Your client, Tom Lee runs small clothes shop in Brisbane. He operates as a sole trader. The business is known as Toms Fashions and Tom Lee has an ABN and is also registered for GST. The following figures are as at 30 June 2022 and do not includeGST.

Receipts

$

398,000 Sales of clothes

17,000 Rental income from an income producing investment apartment

3,000 Interest on Bank deposits.

12,000 Exempt income from part-time military service

2,500 Private Health fund refunds

26,000 Compensation - loss of income due to COVID 19from the QLD Government

Payments

$

25,000 Rent on his shop in Brisbane

15,000 Body Corporate fees on income producing property

45,000 Part-time employee salary

4,000 Superannuation contribution for employee

15,000 Interest on money borrowed to purchase the income producing investment apartment

8,000 Insurance, body corporate fees and land tax for the investment property

1,100 Fees paid to a registered Tax Agent

30,000 New item of plant with an estimated life of 10 years

1,000 Travel to and from work to home

2,000 Rates on his principal residence

5,000 Doctors fees for Tom Lee

3,000 Doctors fees for Toms wife, Mary

16,000 Superannuation contribution for Tom Lee

(a) Tom Lee is using the Small Business Entity (SBE) concessions

(b) Stock at beginning of the year was valued at $35,000

Stock at end was: Cost $26,000

Market selling value $29,000

Replacement $28,000

(c) On 1 July 2021 the opening depreciation pool balance for the SBE pool was $60,000. During the year Tom Lee purchased 1 new depreciating assets used 100% for business purposes. This is recorded in the payments information listed above. The depreciation deduction has not been included in the above figures.

The investment apartment was purchased new on 1 July 2021 for a total cost of $500,000and is part of a hotel complex. The real estate agent advised Bill Jones that the construction cost of the apartment was $287,000 and this was confirmed by the builder.

(d) Tom Lee has a carry forward tax loss from an earlier income year of $30,000. This was due to the impact of COVID 19 on his business

(e) Tom Lee and his family are members of a private health fund and do have private hospital insurance.

REQUIRED

Calculate Tom Lees personal tax liability for the year ended 30 June 2022. You should explain your treatment of each item in this question. Figures can be rounded to the nearest dollar.

(20 marks)