|
Sub question No. |
Amount ($) |
Explanation (wherever necessary) |
|
(a) Income tax payable |
Nil |
Since taxable income up-to $18,200 is not taxable (Hoopes, Robinson and Slemrod, 2018) |
|
(b) Income tax payable |
4,500.00 |
30% of taxable income |
|
(c) |
||
|
Up-to $18200, Nil |
||
|
From $18,201 to $37000 @19% |
3,571.81 |
|
|
From $37001 to $87000 @32.5% |
16,249.68 |
|
|
From $87001 to $155000 @37% |
25,159.63 |
|
|
Income tax payable |
44,981.12 |
|
|
(d) Income tax payable |
46,500.00 |
30% of taxable income |
|
(e) |
||
|
Up-to $18200, Nil |
||
|
From $18,201 to $37000 @19% |
3,571.81 |
|
|
From $37001 to $87000 @32.5% |
16,249.68 |
|
|
From $87001 to $180000 @37% |
34,409.63 |
|
|
Above $180001 @45% |
33,749.55 |
|
|
Income tax payable |
87,980.67 |
|
|
(f) Income tax payable |
76,500.00 |
30% of taxable income (Dixon and Nassios, 2016) |
|
(g) |
||
|
From $0 to $37000 @15% |
5,550.00 |
|
|
From $37001 to $87000 @32.5% |
16,249.68 |
|
|
From $87001 to $180000 @37% |
34,409.63 |
|
|
Above $180001 @45% |
33,749.55 |
|
|
Income tax payable |
89,958.86 |
- An Australian with annual taxable income of less than $21,980, in case of seniors and pensioners less than $34,758 will not have to pay Medicare levy of at all for the income year 2017-18. Hence, the Australian resident with taxable income of $18,000 will not have to pay any Medicare levy and Medical Surcharge for the year ending on June 30, 2018. Medicare surcharge is not required to be paid on taxable income of $90,000 or less. Hence, no Medicare surcharge is payable by the person (Richardson, 2015).
- As mentioned earlier for senior citizens and pensioners the exemption limit for Medicare levy is $34,758. Since, the taxable income of the person eligible for senior tax offset of $32,000 will not be required to pay any Medicare Levy and Medicare surcharge for the year 2017-18 (McClure, Lanis and Govendir, 2017).
- A non-resident Australian for tax purposes is exempted from payment of Medicare levy as well as Medicare surcharge irrespective of his or her taxable income. Thus, there is no levy or surcharge is payable by the non-resident for Medicare purpose in the tax year ending on June 30, 2018.
- Companies are not subjected to Medicare levy and Medicare surcharge in Australia. Hence, irrespective of the taxable income of a company, it does not required to pay any Medicare levy and Medicare surcharge. The Australian company with taxable income of $2,500,000 is not liable to pay Medicare levy or Medicare surcharge in the year (Council, 2017).
- Medicare levy is generally charged @2% of taxable income. The liability to Medicare levy and Medicare surcharge does not alter on the basis of an individual’s private health cover or insurance. Thus, the amount of Medicare levy for the individual would be (150000 x 2%) =$3,000 and Medicare surcharge would be
|
Medicare surcharge |
|
|
Up-to $90000 |
nil |
|
From $90001 to 105000 @1% |
149.99 |
|
From$105001 to $140000 @1.25% |
437.49 |
|
Above $140001 @1.5% |
149.99 |
|
Medicare surcharge |
737.46 |
- Medicare levy and Medicare surcharge of Victor and his family is calculated below
|
Medicare levy of Victor and his wife |
|
|
Total taxable income (110000+75000) |
185,000.00 |
|
Medicare levy @2% (185000 x 2%) |
3,700.00 |
|
|
|
|
For couples Medicare surcharge is nil up-to annual taxable income of $180000 (Chardon, Freudenberg and Brimble, 2016). |
|
|
Medicare surcharge up-to $180,000 no Medicare surcharge |
|
|
From $180001 to $185000 @1% |
50.00 |
|
Thus, Medicare surcharge |
50.00 |
- Medicare Levy threshold for a family with 4 dependent children is $50,713.
