Michael operates his own business selling pool equipment and materials as well as servicing…

Michael operates his own business selling pool equipment and materials as well as servicing swimming pools. During the year

ended 30 June 2019 Michael received $915,000 in cash for sales of equipment andmaterials and for pool services. Wages of

$275,000 were paid to his staff. This included an amount of $50,000 paid to his brother. The work of the brother could have been

done by an unrelated person for $10,000. On 1 June 2019, Michael paid $4,530 to his lawyer to complete the winding up of a

business he had operated at a loss in earlier years. One of Michael’s customers bought some pool materials for $600 on credit

on 21 June 2018 but could not pay the account which was issued on the same day because he went bankrupt in November 2018.

Michael wrote off the debt on 1 July 2019. During the year ended 30 June 2019 Michael paid rates and taxes of $5,270 on a

vacant block of land. Michael was thinking of putting a holiday house on the block of land.

Michael made an interest free loan of $500,000 on 1 January 2019 to one of his employees. The employee used the loan for two

purposes: 30% for the purchase of an investment property and 70% to pay off his home mortgage. On 1 March 2019 Michael

paid the life Insurance premium for one of his employees in the amount of $25,000.

Michael bought a rental property on 4 July 2018 for $1,000,000. He borrowed $750,000 of this money on the same day from

the bank to buy the property. The term of the loan was 4 years. The property was leased on 4 July 2018. He received rent in

cash from his tenants during the year ended 30 June 2019 in the amount of $95,000. On 1 July 2018 Michael paid the bank a loan

application fee of $1,570

Attachments:

ACC-301-Tax-L….pdf

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