Tui Mawi is a middle aged male and resident of Fiji. Tui is a well known jazz guitarist and singer. For most of his life Tui has made a living as a musician.
For all of 2018 Tui carried on his trade at a tourist resort owned and managed by Hiltonco. The deal between Tui and Hiltonco was detailed in a contract headed 'Musical Services Agreement'. The agreement ran for one year starting January 1 and required Tui to perform 6 nights per week at the company's resort. The contract price was $52,000, with payments of $1,000 due weekly. The contract explicitly established that Tui was not an employee of Hiltonco but a third party contractor.
(Tui in fact received a weekly payment from Hiltonco of $950 following a deduction of 5% per the IT (Collection of Provisional Tax) Regs 2016, regulation 3(2). Tui himself also made advance payments per ITA s.110. All of this is merely 'tax collection'. A matter of payment as distinct from liability. In this question we are not concerned with tax administration issues.)
On Jan 1 2018, Tui purchased a new guitar specifically for use in his Hiltonco engagement. The guitar cost $5,000. Tui purchased the guitar with a personal loan from Bankco. The loan principal was paid down over the year together with interest on the outstanding balance. Aggregate interest payments for the year were $1,000. Each month the guitar strings required replacement at a cost of $100.
In his private life Tui is a kind and generous gentleman. In November 2018 he donated $2,500 to the Fiji Red Cross Society.
In 2017 (not a typo) Tui did something unusual. For the first time in his adult life he stopped performing. Instead he tried his hand at being a concert promoter. A partnership was formed between Tui and his brother Red Mawi. The partnership agreement provided for profits and losses of the firm to be split between the two partners 50/50. Tui and Red trading as Island Concerts organised a number of concerts and musical events throughout 2017. Overall the business was not a success and incurred a loss for the year of $20,000. In December 2017 the firm was dissolved and Tui returned to his traditional life as a musician as we have earlier heard.
Required:
Calculate Tui's chargeable income and Income Tax for the year 2018. Explain the calculation using headings and section references.