Assignment Part 2 is the continuation of Assignment Part 1, involving the tax affairs of Alex Lifestyle. In Assignment Part 1, you were required to calculate assessable income based on the information provided. For the purpose of this second assignment you should take that amount of assessable income as $143,000. Taking that amount as the starting point, you (or your team) must deal with the following additional information (which is relevant for the year ending 30 June 2020 unless otherwise stated) to determine Alex’s taxable income and tax payable including Medicare levy for the year ending 30 June 2020. 1. Interest paid on loans over all his rental properties amounted to $30,000. On 1 May 2020, Alex borrowed money over 25 years to purchase a new rental property in Marion, south of Adelaide. In taking out this loan the bank charged a $900 application fee. Stamp duty on the loan was $250. The Marion property cost $200,000 to purchase. Alex had recently paid off a loan on another property situated in Glenelg, west of Adelaide. Having done so, he asked the bank to transfer full ownership to him. The bank charged $500 to effect this transfer. 2. Late in 2019, one of Alex’s tenants reported that the plumbing was leaking. The pipes that were the problem were replaced with similar materials at a cost of $2,500. Alex was annoyed at this since he arranged for those pipes to be replaced 5 years before. 3. Alex regularly travels to inspect his properties. Rather than make a big trip out of it, he always travels from his house to one property and then back home again. Later, he would do the same for another property. These trips cost $500. 4. Other expenses, which may be taken as deductible, amounted to $15,000. 5. Assume that all amounts herein are either exclusive of GST or are free of GST input tax credit entitlements, as appropriate. In other words, GST payments or credits should not be considered in your calculations. 6. Alex’s PAYG Instalments for 2020 amounted to $25,000. He has private health insurance including hospital cover. Please ignore the private health insurance rebate.
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