Question

During the 2017/18 tax year, Selina Matterson (a single resident taxpayer, aged 41) has the following receipts:

• Net salary (after $18,000 PAYG tax withheld) $55,000
• Fully franked dividend from PPP Ltd $9,800 (with franking credit $4,200)
• Unfranked dividend from QQQ Ltd $900
• Net interest received $954 (after $846 no TFN tax withheld)
• Selina had no deductions
• She was covered by private hospital insurance

Required:

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

Calculate Selina’s net tax payable/refundable (including Medicare Levy) for the 2017/18 tax year.

important Notes : 1) We should only include the  Gross interest (rather than net interest) in part a

2) Dividends and franking credit

Show your working step by step

Answer 1

Answer to Question 1

Firstly we need to convert all the net income into the gross income as under:

Particulars	$
Gross Salary ($ 55,000 + $ 18,000)	73,000
Fully Franked Dividend	9,800
Unfranked Dividend	900
Gross Interest Received ($ 954 + 846)	1800
Taxable Income	85,500

Answer to Question 2

Tax Scale for 2017-18 is as under:

Taxable Income	Tax On This Income
0 to $18,200	Nil
$18,201 to $37,000	19c for each $1 over $18,200
$37,001 to $87,000	$3,572 plus 32.5c for each $1 over $37,000
$87,001 to $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

As our taxable income is $ 85,500 so the tax bracket that would be applicable would be $ 37,001 to $ 87,000.

& the Tax payable would be $ 19,334.5 ($ 3,572 + 15,762 (85,500 - 37,000 *32.5%))

Medicare levy would be 2 % of taxable income so it would be = $ 85,500 * 2% = $ 1,710

Tax payable/refundable calculation is as under:

Particulars	$
Tax payable (A)	19,334.50
Less: PAYG Withheld: (B)	18,000
Less: Franking Credit ©	4200
Less: TFN Credit (D)	846
Income Tax Refundable (A-B-C-D)	-3,711.5