Your client, Kay Lee owns a restaurant in Sydney. She operates as a sole trader. The business is known as The Fried Noodle Bar and Kay has an ABN and is also registered for GST. The following figures are as at the end of the financial year, 30 June 2023 and do not include GST. (Do not make any adjustments for GST)

Receipts

256,000 Sale of food and drinks in the restaurant

5,000 Interest on Bank deposits.

28,500 Exempt income from a PhD scholarship from CQU

2,500 Private Health fund refunds

40,000 Inheritance from her grandmother

35,500 Rent from investment property

5,000 Refund from the ATO for the last years tax return

30,000 Net capital gain from the sale of shares held for 5 years.

10,000 Lottery win Kay was just very lucky.

Payments

35,000 Rent on her restaurant in Brisbane

1,500 Body Corporate fees on income producing property.

65,000 Part-time employee salaries

15,000 Superannuation contribution for employees

25,000 Interest on borrowing to purchase the income producing property.

5,500 Insurance, body corporate fees and land tax for the investment property

2,500 Fees paid to a registered Tax Agent

25,000 New cooking equipment with an estimated life of 10 years

5,000 Travel to and from work to home

2,500 Rates on her principal residence

2,000 Doctors fees for Kay and her family

1,265 University fees for Kay

15,555 Personal Superannuation contribution for Kay

(a) Kay Lee is accounting for her taxation liability as a Small Business Entity (SBE)

(b) On 1 July 2022 the opening depreciation pool balance for the SBE pool was $25,000. During the year Kay purchased 1 new depreciating assets used 100% for business purposes in the restaurant kitchen. This is recorded in the payments information listed above. The depreciation deduction has not been included in the above figures.

(c) Kay has a carry forward tax loss from an earlier income year of $25,000. This was due to the impact of COVID 19 on her business.

(d) Kay and her family are members of a private health fund and have private hospital insurance.

(e) Kay has paid $25,000 in PAYG Instalments during the financial year ending 30 June 2023.

(f) The investment apartment was purchased new on 1 July 2022 for a total cost of $550,000 and is part of a hotel complex in Sydney. The real estate agent advised Kay that the construction cost of the apartment was $355,000 and this was confirmed by the builder.

REQUIRED

Calculate Kays personal tax liability for the year ended 30 June 2023. You should explain your treatment of each item in this question. Figures must be rounded to the nearest dollar and do not include cents in your calculations.

Your answer should be in the correct format of Assessable Income less Allowable Deductions. This gives you Taxable Income and you multiply this by the different marginal tax rates plus Medicare levy. This gives you tax payable less any tax offsets. The terms Payments and Receipts are not part of the Tax Formula and are not appropriate for taxation accounting?