Assignment Task: Gordon Smith lives in Adelaide where he owns numerous residential rental properties. The following information relates to Gordon's tax affairs for the income tax year ending 30 June 2023. Gordon is not a tax expert, so he has asked you to complete his tax return.
Rent received from tenants $87,000
Prepaid rent at 30 June 2022 2,500
Prepaid rent at 30 June 2023 3,500
The rental agreement between Gordon and his tenants provides that tenants must pay their rent one calendar month in advance. All rental agreements are for a fixed term and cannot be cancelled unless by mutual agreement between Gordon and the tenant.
In April 2023, Gordon sold one of his rental properties for $897,000. This property was purchased in January 2012 at a total cost of $450,000. The property was not fit for renting out at that time due to requiring certain repairs to meet building and safety standards, but Gordon thought that he might be able to fix the property for a reasonable cost and sell it later. He sought advice from a real estate agent regarding the property's location and whether it constituted a good investment. The agent confirmed that the location made the property a wise investment if the repair costs could be kept to a minimum. Unfortunately, due to rising building costs, demands from the local council, and the property requiring more repair work than expected, the repairs became quite expensive. To offset these costs, Gordon rented the property between 2015 and 2023 while he waited for an offer from a purchaser that he was prepared to accept. The repairs eventually cost $156,000. Costs to sell the property (including advertising and real estate agent commission) total of $12,500.
Required:
Based on the information provided, calculate Gordon's assessable income for the year ended 30 June 2023. Gordon is NOT registered for the Goods and Services
Tax since residential rent is not considered to be turnover for GST registration purposes.