QUESTION ONE

On 30 June 2017, Kylie sold her investment apartment for $580,000. The apartment had been purchased on 1 March 2005 for $360,000. At the time of acquiring the holiday apartment Kylie incurred $5,000 in stamp duty, $4,000 in valuation costs. On 1 July 2007 Kylie incurred costs of $15,000 in renovating the kitchen in the apartment. On 1 February 2009, Kylie spent $40,000 adding a second bathroom to the apartment. At settlement she incurred legal expenses of $2,000 and real estate agents commission of $8,000 in relation to the sale.

a) On 1 January 2017 Kylie granted a $10,500 three month option to purchase the property for $540,000 to a local property developer. The option lapsed on 31 March 2017. Kylie retained the $10,500. Her solicitor charged her $500 legal fees to prepare the option contract.

b) On 25 May 2017 Kylie sold a stamp collection for $25,000. She had purchased the stamp collection for $22,000 in 2001.

c) On 16 September 2016 Kylie purchased shares in BHP for a total price of $45,000. She sold those shares on 28 May 2017 for $65,000.

d) Kylie has a carryforward capital loss of $20,000 from the sale of shares in the 2007-2008 income year. She also has a carryforward capital loss of $5,000 from the sale of a coin collection from the 2010-2011 income year.

During the 2016-2017 income year Kylie earned $40,000 as a part-time school teacher but she made a loss of $20,000 from the operation of a gymnasium that she owns. The gymnasium has made a taxable profit in every one of the ten years Kylie has owned the gymnasium except the 2016-2017 income year.

REQUIRED

Calculate Kylies taxable income for the income year ending 30 June 2017. You are not required to calculate the tax payable.