Solved: Eric is a mechanic who is employed by Mechano Pty Ltd

Eric is a mechanic who is employed by Mechano Pty Ltd. He earns an annual salary of $45,000 plus overtime. During the 2017 tax year in addition to his salary he also worked 50 hours overtime at $70 per hour. 10 of these hours were performed in the last week of June 2017 and were not paid to him until 14 July 2017.

In addition to his salary he also received a Tool Purchase and Maintenance Allowance of $1,500. On 15 December 2016 Eric bought himself a new set of tools worth $950. During the 2017 tax year he also bought miscellaneous spanners, screwdriver etc. for a total of $800. None of the miscellaneous spanners etc. cost more than $300 and were generally to replace items he had lost or that were no longer working properly. Eric also bought overalls for work which cost $340 to purchase (these were only expected to last a year) and a further $100 in laundry expenses during the year.

Eric received franked dividends of $2,200 which had franking credits of $300 attached. In addition, Eric received a lump sum legacy of $80,000 from his grandmother who died during the year.

Two years ago, Eric had sold a number of assets which resulted in a net capital loss of $33,000. No other assets had been sold since that time.
Eric was required to travel to the homes of some clients and carry out services on their cars. He had to take with him his full toolkit to enable him to properly carry out the work. This travel fell into the following categories:

• Travel from Eric’s home to clients’ homes $200
• Travel from clients’ homes to work $180
• Travel from work to clients’ homes $300
• Return to work from client’s homes $300

Assume all depreciating assets, if any, have an effective life of 5 years and Eric wants to minimise his taxable income.

Required:
Calculate Eric’s taxable income for the income tax year ended 30 June 2017.