70,000 Div 43 ITAA97 capital works deductions for the 2020-2021 income year $5,000 $6,000 $4,000 Number 1 Number 2 Number 3 $650,000 $750,000 $600,000 $31,200 $36,000 $27 800 You are required to: Advise Jane on the income tax implications of all these events and transactions in reference to her 2020-2021 income year. To do so, you have to prepare and present the calculation of Jane's taxable income for the 2020-2021 income year. Aim to minimise her taxable income. Show all your calculations and provide reasons for your answer. Your answer should reference relevant sections and divisions of the Income Tax Assessment Acts and relevant case law, meeting the criteria as described in the relevant topic study guides. Do not use footnotes in preparing your answer to Question 1. Present your answer in a table format using the example below. (30 marks) $