Accounting: Tax and Taxable Income Essay example

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a) Calculate Jane’s taxable income and her net tax payable including Medicare for the current year.

Taxable Income = Assessable Income - Deduction

s.6-5 Salary 85000
s.44 BHP dividend 4000
s.207-20(1) BHP credit 933.33
s.44 Woodside dividend 7089
s.207-20(1) Woodside credit 3038.14
s.44 Rio Tinto dividend 1020
s.207-20(1) Rio Tinto credit 437.14
s.44 Commonwealth Bank dividend 1434
s.207-20(1) Commonwealth Bank credit 614.57
s.6-5 Commonwealth Bank Interest 341.56
s.6-5 ANZ Bank Interest 1598 s.6-5 loan Interest 100 s 10-5 Loss of earnings 8000

Assessable Income 113605 .74

Less Allowable Deduction s.8-1 Membership Fees paid to CPA Australia 765
s.8-1 Purchase of a briefcase 250
s.30-15 Donation to World Vision 425
s.8-1 Protection boots 250
Div 290 Superannuation 10000
Overalls and safety boots that she is required to wear on the mining site 250
As Curtin is a place of education s.82A will apply.
Non-deductible expenses can be used to make up the $250 threshold.
Non-deductible Deductible 250 s.8-1 Fee help 2100
s.8-1 Books 340
s.8-1 Stationery 134
s.8-1 Work to uni 120
s.8-1 Uni to home - private 200
s.8-1 Work to uni and return 180 50 2874
Remaining threshold to offset 2824
s.8-1 Rates and Taxes 3,467
s.8-1 Gardening 569
s.8-1 Insurance 325 s.8-1 Interest 13,763 *
s.25-10 Replace Hot Water System 2500
s.25-10 Small Repairs 324
s.8-1 Management Fees 3,510

Total Deduction 48972

Taxable Income 64633.74
Less: Threshold (37000) 27633.74
Tax rate X 32.5% 8980.96

Tax on Taxable Income 12552.96
Plus Medicare Levy 969.5
Net Tax Payable 13552.46

b) Provide the legislative references from the Income Tax Assessment Act 1997 and 1936 for each of the items that make up Jane’s taxable income.

s.6-5 Salary 85000
s.44 BHP dividend 4000
s.207-20(1) BHP credit 933.33
s.44 Woodside dividend 7089
s.207-20(1) Woodside credit 3038.14
s.44 Rio Tinto dividend 1020
s.207-20(1) Rio Tinto credit 437.14
s.44 Commonwealth Bank dividend 1434
s.207-20(1) Commonwealth Bank credit 614.57
s.6-5 Commonwealth Bank Interest 341.56
s.6-5 ANZ Bank Interest 1598 s.6-5 loan Interest 100 s 10-5 Loss of earnings 8000

Assessable Income
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