Question

Shane is an Australian resident for tax purposes. During the year he derived gross business income of $152,200 and had business deductions of $87,000 (PAYG installments paid $15,100), $8600 interest from an overseas bank account, net of $3400 tax, and rent of $18,000 from a property in the UK which he owns, net of $6500 tax. He has adequate private health insurance.

Required:

For the year ended 30 June 2020, calculate Shane's:

a) Taxable Income

b) Net Tax Payable of refundable

Answer 1

Sol :

a) Computation of Txable Income

Particulars Amount

Gross Business Income   = $152,200

Less :Deductions = $87,000

Net Business Income = $65,200 $65,200

Interest Income Gross (8600+2400)    $11,000

Rental Income Gross (18000+6500) $24,500

Less : Deductions

Private Health Insurance ($750)

Taxable Income = $999,50

Note : For singles, an appropriate level of cover must have an excess of $750 or less.

b) Computation of Tax Liability or Refund

Income Tax Slabs for Individual are

Taxable income	Tax on this income
0 – $18,200	Nil
$18,201 – $37,000	19c for each $1 over $18,200
$37,001 – $90,000	$3,572 plus 32.5c for each $1 over $37,000
$90,001 – $180,000	$20,797 plus 37c for each $1 over $90,000
$180,001 and over	$54,097 plus 45c for each $1 over $180,000

Tax Liability = 18200*0%+(37000-18200)*19%+(90000-37000)*32.5%+(99950-90000)*37%

= 0+3572+17225+3681.50

= $24,478.50

Tax Rebates

PAYG Installments = $15,100

Interest = $3,400

Rent = $6,500

Net Tax Liability/Refund = 24478.50-15100-3400-6500

Refund = $521.5

Notes :

1. PAYG instalments help you to avoid a large tax bill after you lodge your income tax return.

2.Include rental income from overseas properties in your Australian tax return.

Paid tax in another country on rental income, can claim a foreign income tax offset in our Australian tax return.