Australian Taxation law
Question:
Clint lives in Nadir, New South Wales. During the 2015 income year, Clint spent 4 months living in New York. He did some casual work there (earning $10,000 and paying $2,000 in US income tax) but he was mostly holidaying.
In the 2015 financial year Clint made deposits into his bank account totalling 240,000. Clint has been registered for goods and services tax (GST) since 25 January 2010. During the 2015 financial year he carried on a home maintenance business (eg repair, painting, cleaning gutters). Most of this work was undertaken for real estate agents on rental properties.
Clint loves drinking coffee. He considers himself a connoisseur. On 1 July 2014 he started importing green beans. He roasts the green beans, packages them, and sells them on weekends at farmers' markets. Clint does not keep any business records in relation to the coffee bean sales as he considers the activity a hobby. He enjoys meeting people at the markets and he does it for fun. He believes that he makes a lot of money out of the coffee bean sales but is unsure how much.
Clint bets on horse races most days. In previous years he roughly broke even on his wins and losses. He has a racing system which he developed over a number of years. In the 2015 financial year he started picking a lot of winners. He won $80,000. Clint keeps meticulous records on his wins and losses. He regularly attends races.
When driving around the city for the home maintenance business Clint sees a lot of abandoned furniture. He generally pulls up and collects the furniture. During lulls in the home maintenance business he repairs the furniture, paints or polishes it, and then sells it. He advertises the furniture in the local newspaper. He doesn't keep business records on the furniture sales because he considers it a hobby.
For his 2015 tax return Clint compiled the following information (GST exclusive):
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$
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Gross Interest on Bank Deposits
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2,000
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Total Income from Home Maintenance Business
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76,000
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Depreciation Expense on Equipment used in Home Maintenance Business
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7,200
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Total Motor Vehicle Expense (No Private Use)
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6,900
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All Other Expenses - Home Maintenance Business
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23,900
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When reviewing his books he noted a big difference between the net income from the home maintenance business and the deposits to his bank account. One of his friends was recently audited by the Australian Taxation Office. He does not want to go through that experience. He seeks your advice on the income tax issues and the GST issues. He DOES NOT want advice on potential offences or penalties.
Further enquires reveals that Clint lodges a business activity statement monthly for the home maintenance business. He runs the home maintenance business as a sole trader. He does not hold any shares, mutual funds, or other financial investments. He is single and does not have any children. He was 52 years old in the 2015 financial year. He does not have any private health insurance. He does not have any superannuation. He did not have any medical expenses.
With reference to legal authority, advise Clint on the taxation issues.