Introduction to Income Tax -Solutions

Transcription

1 Chapter 1: Introduction to Income Tax -Solutions QUESTION 1.1 QUESTION 1.2 1

2 QUESTION 1.3 QUESTION 1.4 2

3 QUESTION 1.5 ( a ) They have 2 dependant children or students - Olaf and Phil. ( b ) Their combined taxable income is 40,000 Medicare Levy for each 10% x (40,000-37,627) x (20,000/40,000) ( c ) Michael's Medicare Levy would become: (1.5% x 37,627) less (8.5% x (40,000-37,627)) Sarah's Medicare Levy would be nil as her taxable income is < 18,839 ( d ) If Michael was a sole parent, the family rates would still apply to him. Therefore, his Medicare Levy would be: 10% x (40,000-37,627) QUESTION 1.6 Glenn and Rowena have combined taxable income of 28,000. As this is less than 31,789, neither will be liable for Medicare Levy in 2011/12. Kath and Fred have combined taxable income of 48,000. As this is greater than the upper threshhold of 47,701 normal Medicare Levy rates apply. Kath 1.5% x 36, Fred < 18, Beck and Roy have combined taxable income of 45,000 Beck 10% x (45,000-43,465) x (25,000/45,000) Roy 10% x (45,000-43,465) x (20,000/45,000) Will and Tina have combined taxable income of 49,000 Will's Medicare Levy 1.5% x 30, Tina's Medicare Levy 10% x (19,000-18,839)

4 QUESTION 1.7 Medicare Levy on 70, % x 70,000 1, Medicare Levy Surcharge on 82,000 1% x 82, No - only private health insurance that includes hospital cover is sufficient for a resident taxpayer to be not liable for the Surcharge. If Jeremy commenced private health insurance on 1 June 2012, his liability for the MLS would be: 1% x 82,000 x 336/ QUESTION 1.8 Gemima Medicare Levy 1.5% x 69,000 1, Ian Medicare Levy 1.5% x 82,000 1, Medicare Levy Surcharge 1% x 82, Morgan Medicare Levy 1.5% x 75,000 1, Medicare Levy Surcharge 1% x (75, ,000) Ethan Medicare Levy 1.5% x 95,000 1, Medicare Levy Surcharge 1% x 95,000 x 244/ Reg Medicare Levy 1.5% x 68,800 1, note - MLS only applies if income for surcharge purposes is greater than 80,000. Tyrone Medicare Levy 1.5% x 78,000 1, Medicare Levy Surcharge 1% x (78, ,000)

5 QUESTION 1.9 5

6 QUESTION

7 QUESTION 1.10 (continued) 7

8 QUESTION 1.11 ( a ) The low income tax offset is a non-refundable offset. ( b ) Low income tax offset on 55,000 1,500 - (4% x (55,000-30,000) ( c ) Low income tax offset on 17,000 < 30,000 1, ( d ) There is no family threshold and the taxable income of the taxpayer is the sole determinant of the offset. ( e ) Low income tax offset on 68,000 > 67,500 Nil QUESTION 1.12 Bethany Low Income Tax Offset on 25,000 taxable income < 30,000 1, Irwin Low Income Tax Offset on 69,000 taxable income > 67,500 Nil Rhys Low Income Tax Offset on 45,000 1,500 - (4% x (45,000-30,000)) Zane Low Income Tax Offset on 11,000 taxable income < 30, Non-refundable tax offset - the full 1,500 while credited is effectively not refunded. Jess Low Income Tax Offset on 30,000 taxable income < 30,000 1, Fringe benefits are not considered in the calculation 8

