Taxation Assignment Instructions -
Description: This assignment involves compiling a written report and calculating the tax refund or payable amount for a client.
What You Need to Do
1. Using the information on the following pages, complete all calculations necessary in order to calculate Joan's refund or payable amount for the 2017/18 year.
You should set out your calculations neatly and label them clearly. For the rental property you should complete a Rental Schedule showing total rental income and then clearly listing each allowable deduction in order to calculate a net rental figure (a little like a profit and loss statement). Each figure should be clearly labelled. DO NOT simply write a long calculation (eg. 7,200 - 300 + 260 + 893 + 443 - 190 = ) as this will not receive any marks.
2 Complete the written section (body) of the report, clearly explaining and justifying the decisions and calculations you have made concerning the deductions Joan wishes to claim, including those relating to her rental property. You only need to explain deductions and not income or the tax calculation components. In the report you should clearly explain why certain items are deductible and why others are not (you must also discuss items that are not deductible and why). You should use headings to indicate what you are discussing, eg. "Work Deductions", "Self Education", "Rental Property", and also refer to the section of the appendix which contains the calculations for the items you are discussing.
Your assignment should be typed and presented in a professional manner. It should contain a title page, table of contents, the written analysis, the calculations (including the Rental Schedule) contained in appendices and a reference list. Only the written analysis section should be included when calculating the word count.
REMEMBER - ONLY ONE WORD DOCUMENT FOR THE WHOLE ASSIGNMENT WITH WRITTEN ANALYSIS AND JUSTIFICATIONS CONTAINED IN THE BODY AND ALL CALCULATIONS CONTAINED IN APPENDICES.
Information You Need Regarding the Client -
The following information relates to the year ended 30 June, 2018. Joan has kept all her receipts and other records for the items described below.
Your client is Joan Simpson. Joan was born in Campbell Town, Tasmania, on 21 March, 1972 and has lived in Tasmania all her life. She moved to Hobart twelve years ago for work. She is married to Jack who was born in Launceston on 20 July, 1970. They do not have any dependant children as they have all grown up and moved away. Joan's husband Jack has been ill for a couple of years and is unable to work. The only income he has received over this time is his share of any interest on their joint bank account. The couple do not have private health insurance.
Joan works as a nurse and is employed by Golden Years Homes, aged care facilities located at two different locations in Hobart (Sandy Bay and Glenorchy). This year her gross salary was $76,712. She had PAYG tax withheld from her wages of $17,275. Joan also had reportable fringe benefits of $12,420 and a "travel allowance" of $382 on her PAYG Payment Summary. Joan and Jack's joint bank account earned total interest of $474 for the year.
Joan wears a compulsory uniform each day comprising of a button up shirt, pants or skirt and a cardigan. The items of clothing all have the logo of the organisation on them and the design is registered on the Register of Approved Occupational Clothing. This year she purchased one new pair of pants for $98 and two new shirts at $54 each. She wears running shoes at work (which she finds the most comfortable when on her feet all day) and she bought one new pair this year for $140. She does two full loads of washing (containing just her uniform) each week to keep her uniform clean.
Joan paid her nurses registration fee of $465 in January 2018. This fee is a total amount for the next three years - the fee is $155 per year. She is a member of the nurses' trade union, paying an annual fee of $826. Joan works in Sandy Bay on Monday, Tuesday and Wednesday. On Thursday she works in Glenorchy. On Friday she starts her shift in Glenorchy and then travels to Sandy Bay for the afternoon part of her shift, using her own car. This is the reason she receives the travel allowance. It is 5 km for her home to the Sandy Bay aged care home, 15 km from the Sandy Bay aged care home to the Glenorchy aged care home and 11 km from the Glenorchy aged care home to Joan's home. Her car has a 2.1 ltr engine.
Joan wears glasses due to her poor vision and cannot perform her job without them. She purchased new glasses on 1 August, 2017 for $265 and had to cover the cost herself as she does not have private health insurance. Her workplace requires Joan to be up-to-date with certain vaccinations to protect her at work. This year she had a flu injection and a hepatitis C injection - the cost of the two together was $94. Joan wishes to claim the glasses and vaccinations as a deduction as she feels they are work related. She would not have had the injections if she was not working as a nurse and at more risk of exposure to diseases. Last year Joan paid $150 to have her tax return prepared by your firm.
