Reference no: EM132549525

Question - Don Drysdale is an Australian resident and has provided you with the following details for the income tax year ending 30 June 2019.

(1) Don's gross salary was $32,000 from his part-time employment at Fast Car Detailers Pty Ltd where he works as a car cleaner

(2) Don received $7,000 in fully franked dividends from BankEast which have franking credits attached.

(3) Don also worked part-time with the Australian Defence Force Reserves and he was paid $10,000 during the year.

(4) Don purchased a compulsory work uniform with the logo of Fast Car Detailers printed boldly on the front and he paid $200 for this purchase and he has kept this receipt. Don has not kept any receipts for his laundry of this work uniform but he has been told by an accountant friend that he can claim $150 a year in laundry expenses without keeping any receipts.

(5) Don took out a loan on 2 January 2019 to buy more shares in BankEast. You can assume that shares in BankEast are income producing shares. Don has paid $5,000 in interest on this loan for the year ended 30 June 2019.

(6) Don was charged $1,200 by BankEast to arrange this loan. You can assume that there are 181 days from 2 January 2019 to 30 June 2019.

(7) Don is also studying an accounting degree part-time at Flinders University and he has receipts for course fees of $1,600. He also has receipts for $120 of textbooks for his study and $50 in car parking expenses at Flinders University. He drove to university 1 day per week during semester teaching time and he has estimated that his total travel between his home and university and back again to home was 600 kilometres.

(8) Don has spent $500 on a subscription to the Financial Times Investor magazine and he uses this publication to monitor the share price of his investment in BankEast and also to keep abreast of financial information which he considers is useful should he wish to buy any more shares.

Required -

(i) What is Don's assessable income for the income tax year ended 30 June 2019? Please provide supporting references (legislation and case law where relevant) and explanations for your calculation of Don's assessable income.

(ii) What deductions are allowable to Don for the income tax year ended 30 June 2019? Please provide supporting references (legislation and case law where relevant) and explanations for your conclusions regarding his allowable deductions.

(iii) What is Don's taxable income likely to be for the income tax year ended 30 June 2019?

(iv) What marginal tax rate will apply to Don for the income tax year ended 30 June 2019? Do not include the Medicare Levy in this rate.