Rick Hastie is a senior executive in the Canberra office of a large company called DxP Ltd (DxP). Rick needs to do his income tax return for the 2021 income year and he has come to you for advice.

He provides the following information about his income and expenditure.

He receives $500,000 per annum in salary from the DxP. In addition to his salary, Rick received an annual performance bonus of $100,000 on 15 June 2021 as he satisfied certain billing targets. Rick's investment portfolio comprises of the following:

Asset	Acquisition Date	Acquisition Price	Notes
Queanbeyan property	24 June2015	$600,000	Property is a vacantwarehouse site.
Shares in BHP	3 March 2018	$50,000	Shares pay dividends

 

Rick works 3.5 days (Monday to Thursday) a week for DxP and spends 1.5 days (Thursday and Friday) a week in his furniture studio at home. Rick incurs the following expenditure during the 2021 income year:

 

He pays $100,000 to a timber merchant for timber and other materials to use in making his furniture.
He receives a $500 speeding fine on the way to Mick's store to deliver furniture.
On 1 May 2021, he buys a laptop to use in the furniture-making activity, costing
$3,600. The Commissioner states that the laptop should last 3 years. Ricks uses the laptop 10% of the time to stream movies and watch sport.

He travels between his office at DxP and home 5 days a week, by bus, at an annual cost of $1,500.
Rick uses the garage to make the furniture and one of the bedrooms in his home as an office to Vadministration relating to the furniture-making activity. He pays $2,500 per month in interest on his home loan and $600 per month in heating and cleaning costs for the home. The garage and the bedroom take up 25% of the space in the house.
Rick employs two students to work in the studio, paying a total of $50,000 in wages

per year.

Rick is thinking about starting a new business buying and selling recycled timber. He asks his accountant to investigate the feasibility of the business before he decides. The accountant's report cost $4,000. Rick decides not to start the business.

Required:

 

Using relevant legislation and case law, explain to Rick whether the amounts in the above-mentioned transactions would or would not be allowable deductions for income tax purposes in the 2021 income year. Show calculations where appropriate. No need to consider the trading stock rules.

Monetary assents are limitations set up by the UN or UK to accomplish a particular unfamiliar
strategy or public safety objective. They can:
• limit the arrangement of specific monetary administrations
• confine admittance to monetary business sectors, reserves and financial assets.
Monetary approvals are by and large forced to:
• pressure a system, or people inside a system, into changing their conduct (or
parts of it) by expanding the expense on them so much that they choose to
stop the culpable conduct;
• oblige an objective by denying them admittance to distinct advantages expected to proceed their
irritating conduct, including the financing of psychological oppression or atomic multiplication;
• signal objection, slandering and possibly secluding a system or individual, or
as an approach to sending more extensive political messages broadly or universally; or potentially
• safeguard the worth of resources that have been abused from a nation until
these resources can be localized.

1.2 Who is engaged with making and executing sanctions
The United Nations (UN) forces monetary endorses and requires part states to carry out
them through Resolutions passed by the UN Security Council. You can peruse more about the
UN's work on monetary assents on their site
Utilizing the Consolidated List
The Consolidated List contains a scope of data to help the recognizable proof of assigned
people. For a singular this can incorporate their:
• monikers
• date of birth
• visa subtleties
• identity
Unfamiliar, Commonwealth and Development
Office (FCDO)
Liable for the UK's worldwide
sanctions strategy, including all global
sanctions systems and assignments
Haggles generally global approvals
HM Treasury
(Office of Financial Sanctions Implementation -
OFSI)
OFSI is the authority liable for
executing the UK's monetary approvals on
benefit of HM Treasury
Division for International Trade
(Trade Control Joint Unit)
Executes international restrictions and bans
Division for Transport Implements transport sanctions, including
controlling development of boats and airplane in
UK waters and airspace
Work space Implements travel boycotts
HM Revenue and Customs (HMRC) Enforces breaks of international restrictions
Public Crime Agency (NCA) Investigates and implements breaks of monetary
sanctions
Monetary authorizations come in many structures as they are created in light of a given circumstance.
The most well-known sorts of monetary approvals utilized lately are:
• Designated resource freezes: these apply to named people and elements confining
admittance to reserves and monetary assets. Somebody subject to a resource freeze in the
UK will be recorded on OFSI's united rundown:
sanctions-solidified listof-targets
• Limitations on a wide assortment of monetary business sectors and administrations: these can apply to
named people and elements, determined gatherings, or whole areas. To date these
have appeared as:
• venture boycotts
• limitations on admittance to capital business sectors
• bearings to stop banking connections and exercises
UK monetary authorizations: general direction (December 2020)
• prerequisites to tell or look for authorisation before specific installments being
made or gotten
• limitations on the arrangement of monetary, protection, handling or warning
administrations or other monetary administrations.
• Bearings to stop all business: these will indicate the kind of business and can apply
to a particular individual, gathering, area or country.
1.4 Who needs to consent to monetary authorizations
UK monetary authorizations apply to all people inside the region and regional ocean of the UK and
to all UK people, any place they are on the planet. This intends that:
• All people and lawful substances who are inside or attempt exercises inside the
UK's region should conform to UK monetary authorizations that are in force.
• All UK nationals and legitimate elements laid out under UK regulation, including their
branches, should likewise agree with UK monetary approvals that are in force,
regardless of where their exercises occur.

Step-by-step explanation

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