Sample exam question 4 - June 2015

Doctor House worked as an employee doctor for Princeton Medical Enterprises.  Prior to leaving Perth to move to Sydney on 30 June 2014 he sold the following assets:

• The family home on 1 April 2014.  The home was bought on 31st January 1996.  The house cost $200,000 and renovations totalling $85,000 were carried out in June 2000. Stamp Duty on the purchase was $10,000 which was paid on 2nd February 1996 and commission on sale $25,000 paid on 1st April 2014 - $990,000
   
• Shares in Medical Supplies Pty Ltd on 10 November 2013. The shares had cost $55,000 in January 1995. - $50,000
    
• A vacant block of land on 1 June 2014.  The block had cost $235,000 on 28 June 2013.  Stamp duty on purchase was $20,682 and commission paid on sale was $10,350.  Interest of $13,000 was paid in respect of the loan which had been taken out to finance the purchase. - $345,000

Doctor House had a capital loss from the previous year of $5,900.  In addition, during the current year he had a loss of $7,900 from renting out a factory unit in a Perth suburb. 

 

Doctor House had a salary of $285,000 in addition to a salary of $5,000 from the Naval Reserve in which he was an officer.  Dry-cleaning costs totalled $185 for white medical coats and $53 for the Naval Reserve uniforms.

During the year he received the following dividends from several companies he had invested in –
Medical Limbs Ltd – Fully Franked Dividend with franking credits of

$4286 attached - $10,000

 

Blood Bank Ltd – Unfranked Dividend - $2,500

 

Pills Galore Pty Ltd – Partially Franked Dividend ($1500 franking credits

attached) - $5,000

 He had incurred the following costs whilst working –

a) Subscriptions to “Weekly Medical” a journal for health professionals - $250

b) Fees paid to Medical Association - $2,500

c) Raffle tickets for a hospital charity - $100

d) Costs associated with attending a medical conference - $4,589

Doctor House intended to start his own medical practice in Sydney and intended to use a family trust.  He paid his accountant $1,500 for advice on how to structure his business and a further $800 to prepare his current year’s tax return.

During the current year Doctor House had to work a number of nights as his employer operated a 24 hour emergency clinic.  His travel to the clinic occurred in a number of different circumstances which are set out below.

• Travel from home to work and return for daytime shifts - $3,600
• Travel from home to work and return for night shifts (when there was no public transport available) - $2,100
• Travel from home to work and return at nights when he was called in after having already worked a day shift - $800
• On very busy nights he was contacted at home and would give instructions over the phone to nursing staff then he would drive in and continue treating the patients.  Cost of this travel from home to work and return - $930

Required

Calculate Doctor House's taxable income and net tax payable including Medicare.

  

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