BUSL320 Presentation

Fangya LIU
43596282

Question 1

(a) Rebecca, a resident of Australia for income tax purposes. She is

the store supervisor of a leading hardware store. For the year ended
30 June 2016, she was paid $65,300 in salary and wages. She also
received a $250 gift voucher from her employer for being the most
punctual member of staff at work. The voucher can only be redeemed
in return for goods stocked by the store. Her employer withheld tax
from her wages from week to week and by the end of the year had
withheld $10,769. She has work and gift deductions of $8,000.

i. Discuss the income tax consequences that result from these

transactions.

ii. Calculate her tax liability for 2015/16. What difference does is
make if you take Medicare levy and Medical levy surcharge into
account?

Individual Tax Rates 2015/16

Resident Individual rates for 2015/16
Taxable income

Tax on this income

0 $18,200

Nil

$18,201 $37,000

Nil + 19% of excess over $18,200

$37,001 $80,000

$3,572 + 32.5% of excess over $37,000

$80,001 $180,000

$17,547 + 37% of excess over $80,000

$180,001 and over

$54,547 + 47% of excess over $180,000

Taxable income= $65,300 - $8,000=$57,300

low income earners offset

$

Tax on $57300
Tax on $18,200

Maximum offset

nil

445

Tax on ($37,000 - $18,200) x 19%

$3572

Reduction

Tax on ($57,300 - $37,000) x 32.5%

$6597.5

Gross tax payable

$10169.5

($57300-37000)*1.5% 304.5

Less low income earners offset

$140.5

Less tax withheld

$10769

Total tax payable

($740)-tax refund

Plus Medicare levy ($57,300 x 2%)

$1146

Tax payable

$406

Low income tax offset 140.5

Medicare Levy Act 1986

Taxable Income ($)

0 21,335

Levy Payable

Nil

21,336 26,668

Nil + 10% on excess over $21,336

26,669 +

2% on entire taxable income

 (b)

During 2015/16, Klaus, a non-resident, derives

$59,000 assessable income from services he
performs in Australia for a South African mining
company. He also earns $95,000 interest income
on a savings in an overseas bank account.

Calculate

Klauss liability to Australian income tax

for 2015/16. What impact would Medicare levy
have on his tax liability? Is Klaus entitled to a low
income tax offset?

Individual Tax Rates 2015/2016

Foreign-Resident Individual rates for 2015/2016
Taxable income

Tax on this income

0 $80,000

32.5% on the entire amount

$80,001 - $180,000

$26,000 + 37% of excess over $80,000

$180,001 and over

$63,000 + 47% of excess over $180,000

Tax on $59000=$59000*32.5%=$19125

(c) Miko is a PhD student at Macquarie University. For the year

ended 30 June 2016, he worked on two part-time jobs - the
first as a service station attendant, and the second-job as a
cleaner at a local restaurant. He earned in total $23,270 from
working on these two jobs. He incurred an expense of $180
purchasing protective clothing for his second job. He also
donated $250 to his local church. His payment summaries show
that a total of $340 had been withheld in tax from his wages for
the year.

In the previous year, Miko developed a very popular smart

phone app. He registered the patents in the US. A major USbased tech company packaged it with its products in selling it
to the public. On 10 December 2015, the US tech company sent
Miko a royalty cheque of US$ 8,500 net. 15% US tax had been
withheld by the company and remitted to the US-Internal
Revenue Service.

What is Mikos tax liability for 2015/16?

Taxable income= $23270 - $180-$250=$22840

Tax on $22840
Tax on $18,200

nil

Tax on ($22840 - $18,200) x 19%

$881.6

Gross tax payable

$881.6

Less low income earners offset

$445

Plus Medicare levy ($22840-20897) x 2% $194.3

Tax payable

$630.9

(d) An electrician has a contract with a real estate agency

to make repairs to tenanted premises when problems are
reported. During 2015/16, the electrician issues invoices
to the agency for $18,000 for work that he carried out
during the period. He does not provide his Australian
Business Number on the invoices but supplies his bank
details so that payment can be made into his account.

Assuming the agency complies with its obligations under

tax law, how much would the agency deposit into the
electricians account? Explain your reasoning.

In your answer, you are also required to explain the nature

and significance of the Australian Business Number for tax
purposes.

Australian Business Number (ABN)

The ABN

is a unique identification number for all

businesses dealing with government.

Entities

required to register for GST purposes must have

an ABN and failure to quote an ABN when required to do
so may result in tax being withheld at the highest
marginal rate.

Correct

amount= 18000*10%*18000=$19800 (GST

included)

Thanks for listening!