Individual Income Tax Assessment and Taxation Report - ACC00132

This report provides a comprehensive analysis of an individual's income tax return, addressing various aspects of taxation. It begins with a letter of advice to the client, offering guidance on their tax affairs. The report includes detailed work papers outlining employment income, work-related deductions, capital gains from investments (including shares inherited from a grandmother), and income from a rental property. It also examines other deductions, such as personal superannuation contributions and donations. The report calculates the tax payable, incorporating offsets like insurance premium offsets and credits for tax withheld. Furthermore, it includes references to relevant sections of the Income Tax Assessment Act 1997 (ITAA 1997) and other sources to support its findings. The report demonstrates the application of taxation principles to real-world financial scenarios, offering a practical understanding of income tax calculations and compliance.

Running head: TAXATION
Taxation
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION
Table of Contents
Letter of Advice.........................................................................................................................2
Work papers:..............................................................................................................................4
Work Related Income and Deductions:.................................................................................4
Capital gains:..........................................................................................................................5
Rental Property:.....................................................................................................................5
Other deductions:...................................................................................................................6
Tax Payable, Offsets and Levies:...........................................................................................6
References:.................................................................................................................................8

2TAXATION
Letter of Advice
To Janseze
From Tax Consultant
Date: 14-09-2018
Dear Janseze
We would like to draw your kind attention towards our letter of advice relating to the
information that you have furnished to us. To simply the matters relating to your taxation you
reported an annual gross salary of 120,000 with tax withheld of 32,032. Your annual salary
will be subjected to taxation under the ordinary concepts of “section 6-5 of the ITAA 1997”.
While your tax withheld will be subjected to offset from the amount of tax payable to reduce
your income tax liability.
A recommendation can be made to improve your financial position is by balancing
your income against your expenses is necessary as this would add up to greater amount of
savings. According to the information that is furnished we have found that you made a
superannuation contribution of $15,000. The superannuation contribution will be reflected in
your assessable income to provide the true reflex of your assessable income. You further
made the superannuation contribution of $4,100. The personal superannuation contribution
would be allowed to you as the allowable deduction.
We have noticed that you reported an expenses related to the car running. A
proportion of 82% of such expenditure was dedicated towards work purpose while the rest
18% of the car expenses were incurred for private purpose. You shall be eligible for claiming
deductions for the 82% of the running expenses under “section 8-1, ITAA 1997” as they
were incurred for generating your taxable income.

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Your rental property expenses that was incurred during the month of May and June
will be subjected to allowable deductions under the general provision of “section 8-1, ITAA
1997”. While the interest on borrowing for the month of April will not be allowed for
deductions as this was not incurred when the property was rented out.
Furthermore, you reported expenses on the purchase of suit to appear more
professional for your clients. We would to like inform you that you shall be prohibited from
claiming deductions as they are not a compulsory clothing.
We look forward to hear from you soon and hope that the guidance provided has
helped you in meeting your taxation affairs related requests.
Thank you

4TAXATION
Work papers:
Work Related Income and Deductions:
Under the work related income and deductions the current set of work paper
comprises of gross salary, superannuation contributions and allowances received by the
taxpayer. The salary gross is treated as the assessable income under the ordinary concepts of
“section 6-5 of the ITAA 1997” while the receipt of dividend is treated as the statutory
income under “section 44 (1), ITAA 1997” (Barkoczy 2014).
Work Papers
Particulars Amount ($)
Work Related Income and Deductions
Employment Income
Gross Payments 120000
Less: Tax Withheld 32032
Travel Allowance 2011
Less: Superannuation Contributions 15000
Australian Sourced Dividend Income
Dividends on 29 September 1150
Dividends on 28 March 500
Total Dividends Fully Franked (Net) 1155
Franking Credits
Gross up for Franking Credits 495
Total Employment Income 74979
Work Related Deductions
Registration & Insurance 1371
Fuel & Oil 5117
Services 902
Tyres (Repairs) 869
Tolls for road and tunnels 595
Lease Payments 7331
Mobile Phone 823
Monthly Mobile Plan 576
Total Work Related Deductions 17584

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Capital gains:
With reference to “section 104-10, ITAA 1997” the sale of shares held in
Commonwealth Bank is treated as the capital gains which ultimately resulted in CGT event
A1 (Grange, Jover-Ledesma and MaydeW 2014). While the shares the taxpayer acquired the
shares from the grandmother and eventually resulted in change in ownership of asset. The
taxpayer eventually sold the shares inherited from grandmother and made capital gains.
Therefore, the capital gains have been included as income and held for assessment by virtue
of “section 104-10, ITAA 1997”.
Capital Gains from Investment Amount ($)
Gross Sales Proceeds from sale of Shares 57128
Add: Brokerage Fees 115
Total Sales Proceeds 57243
Cost Base for 500 Shares @6.70 3350
Cost Base for 250 Shares @ 38.54 9635
Total Cost Base 12985
Net Capital Gains 44258
Sale of Shares Inherited from Grandmother
Gross Sales Proceeds from Qantas Shares 10440
Add: Brokerage Fees 20
Net Proceeds from Sale of Shares 10460
Less: Cost Base 6040
Net Capital Gains 4420
Total Capital Gains 48678
50% CGT Discount 24339
Rental Property:
The rental property expenses reported by taxpayer is held for deductions only for the
month of May and June while the interest on borrowing for the month of April is excluded
from deductions as the property was not available for rent.
Income From Rental Property Amount ($)
Gross Rental Income (May and June) 3330
Allowable Rental Deductions

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Council Rates 458
Water Rates 185
Insurance 1340
Interest on bank Borrowings (May and June) 333
Travel Expenses 840
Total rental Allowable Deductions 3156
Net Rental Income 174
Other deductions:
Under this sub-heading an expenses related to the purchase of clothing was reported
by the taxpayer. The purchase of suit to appear professional has not been considered for
deduction as they are not incurred in producing assessable income (Sadiq 2014). As held in
“Mansfield v FC of T (1996)” deductions for compulsory clothing is only allowed when it is
relevant to the taxpayer profession or business (Jover-Ledesma 2014). Hence, the purchase of
suit is disallowed from deductions under “section 8-1, ITAA 1997”.
Other Deductions Amount ($)
Accommodation Cost 1425
Meals 1250
Taxis 180
Gross Other Deductions 2855
Personal Superannuation Contribution 4100
Donations
Cancer Council 800
RSL Art Union 50
Subscription to Magazine 245
Insurance Policy 2600
Total Other Expenses 9555
Tax Payable, Offsets and Levies:
Tax Payable, Offsets and Levies Amount ($)
Tax Payable on Taxable Income 87,239
Less: Offsets
Insurance Premium offsets 2,600
Lump Sum 3,247
Reportable Superannuation Contribution 15000

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Medicare levy 8233.84
Less: Credits
Tax Withheld 32,032
Estimated Tax Refund 21965.11

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References:
Barkoczy, S. 2014. Foundations of taxation law 2014.
Grange, J., Jover-Ledesma, G. and Maydew, G. 2014 principles of business taxation.
Jover-Ledesma, G. 2014. Principles of business taxation: Cch Incorporated.
Sadiq, K. 2014. Principles of taxation law 2014.