Question

Ned Markson is a resident taxpayer employed by Acme Holdings Ltd. The following transactions were all as a consequence of Ned’s employment:

• Net weekly wages totalled $78,000 for the year.
• Total PAYG tax withheld from Ned’s weekly wages from Acme and forwarded to the ATO amounted to $19,000.
• Additional wages paid to Ned as a Christmas bonus of $6,000 net (net of $4,200 PAYG tax withheld).
• Reimbursement of out-of-pocket travel costs of $1,200 that Ned incurred during his employment.
• A taxable travel allowance totalling $2,800. No PAYG was withheld from this amount.
• Acme paid health insurance premiums for Ned and his wife to the value of $2,750, as an employment fringe benefit.
• Superannuation contributed $10,000 to Acme Holdings Superannuation Fund on behalf of Ned.

Required:

For each of these transactions indicate which amounts are to be included in Ned’s assessable income and provide Ned’s total assessable income.

Answer 1

Let check point to point details:

1. Net weekly wages totalled $78,000 for the year- Included

2. Total PAYG tax withheld from Ned’s weekly wages from Acme and forwarded to the ATO amounted to $19,000. - This will be used to calculate the gross wages to calculate assessable income.

3. Additional wages paid to Ned as a Christmas bonus of $6,000 net (net of $4,200 PAYG tax withheld). Included

4. Reimbursement of out-of-pocket travel costs of $1,200 that Ned incurred during his employment. - Reimbursement of expenses is not in nature of income. Hence, Not Included.

5. A taxable travel allowance totalling $2,800. No PAYG was withheld from this amount. – Included

6. Acme paid health insurance premiums for Ned and his wife to the value of $2,750, as an employment fringe benefit.- Since health insurance premiums as an employment fringe benefit is not taxable . Hence, Not Included.

7. Superannuation contributed $10,000 to Acme Holdings Superannuation Fund on behalf of Ned - Not Included

Ned’s assessable value is calculated as follows:

Wages	97,000 $	Net Wages of 78,000 $ and PAYG 19,000 $
Bonus	10,200 $	Net 6000 $ and PAYG 4200 $
Travel Allowance	2,800 $
Assessable Income	1,10,000 $