9 QUESTION 1.13 ( a ) 5 months as a resident, therefore 5 x 500 2,500 ( b ) Tax on 25,000 15% x (25,000-2,500) 3, ( c ) Medicare Levy 1.5% x 25,000 x 151/ ( d ) Low income tax offset < 30,000 1, ( e ) Tax on 25,000 15% x (25,000-2,500) 3, Less Low income tax offset < 30,000 1, , Medicare Levy 1.5% x 25,000 x 151/ TAX PAYABLE 2, QUESTION 1.14 ( a ) 10 months as a resident, therefore 10 x 500 5,000 ( b ) Tax on 31,000 15% x (31,000-5,000) 3, ( c ) Medicare Levy 1.5% x 31,000 x 305/ ( d ) Low income tax offset 1,500 - (4% x (31,000-30,000)) 1, ( e ) Tax on 31,000 15% x (31,000-5,000) 3, Less Low income tax offset 1,500 - (4% x (31,000-30,000)) 1, , Add Medicare Levy 1.5% x 31,000 x 305/ TAX PAYABLE 2,

10 Note: Solutions to Questions 1.15 to 1.24 include the Flood Levy in the tax payable calculation. QUESTION months as a resident, therefore tax free threshold is 8 x 500 = 4,000 Tax on 85,000 17,550 + (37% x (85,000-80,000)) + 15% x (6,000-4,000) 19, Flood Levy (85,000-50,000) x 0.5% Medicare Levy 1.5% x 85,000 x 227/ TAX PAYABLE 20, QUESTION months as a resident, therefore tax free threshold is 9 x 500 = 4,500 Tax on 146,000 17,550 + (37% x (146,000-80,000)) + 15% x (6,000-4,500) 42, Flood Levy ((146, ,000) x 1%) Medicare Levy 1.5% x 146,000 x 271/366 1, Medicare Levy Surcharge 1% x 146,000 x 271/366 1, TAX PAYABLE 45, QUESTION

11 QUESTION

12 QUESTION 1.19 QUESTION 1.20 Tax-free threshhold 500 x 4 2,000 Tax on 72,340 15, (30% x (72,340-37,000)) + 4,650 + (15% x (6000-2,000)) Flood Levy (72,340-50,000) x 0.5% Medicare Levy 1.5% x 72,340 x 123/ , Less: PAYG Withheld 17, TAX REFUNDABLE 1,

13 QUESTION 1.21 QUESTION 1.22 QUESTION 1.23 Tax-free threshhold 500 x 3 1,500 Tax on 37,540 5, ,650 + (30% x (37,540-37,000)) + (15% x (6,000-1,500) Less: Low Income Tax Offset 1, ,500 - (4% x (37,540-30,000) 4, Add: Medicare Levy 1.5% x 37,540 x 73/ , Less: PAYG Withheld 6, TAX REFUNDABLE 1,

14 QUESTION 1.24 Combined family income 144, , , ,870 Threshhold 160,000 + (1,500 x (3-1)) 163,000 Therefore surcharge applies to Bjorn but not Monica. Monica Tax on 144,000 17,550 + (37% x (144,000-80,000)) 41, Flood Levy ((144, ,000) x 1%) Medicare Levy 1.5% x 144,000 2, TAX PAYABLE 44, Bjorn Tax on 19,560 15% x (19,560-6,000) 2, Less: Low Income Tax Offset 1, Medicare Levy 10% x (19,560-18,839) Medicare Levy Surcharge 1% x 19, TAX PAYABLE QUESTION 1.25 Tax on 26,600 26,600 x 29% 7, Less PAYG tax withheld 7, TAX PAYABLE QUESTION 1.26 Sarah Flood Levy (69,000-50,000) x 0.5% Daniel Flood Levy Taxable income less than 50,000 NIL Jacqui Flood Levy Taxable income less than 50,000 NIL * Flood levy in not calculated on family income Jess Flood Levy Taxable income less than 50,000 * Flood levy calculated on taxable income not adjusted taxable income Kareena Flood Levy ((142, ,000) x 1%) Ella Flood Levy Exempt from levy as in receipt of an Australian Government Disaster Recovery Payment. Minh Flood Levy (60,000-50,000) x 0.5% Non-residents are subject to the Flood Levy on Australian source income. 14