Question 1

On 1 June 2013 Mark Neville signed a contract to purchase a house for investment
purposes (46 Kent Rd South Brisbane Qld 4101). It settled on 30 June 2013 and was
first rented on 1 July 2013. The purchase price of the house was $590,000. In addition
legal costs and stamp duty amounting to $6,200 were paid. A quantity surveyor was
engaged to determine depreciation rates & values. His report showed that the only
deduction available was a 2.5% capital works deduction on assessed construction
costs of $200,000.

Mark financed the purchase of the property by borrowing in part by an interest only
loan from Suncorp over 10 years. Borrowing costs (establishment fees etc) amounted
to $5,000. Total interest paid on the loan for the year ended 30 June 2014 amounted to
$10,000.

Mark engaged a real-estate firm to manage the property on his behalf. The annual
taxation statement received from this firm showed the following transactions for year
ended 30 June 2014:
$
Total rent income received
24,700
Disbursements include:
Repairs & maintenance
590
Gardening & mowing
860
Property agents fees
840
Insurance building & landlord protection
760
Pest control
300
Additional expenses paid by Mark include:
Rates

3,200

Mark also used his private motor vehicle (1,600cc Toyota) to visit the rental property
and real estate agency. Distance travelled for this purpose was 1,000 km.

Required:

1. Complete a rental property worksheet (see form attached) to determine

the amount of net income (loss) for the year ended 30 June 2014.

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PAGE 1 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014

2. Complete Item 21 on the 2014 tax return for individuals (supplementary

section) see form attached.

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PAGE 2 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014

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Question 2
As well as renting out his rental property, Mark also operates a business specialising
in washing and shampooing animals. He trades under the name of Doggy Dunk.
The business has an ABN (28 096 278 581) but is not registered for GST and operates
from the proprietors home located at 20 Ann St Fortitude Valley Qld 4006. Income
received is not considered to be personal services income. Mark has advised that he
does not use the internet to sell his services. You have previously advised him that the
business qualifies for the SBE concessions which were subsequently adopted in prior
years. As the business has used cash based accounting in prior years the tax return is
to be prepared using this method.
The businesss depreciable assets have previously been allocated to a general small
business pool. The balance of this pool as at 1 July 2013 is $32 000. This balance
includes the business vehicle which was purchased in a prior year. During the year
ended 30 June 2014 the following business assets were purchased:
Description
Hydrobath
Electric dog dryer
Computer System

original cost($)
4,500
840
2,800

Taxable purpose %
100
100
60

Marks records show that the following income was earned and expenses incurred for
year ended 30 June 2014 (note all amounts shown are GST inclusive):
$
Gross income dog services (cash receipts)
218,700
Advertising
Accounting fees
Bank fees
Home office expenses
Insurance business
Interest on business loan
Licences & fees
Purchase of Materials shampoos etc (cash paid)
Motor vehicle expenses (including 25% private use proportion):
- fuel
- registration & insurance
- repairs & maintenance
Printing & stationery
Protective clothing
Repairs to equipment
Telephone - Mobile (100% business use)

4,900
700
278
350
770
3,750
260
6,390
9,650
580
2,500
3,130
150
125
850
1,490

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PAGE 5 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014

- home (only 20% business proportion to be claimed on tax return) 1,200

Wages to Jessica (Marks teenage daughter)
1,500
Total expenses

$32,993

Additional information:
Stock of shampoos at 30 June 2013
at 30 June 2014

$
5,000
1,000

Required:
(a) Calculate the General SBE Pool deduction for year ended 30 June 2014
and the closing balance of this pool at 30 June 2014.
(b) Calculate the Taxable Income for Mark attributable to his business Doggy
Dunk for the year ended 30 June 2014.

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PAGE 6 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014

Question 3
To supplement his income Mark also sold the following assets during year ended 30
June 2014. Calculate the net capital gain or loss.
Details
Saab motor vehicle
AMP shares
Woolworths shares
Coles Myer shares
Jewellery
Yacht

Acquisition
Date
20/04/2000
30/09/2009
12/06/2013
10/09/2001
01/11/2000
05/05/1985

Total
Cost($)
50,000
7,500
2,600
1,500
499
80,000

Sale
Date
22/11/2013
11/03/2014
28/04/2014
20/06/2014
20/06/2014
29/06/2014

Capital
Proceeds($)
22,600
17,500
8,500
53,500
10,000
46,000

Note: use the CGT discount method where available to calculate the capital
gains tax payable by the taxpayer.

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PAGE 7 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014

Question 4
(a) Calculate Mark total taxable income or loss figure.

(b) Complete an income tax calculation form to show the further tax
payable/refundable for the year ended 30 June 2014. (Note: Mark has
paid PAYG instalments of $8,000 during the year and does hold private
health insurance. Also assume that he has no other assessable income,
deduction claims or tax offsets).

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PAGE 8 FNSACC02B sem2 2014 practice exam (part A)

Accounting team - Oct 2014