Tax

[Admin]

#15319

Ryan is a tradesman who receives a weekly salary of $1500. He bought new tools for $2600 on 30 September and calculates depreciation using the declining balance method at a rate of 12% per annum.
a. What is Ryan’s gross annual income?
b. Calculate Ryan’s taxable income for this financial year if the only tax deduction is the depreciation for his tools.
c. Use the tax table (below) to calculate Ryan’s tax payable.
d.What is the salvage value of the tools after the first financial year?
e. What is the allowable tax deduction in the next financial year?

a. Income = $1,500 × 52
= $78,000

b. 9 months worth of depreciation
$2,600 × 0.12 = $312
for the 9 months = $312 × ⁹/₁₂
= $234
Taxable income = $78,000 – $234
= $77,766

c.

TAXABLE INCOME	TAX
$0 – $6000	Nil	Nil
$6001 – $35,000	Nil	15c for each $1 in excess of $6000
$35,001 – $80,000	$4350	30c for each $1 in excess of $35,000
$80,001 – $180,000	$17,850	38c for each $1 in excess of $80,000
$180,001 and over	$55,850	45c for each $1 in excess of $180,000

tax = $4,350 + 0.30(77,766 – 35,000)
= $17,179.80

d. Value after first year = $2,600 – $234
= $2,366

e. tax deduction after another year = $2,366 × 0.12
= $283.92

[Admin]

#7267

Using the tax table below, calculate the taxable income if $25,416 was paid in tax.

TAXABLE INCOME	TAX
$1 – $8,000	Nil	Nil
$8,001 – $23,600	Nil	16c for each $1 in excess of $8,000
$23,601 – $65,000	$2,496	30c for each $1 in excess of $23,600
$65,001 – $97,000	$14,916	42c for each $1 in excess of $65,000
$97,001 and over	$28,356	48c for each $1 in excess of $97,000

Find the tax bracket, which will have to be the $65,001 – $97,000, as the one below is too high.

25,416 = 14,916 + 0.42(x – 65,000)               ^{subtract 14,916 from both sides}

10,500 = 0.42(x – 65,000)               ^{divide both sides by 0.42}

25,000 = x – 65,000               ^{tadd 65,000 to both sides}

x = 90,000

∴ Taxable Income was $90,000

[Admin]

#15326

The Income Tax rates for the 2003-2004 financial year are shown in the table below.

TAXABLE INCOME	TAX
$1 – $6000	Nil	Nil
$6001 – $21600	Nil	17c for each $1 in excess of $6000
$21601 – $52000	$2562	30c for each $1 in excess of $21600
$52001 – $62500	$11772	42c for each $1 in excess of $52000
$625001 and over	$16182	47c for each $1 in excess of $162500

Kay has a total income of $65 500. Her tax payable is $11 898.
a. Determine her taxable income.
b. How much did Kay claim as allowable tax deductions?
c. Kay must also pay a Medicare Levy of $768. If she paid $12,200 as PAYG tax, calculate the additional amount of tax that Kay must pay.

a. 11,898 = 11,772 + 0.42(x – 52,000)
126 = 0.42(x – 52,000)
÷ 0.42
300 = x – 52,000
x = $52,300
Taxable Income = $52,300

b. deductions = 65,500 – 52,300
= $13,200

c. tax paid = $12,200
tax due = $11,898 + $768
Refund = $11,898 + $768 – $12,200
= $466

[Admin]

#15327

On the 1st July, 2000, Australia will be getting a new taxation system which involves reduced rates of income tax at the same time as the introduction of a Goods and Services Tax (GST). Below are shown the Income Tax tables before and after the change. A taxpayer has a taxable income of $49000. Use the tables to determine the savings in Income Tax for this taxpayer.

Old Tax Rates
Current scale Taxable Income	Tax Payable
0 – 5400	Nil
5401 – 20700	20c for each $ over $5400
20701 – 38000	$3060 plus 34c for each $ over $20700
38001 – 50000	$8942 plus 43c for each $ over $38000
50000 & over	$14102 plus 47c for each $ over $50000

New Tax Rates From 1st July
New scale Taxable Income	Tax Payable
0 – 6000	Nil
6001 – 20000	17c for each $ over $6000
20001 – 50000	$2380 plus 30c for each $ over $20000
50001 – 60000	$11380 plus 42c for each $ over $60000
60000 & over	$15580 plus 47c for each $ over $60000

From the old tax rates:
8942 + 0.43 × (49,000 – 38,000) = $13,672

From the new tax rates:
2380 + 0.30 × (49,000 – 20,000) = $11,080

∴ the saving will be $13,672 – $11,080 = $2592

[Admin]

#18551

Kim earns $364.80 per week. She received $197.40 interest from her building society. Her allowable deductions total $692. What is her taxable income?
364.8 × 52 = $18 969.60	find the income for the year from her weekly earnings by multiplying by 52
total = $18 969.60 + $197.40 = $19 167	find the total income for the year by adding her earnings to the interest
Taxable income = $19 167 – $692 = $18 475	taxable income = total income – allowable deductions

[Admin]

#18552

Abbey bought new furnishings for her commercial property on 31 December. She paid $18 400. The furnishings are an allowable tax deduction that uses the declining balance method of depreciation at a rate of 15% p.a. a. How much can be claimed for depreciation this financial year? b. Calculate the salvage value of the furnishings after the first financial year. c. What is allowable tax deduction in the next financial year? d.What is the total tax deduction that can be claimed for the first two financial years?
a. $18 400 × 0.15 = $2760 $2760 × 0.5 = $1380 ∴ deduction = $1380	Depreciation for the year is 15% of $18 400 but we can only claim for half the financial year (J, F, M, A, M and June) as the financial year ends on June 30
b. $18 400 – $1,380 = $17 020	Value = original value – reduction
c.  $17 020 × 0.15 = $2 553	Value at end of first financial year = $17 020 Deduction = 15% of the new value
total deductions = $1 380 + $2 553 = $3 393

[Admin]

#18553

Last financial year, Luke paid $19,228 in tax. Using the tax table below, calculate his taxable income. TAXABLE INCOME TAX   $1 – $6000 Nil Nil $6001 – $25 000 Nil 15c for each $1 in excess of $6000 $25 001 – $75 000 $2850 30c for each $1 in excess of $25 000 $75 001 – $150 000 $17850 40c for each $1 in excess of $75 000 $150 001 and over $47850 45c for each $1 in excess of $150 000
19 228 = 17 850 + 0.40(x – 75 000) 1378 = 0.40(x – 75 000) 3445 = x – 75 000 x = $78 445	-17 850 from both sides ÷ both sides by 0.40 add 75 000 to both sides

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