Reference no: EM133655688

Question Handitax Return

Read the information supplied and complete the required tasks as listed.

Please note: part of what this task is assessing is your ability to spot gaps in the information a client provides you. To get this Satisfactory, you will need to apply your knowledge of tax law to identify information that is missing, incomplete or irrelevant. If you have any queries for the client (you should have some!) you are to pose them by emailing or discussing with your teacher.

Alberto Cortes is a single resident Australian taxpayer employed as a lecturer by Universal Training College. During the 2022/2023 tax year, Alberto also sold two properties and some shares.

Alberto's personal details are as follows:

Address: 23 Nonesuch Street

Bracken Ridge Qld 4017

Telephone contact: 07 6543 2109

Tax File Number: 322 666 553

Date of Birth: 16/4/1968

Alberto requests his tax refund (if any) to be sent directly to his bank account by electronic transfer from the Tax Office. He advises his BSB No is 064-999 and the account is in his name at the Commonwealth Bank - Account Number: 71234.

Payment Summary
Gross Wages	$40,000
Performance Bonus	2,000
PAYG tax withheld	5,347
Union fees deducted and forwarded to Academics Federation	700
Alberto has also disclosed other amounts received during the 2022/2023 tax return:
Winnings from casino (Alberto won a jackpot at one of the card tables)	15,480
Proceeds from sale of rental property on Gold Coast (sold on 25th June this year)	432,000
Proceeds from sale of shares in Golden Mining NL (sold on 6th January this year).	9,340
Proceeds from sale of shares on Blackpitt Ltd (sold on 6th January this year).	415
Proceeds from sale of holiday house in Nelson Bay (sold on 14th May this year).	397,000
Proceeds from sale of artwork (partially destroyed during cleaning, then sold 3rd June this year.)	750
Interest on Commonwealth Bank account	150
The shares in Blackpitt Ltd were sold before any dividends for 2022/2023 were declared.
Golden Mining NL only paid one dividend which Alberto Received before selling his shares.   The fully franked dividend was $200 cash with a franking credit of $85.71.

Details Relating to Assets Sold:

The rental property was originally purchased for $276,800 on 1/7/2009.
Alberto was not able to have the rental property tenanted for the whole year, but the property was advertised for rent (or tenanted) for 52 weeks in the year.
To date, Alberto has claimed eligible capital works deductions of $19,400 in respect of constructions costs of the rental property.
The Golden Mining shares were purchased for $2,730 on 15 July 2010 plus brokerage of $20 was incurred on the transaction.
The Blackpitt shares were purchased for $4,035 on 3 March 2015 plus brokerage of $20 was incurred on the transaction.
The holiday house was originally purchased for $428,000 on 20 August 2015. Alberto incurred a further $20,000 in building extensions on 30 April this year. Alberto and his family (and sometimes friends of the family) regularly enjoyed the use of the holiday house as it has proximity to the beach.
The artwork classified as a Collectable asset was originally purchased 2 September 2017 for $5,000.

Other Expenses:

Alberto has kept an estimate that he has used his 1,500cc car for 3,200 work related kilometres. He has also estimated that the petrol used for this amounted to $480.
Alberto has incurred a net rental loss of $2,090 from his rental property for the 2022/23 tax year prior to selling it. This loss was made up $1,000 in rental income, $3,000 in mortgage interest and $90 in agent's commission.
Address - 12 Rein Avenue, Georgetown QLD 4107
Date property first earned rental income - 15/7/2009
The property was advertised for rent for all of the current income year, but he had trouble keeping it tenanted. It is owned exclusively by Alberto and he does not use it for private purposes.
Alberto uses a room in his home exclusively for work preparation. The room accounts for 25% of the floor space of his home. Alberto's mortgage interest, rates and insurance for the tax year amounted to $27,590 while electricity used for the room was calculated at 10% of $1,800 after reviewing his electricity bills. Alberto estimates he used this workspace for approximately 280 hours of preparation during the year. You are to use either the revised fixed rate method or the actual cost method; whichever returns the highest deduction.
Tax agent's fee of $290 paid in August 2022 when Alberto's last income tax return was prepared.
Alberto made the following charitable donations during the year (receipts available): Karl McMannus Foundation for Lyme Disease $100, Doctors Without Borders Pty Ltd $50, Red Cross Foundation (raffle tickets) $15. (Hint: Check Australian Business Registry to see which organisation is registered as Deductible Gift Recipient)
Alberto contributed to the Medibank Private Ltd Health Fund. The Policy Number is 2356578 and the policy type is 'combination'. The Private Health Insurance Rebate has been claimed through the health fund.
Alberto's private health insurance statement is below:

(c) Health Insurance Fund of Australia, Understanding your HIF tax statement

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Additional questions from Alberto:

This is only the second time that Alberto has used a tax agent to prepare his tax return and he has some additional questions for you:

Alberto is aware he is a bit late seeing an accountant this year and as a consequence his return will probably be lodged late. He inquires as to the time frame for lodgment of taxation returns and the penalty he could incur.
He is also aware that there are different ways to calculate capital gains and would like them explained to him.
Alberto is a little uncertain as to the meaning on his dividend statements of the terms "franked amount" and "franking credit" and would like you to explain them to him.
Finally, Alberto heard that there have been changes to the methods available to claim home office expenses due to Covid 19 and would like these changes explained to him.

Responding to Alberto's questions:

To respond to Alberto's questions you are required to:
Prepare for a conversation with Alberto to provide him with the requested information, including any required documentation.
Meet with "Alberto" to answer his queries.
If you are studying online: This meeting will take the form of a role-play and you will need a friend or relative to play the part of Alberto for the meeting. You will need to record this meeting (with video and audio - a mobile phone is ideal for this purpose).
If you are studying face-to-face: This meeting will occur during one of your scheduled classes with your teacher.