Question

Mark is a self-employed motor mechanic who derived assessable business income of $235,000 in the year ended 30 June 2020. Mark incurred expenses of $220,000 in deriving this income and also contributed $12,000 to a complying superannuation fund in his own name. In addition to this, he made a donation to the Cancer Council for $1,000. Mark is also a member of the part-time Army Reserve and earned $5,000 during the income year. Expenses incurred in relation to his Army Reserve work amounted to $400.
Given that Mark had income losses brought forward from the previous year of $12,000, the amount of his taxable income/loss for the current year is:

	a.	Nil
	b.	$8,000 income
	c.	$7,000 loss
	d.	$5,000 loss
	e.	$2,000 income

Answer 1

It is the liability of any individual to pay tax to the government and government also make some arrangement to deduct expenses from the earned income

As per the requirement current income is $235,000 and expenses incurred to earn income is $220,000. so the net income is $15,000

Business income		$235,000
less: expenses incurred to earn income		$220,000
Gross income		$15,000
less: deduction allowed
superannuation fund	$12,000
donation to cancer council	$1,000
Total deduction		$13,000
net taxable income for the current year income		$2,000

So, the option 'e' is correct as taxable income is $2,000