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Kate is employed full-time as an accountant at a top tier accounting firm in Sydney. She receives a salary of $100,000 in the 2017/18 year of income....
Kate is employed full-time as an accountant at a top tier accounting firm in Sydney. She receives a salary of $100,000 in the 2017/18 year of income. Kate spends many evenings working past 8pm at the office and her employer pays for her taxi travel to go home. Kate lives in the suburb of Epping. During the 2017/18 year of income, Kate receives a $5,000 cash award for "Best Accountant in Sydney" from the Chartered Accountants Association.
In her spare time, Kate participates in high-jumping competitions. She is committed to the pursuit of excellence in this sport and over the last couple of years she has competed successfully in a number of competitions, and has won several prizes for high-jumping. During the 2017/18 year of income, Kate is invited back to participate in several prominent high-jumping competitions, where she wins $40,000 in prize money, and a top-of-the-range coffee machine (valued at $3,000). Kate is also invited to make an appearance at several major sports events and she is paid $40,000 for these appearances in the 2017/18 income year.
Kate is also a collector of antique bedside lamps. In August 2017, she sold an antique bedside lamp for $500. She had previously purchased this lamp for $700 (assume cost = $700). In December 2017, she sold another antique bedside lamp for $1,000. She had previously purchased this lamp for $400 (assume cost = $400).
Kate also receives rent of $30,000 in the 2017/18 income year, from her rental property in Canberra. She has $60,000 of allowable deductions in relation to the rental property in the 2017/18 income year.
On 1 June 2018, Kate is approached by a TV Station. She agrees to participate in a series of interviews about her life outside of sports, in consideration of a payment of $30,000 to Kate by the TV station.
On 1 June 2018, Kate also enters into a second agreement with the TV station in which she agrees not to give any similar interviews for a period of two years, in consideration of a payment of $20,000 made to Kate, by the TV station. Kate incurs legal fees of $5,000 in relation to the second agreement.
Despite being employed full time at the accounting firm in Sydney, Kate is always on the lookout for new opportunities. On 15 June 2018, she travels to Melbourne in order to attend a job interview with a rival top-tier accounting firm and incurs $400 on airfares and $800 on accommodation.
Kate has $170,000 of allowable deductions in total in the 2017/18 income year (including any deductions arising (expressly or impliedly) in the above facts).
Advise Kate regarding the tax implications, arising from the above facts in relation to the 2017/18 income year. In your answer, make sure you: (1) apply the HIRAC methodology and refer to any relevant cases, legislative provisions, and principles of tax law; and (2) show separately your calculation of Kate's taxable income, and 'basic income tax liability', for the 2017/18 income year, fully explained by reference to any relevant legislative provisions. (Note: you are not required to calculate Medicare Levy or income tax payable).