Joan has been studying a post-graduate course in dementia care. She has done one unit per semester at UTAS this financial year. Her workplace pays her course fees but she pays for any other costs herself. In semester 2, 2017 she paid $270 for books and $45 for stationery. In semester 1, 2018 she paid $143 for books and $22 for stationery. She does the units online and does not have to travel to the actual campus of the university. On 1 May, 2018, she bought a new laptop computer to use for her studies. It cost $850 and, using a log, Joan estimates she uses it 90% of the time for her university work. She also pays $69 a month for internet access and estimates that of all the time she or Jack are on the internet, she is using it 40% for university work. She has a special room in the house set aside to do her study. It occupies 10% of the floor space of the house. Joan believes she can claim some of the occupancy costs of the house and informs you that her annual council rates are $1,138, water $670, electricity $2,765 and insurance $533 - they own their house and do not have a mortgage. She estimates she spends 15 hours per week for 14 weeks per semester using the room for university work.
Joan also attended a two day aged care conference in Melbourne in April. She flew to Melbourne early on the morning the conference started and back in the evening the day it finished at a cost of $146 return. The conference fee was $470 and she stayed in a motel for one night which cost $175. Joan paid $36 return to catch the Skybus from the airport to the city. She bought a Country Style magazine at the airport to read on the flight and at night after the conference for $8.20. She paid for her dinner ($32) and breakfast ($21) herself. The lunches were provided by the conference. Joan's employer did not require her to attend the conference - she was simply very interested in the topics and felt it would enhance her care practices in the aged care home. Her employer was happy she was so keen and reimbursed her half of the conference fee after she returned.
Joan wishes to claim donations she made in the 2017/18 tax year: $25 to the Salvation Army Red Shield Appeal, $50 to a "GoFundMe" page for a local family whose house was destroyed in a fire and $60 for a book of raffle tickets from the Guide Dogs (Joan hoped to win the first prize of a car but was not so lucky).
Joan was concerned about their retirement, particularly as Jack is unable to work. With the recent growth in property prices, she decided to buy a rental property, hoping to sell it to make a big profit when she retires. Joan found the perfect house in Kingston and purchased it on 1 October, 2017 for $430,000. The house was built in 1979. She advertised it as being available for rent on 2 October, 2017. The advertisement cost $42.
Joan took a week off work from the 2nd October to clean the house and tidy the yard. She replaced a broken window at a cost of $380. She also decided to renovate the bathroom which was in bad need of repair. She hired a tradesman who replaced the bathtub and hand basin and did some retiling. The tradesman charged $2,890 for the complete job, which he finished on 12 October. The house had no garage or carport so Joan hired a builder to build a carport at the end of the drive. The work was completed on 15 October and the total cost was $4,200. She rented the house from 16 October to a couple with four children. The rent was set at $470 per week paid each fortnight in advance. Joan also required a bond to be paid upfront of $1,500. Joan provides you with the following information:
- In order to buy the house Joan needed a loan of $320,000, which she took out with Best Bank on 1 October, 2017. The loan was for 20 years. Interest paid from the beginning of the loan to 30 June, 2018 was $10,970. In order to secure the loan with the bank, Joan had to pay legal fees, loan establishment fees and stamp duty on the mortgage of $1,420.
- Solicitor's fees for arranging the transfer of the house title were $825 and stamp duty on the purchase was $14,125.
- Joan paid council rates of $1,925, insurance of $980 and land tax of $319, all relating to the rental property.
- The wood heater in the lounge room had burned through its base and damaged the floor boards which were under it. This happened before Joan bought the house. Initially this did not matter as it was late spring when Joan rented the house and the tenants did not need to use the heater. However as winter approached the tenants complained as this was the only form of heating in the house. Joan bought a new wood heater for $1,950 on 10 April 2018. She had a tradesman replace the damaged floor boards with a square of concrete and install the heater. The laying of the concrete cost $650 and the installation of the wood heater cost $225.
- As it was badly worn, Joan replaced the carpet in the main bedroom on 10 June, 2018 at a cost of $2,300.
- One of the bedrooms the children of the tenants use was in bad need of painting due to the children having scribbled on the wall. Joan and Jack painted it themselves on 10 June, 2018. The paint cost $420 and Joan estimates their labour was worth $650.
- Joan travelled to Kingston each day in the week beginning 2 October to clean and make the repairs and then once a fortnight, beginning 16 October, to inspect the property and collect the rent (in the same car she uses for work). It is a 25 km round trip to the Kingston house from their house in Hobart.
Attachment:- Assignment Files.rar