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LAW3130 - Laurina Case Study - Taxation Law Assignment Help
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Assignment Task
Your client, Laurina, purchased an apartment in Brisbane on 1 July 2018. The purchase price was $545,000. Laurina borrowed $445,000 from a bank as well as using her savings to purchase the apartment.
The apartment was listed for rental immediately, and a tenant moved in within two weeks, paying $450 per week. The real estate agent charged commission of 10% for managing the property.
Laurina incurred the following expenses during the year ended 30 June 2019 in respect of the apartment:
- Legal fees on the purchase of the apartment, $750.
- Queensland Government stamp duty on the purchase of the apartment, $16,500.
- A quantity surveyor’s report estimated that the construction costs for the apartment were $260,000. The quantity surveyor charged a fee of $350 for the report.
- A loan application fee paid on 1 July 2018 to the bank for the loan, $500. Interest on the loan totalled $13,500.
- A new microwave was purchased by Laurina and installed in the apartment at a cost of $195 on 14 July 2018.
- At the time Laurina purchased the apartment the interior paint work was very faded and chipped. Prior to the tenants moving in Laurina paid $1,750 to have the interior walls re-painted. She paid the painter on 8 July 2018.
- A severe storm smashed a window on the apartment on 2 February 2019 and needed to be replaced at a cost of $550.
- Laurina replaced the dishwasher with a second-hand machine she had previously used in her house. Laurina estimated the value of the dishwasher was $400 on 15 April 2019.
- Contents and public liability insurance for the apartment was paid on 1 July 2018 and totalled $1,100.
- Body corporate fees for the year ended 30 June 2019 totalled $1,800 and were paid by Laurina on 30 April 2019.
- Brisbane City Council rates were paid each quarter during the year, totalling $2,400.Laurina travelled 80 kilometres in her car during the income year to inspect her rental property.
You can assume that any depreciating assets have an effective life of 10 years and that Laurina use the prime cost method of depreciation when relevant.
Required:
Discuss whether any amounts of expenditure incurred by Laurina would be allowable as a deduction during the year ended 30 June 2019 under any section of the Income Tax Assessment Acts. Support your discussion with reference to legislation, case law and taxation rulings.
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