Question

(Foreign Pension)

Elizabeth Windsor is 59 years old. She is a resident taxpayer with private health insurance. She also received a government pension from the United Kingdom that is taxable in Australia but not in the United Kingdom. Elizabeth is subject to tax as an Australian resident taxpayer but exempt from tax in the United Kingdom.

During the 2017/18 tax year, Elizabeth derived interest and unfranked dividends of $39,000 and also received $25,000 of pension.

Required:

1. Calculate Elizabeth’s taxable income for the 2017/18 tax year.

This is my answer for part a

Particular	Amount $
Receipt of Pension	$25000
Unfrank Dividend	$39000
Less deductible amount - New Zealand pension	8% * $25,000 = 2000
Total Taxable income	62000

I need help with part b

b) Calculate Elizabeth’s tax payable or refundable for the 2017/18 tax year.

Q2 Stan Eckhardt, aged 57, received a superannuation lump sum of $310,000 from his superannuation fund upon retirement on 15 April 2018. PAYG tax of $28,170 was withheld from the lump sum. The lump sum comprised entirely of an element taxed in the fund.

Stan also received gross wages of $85,000 up to the date of his retirement.  PAYG tax of $22,110 was withheld from Stan’s wages. Stan has adequate private health insurance.

Required:

a) Calculate Stan’s taxable income for the 2017/18 tax year.

This is the answer for part (a) which I have it right answered Below:

Computation of taxable income for 2017-2018 :

Receipt from Super Annuation fund = $310,000

Receipt from annual wages  = $85,000

Total income for the year 2017-2018= $395,000

Total taxable income for 2017-2018- $ 395,000

Note: In the United States of America Super annuation fund is not tax deductible and hence any receipt from super annuation fund is taxable in the year of receipt.

I only need help with part b

b ) Calculate Stan’s net tax payable or refundable for the 2017/18 tax year.

Answer 1

Sol :

a)

Computation of Tax Payable / Refundable for year 2017/18

Taxable Income = $62,000

Tax Liability = ($0-$18,200)*0% + ($37,000-$18,200)*19% + ($62,000-$37,000)*32.5%

= 0 + $3,572 +$8,125

= $11,697

b)

Particulars	Amount
Receipt from Super Annuation fund	$310,000
Receipt from annual wages	$85,000
Less : Adequate Health Insurance	-$750
Taxable Income	$394,250

Computation of Tax Payable / Refund

Resident tax rates for 2017-18

Taxable income	Tax on this income
0 – $18,200	Nil
$18,201 – $37,000	19c for each $1 over $18,200
$37,001 – $87,000	$3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000	$19,822 plus 37c for each $1 over $87,000
$180,001 and over	$54,232 plus 45c for each $1 over $180,000

Taxable Inocme = $394,250

Tax Liability = ($0-$18,200)*0% + ($37,000-$18,200)*19% + ($87,000-$37,000)*32.5% + ($180,000-$87,000)*37% + ($394,250-$180,000)*45%

= $0 + $3,572 + $16,250 + $34,410 + $96,412.50

= $150,644.50

Tax Liability = $150,644.50

Less :PAYG Tax = $28,170

Less : PAYG Tax = $22,110

Net Tax Liability =$100,364.50

Note : The adeqaute health insurance for individuals is $750 or Less