Income tax payable as per s4-15 of ITAA 1997:
|
Particulars |
Amount ($) |
Amount ($) |
|
Salary income |
31,000.00 |
|
|
Bank interest received |
1,150.00 |
|
|
Allowed deductions |
450.00 |
|
|
32,600.00 |
||
|
Less: Allowable deduction |
450.00 |
|
|
Taxable income |
32,150.00 |
Tax liability under ITRA 1986:
|
Up-to $18200 Nil |
|
|
From $18201 to $31700 @19% |
2,650.31 |
Medicare levy:
|
Medicare levy @2% of taxable income |
|
|
(31700 x 2%) |
634.00 |
Rob’s tax credit entitlement is calculated below:
|
Particulars |
Amount ($) |
Amount ($) |
|
Salary income |
31,000.00 |
|
|
Bank interest received |
1,150.00 |
|
|
Allowed deductions |
450.00 |
|
|
32,600.00 |
||
|
Less: Allowable deduction |
450.00 |
|
|
Taxable income |
32,150.00 |
|
|
Income tax payable / (Refundable) |
||
|
Up-to $18200 Nil |
||
|
From $18201 to $31700 @19% |
2,650.31 |
|
|
Less: PAYG deducted |
2,700.00 |
|
|
Income tax credit |
(49.69) |
Thus, Rob is entitle to receive a tax credit of $49.69 (Toth and Burns, 2016).
Income tax payable or refundable is calculated below:
|
Particulars |
Amount ($) |
Amount ($) |
|
Salary income |
31,000.00 |
|
|
Bank interest received |
1,150.00 |
|
|
Allowed deductions |
450.00 |
|
|
32,600.00 |
||
|
Less: Allowable deduction |
450.00 |
|
|
Taxable income |
32,150.00 |
|
|
Income tax payable / (Refundable) |
||
|
Up-to $18200 Nil |
||
|
From $18201 to $31700 @19% |
2,650.31 |
|
|
Less: PAYG deducted |
2,700.00 |
|
|
Income tax refund |
(49.69) |
|
Particulars |
Amount ($) |
Amount ($) |
|
Gross salary |
78,000.00 |
|
|
Unfranked dividend |
2,000.00 |
|
|
Unfranked portion of dividend (700 x 50%) |
350.00 |
|
|
Taxable income under s4-15 of ITAA 1997 |
80,350.00 |
Tax liability under ITRA 1986:
|
Tax liability |
|
|
Up to $18200 |
Nil |
|
From $18201 to $37000 |
3,571.81 |
|
From $37001 to $80350 @32.5% |
14,088.43 |
|
Tax liability |
17,660.24 |
|
Medicare levy |
|
|
Taxable income |
80,350.00 |
|
Medicare [email protected]% (80350 x 2%) |
1,607.00 |
PAYG tax withheld is $16,500 from Rafael (Eccleston and Smith, 2015).
Income tax payable or refundable for Rafael is calculated below:
|
Up to $18200 |
Nil |
|
From $18201 to $37000 |
3,571.81 |
|
From $37001 to $80350 @32.5% |
14,088.43 |
|
Income tax liability |
17,660.24 |
|
Less: PAYG withheld |
16,500.00 |
|
Income tax payable |
1,160.24 |
References:
Chardon, T., Freudenberg, B. and Brimble, M., 2016. Tax literacy in Australia: not knowing your deduction from your offset. Austl. Tax F., 31, p.321. Available at: https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/austraxrum31§ion=16 [Accessed on 11 October 2018]
Council, A., 2017. Strengthening the Medicare Levy to secure the future of the NDIS and other essential universal services. Available at: https://www.acoss.org.au/wp-content/uploads/2017/09/ACOSS_medicare-levy-FINAL.pdf [Accessed on 11 October 2018]
Dixon, J.M. and Nassios, J., 2016. Modelling the impacts of a cut to company tax in Australia. Centre for Policy Studies, Victoria University.
Eccleston, R. and Smith, H., 2015. Fixing Funding in the Australian Federation: Issues and Options for State Tax Reform. Australian Journal of Public Administration, 74(4), pp.435-447.
Hoopes, J.L., Robinson, L. and Slemrod, J., 2018. Public tax-return disclosure. Journal of Accounting and Economics.
McClure, R., Lanis, R. and Govendir, B., 2017. Analysis of Tax Avoidance Strategies of Top Foreign Multinationals Operating in Australia: An Expose.
Richardson, D., 2015. Company tax cuts: an Australian gift to the US internal revenue service. TAI Briefing Paper.
Toth, S. and Burns, A., 2016. Mid market focus: Company tax rates: Consider the total tax liability. Taxation in Australia, 51(5), p.245.
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