Internal Code: MAS558
Jim carries on income producing activities in two different locations. During the week he works as a barrister in Sydney in the central business district (CBD). Sometimes during the week he also has to go to courts located in various suburbs in Sydney to represent a client. On the weekends he works on his farm at Cooma. The farm is a commercial enterprise.
1) driving from his office in the CBD to another court located in a suburb in Sydney and then driving home;
2) driving from his office in the CBD directly to the farm in Cooma, with 4 big folders of a file he intends to review there;
3) driving from office in the CBD to home and then to the farm in Cooma.
John, an accountant and a tax resident, has provided you with the following information relating to himself for the 2013 income year:
1. He sold a laptop for $500 on 30 June 2013. The laptop was purchased for $2,500 on 1 July 20011. He has self-assessed the laptop to have an effective life of 3 years and he has used the straight-line method of depreciation for tax purposes. He used the laptop 100% for work purposes.
2. On 12 November 2012, he sold his golf clubs for $15,000. He originally acquired them for $1,000 in 2007. The clubs had dramatically increased in value after Tiger Woods autographed them in 2007 during his practice hit out in Australia at the golf course where Mark regularly plays.
3. He signed a contract to sell his rental property on 25 June 2013 for $400,000. The title to the property was transferred on 31 July 2013. The property originally purchased in 2007 for $300,000.
Advise Ian of the income tax consequences of each of the above items. Show your calculation process where appropriate and provide relevant case law, ATO rulings and section references to support your answer.
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