BFA714: Australian Taxation Law - Wendy’s Taxable Income Case Study - Law Assignment Help

Assignment Task:

Information for the Assignment

Wendy Huang is a senior accountant employed by Young Price & Associates, an accounting practice in Hobart. She is single with no dependents. For the whole of the 2019-20 income year, she had comprehensive health insurance with a hospital cover. 

Receipts: For the year ending 30 June 2020, Wendy received the following amounts: 

Salary from Young Price & Associates $120,000 

Her employer deducted an amount of $30,000 in PAYG from this amount. 

Payment from CPA Australia for training programs $ 12,000 

Wendy was engaged by CPA Australia to develop Audit Training Programs for their members. Because of this, Wendy has obtained an Australian Business Number. However, she has not registered for GST. Her PAYG Instalments for the year ending 30 June 2020 amounted to $2,500. 

Prize money $ 1,000 

Wendy is a keen golfer and won this prize at Young Price and Associates’ annual golf tournament. 

A gift from a friend $ 1,200 

John (a friend from university) runs an import/export business. During the year, his accountant retired suddenly due to an illness. At John’s request, Wendy completed the financial statements for the business. She did not accept payment, but John gave her a bottle of Penfolds “Grange” wine, which had a market value of $1,200. 

Rental income $ 13,000 

Wendy owned a residential apartment in Hobart, which was leased for part of the year. The apartment was sold on 1 January 2020 (see below). 

Proceeds from the sale of her rental property $600,000 

Wendy purchased a new rental property on 1 July 2003 for $250,000, and at that time was told that the cost of building the apartment had amounted to $200,000. She decided to sell it this year; the property was sold on 31 December 2019 and settled on 1 January 2020. 

Outgoings: During the year, Wendy incurred the following outgoings: 

Car expenses $ 12,000 

These costs include the usual running costs such as petrol, servicing, insurance and registration, but do not include depreciation. Wendy purchased the car for $33,000 on 1 September 2019 and kept a logbook, which showed that her business use was 48%. 

Interest $ 150 

This was the General interest Charge imposed by the Australian Tax Office for late payment of her PAYG instalment for December 2019. 

Penalty $ 250 

This penalty was imposed by the Australian Tax Office for late lodgment of her December 2019 Business Activity Statement. 

A new set of golf clubs $ 3,000 

Wendy purchased these clubs especially for the annual Young Price & Associates golf tournament. 

Laptop Computer $ 6,000 

On 1 July 2019, Wendy purchased this computer for designing and presenting the Audit training Programs to CPA Australia referred to above. She tells you that she does not use the laptop for any other purpose. 

Clothing $ 1,800 

Young Price & Associates has a strict dress code that requires all employees (male and female) to wear business suits. Wendy purchased two business suits during the year that she only wears to work, and does not wear them outside working hours. 

Rental property expenses for the period 1 July to 31 December 2019: 

Council rates $ 1,100 

Mortgage interest $ 9,100 

Repainting the inside of the apartment $ 10,0001 

New tiles for the entrance hall $ 5,5002 

Real estate agent’s fee $ 15,0003 

Required 1. Calculate Wendy’s Taxable Income for the year ending 30 June 2020. Your calculation should 

include a brief explanation about which amounts were included or excluded and why. 2. Calculate Wendy’s tax payable or refund (as the case may be) for the year ending 30 June 2020.

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