Question

The following question is based on the material in Chapter 2 of the textbook “Prepare Tax Documentation for Individuals”:

Q

(Assessable Income - Income from various sources)

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.

Show your workings.

Answer 1

1. Calculation of Selina's Taxable Income for the Tax Year 2017-18.
Particulars	Amount ($)
Taxable Income:
Net Salary (Working #1)	$73,000
Fully Franked Dividend	$9,800
Unfranked Dividend	$900
Net Interest Received	$954
Taxable Income	$84,654
Working #1
Net Salary = Salary + PAYG tax wtihheld
Net Salary = $55,000 + $18,000
Net Salary = $73,000
2. Calculation of Selina's Net Tax Payable/Refundable (including Medicare Levy) for the Tax Year 2017-18.
Particulars	Amount ($)
Net Tax Payable:
Tax for 2017-18 as per Single Taxable Income Tax Brackets & Rates, 2017 (Working #2)	$16,902.25
Medicare Levy, 2% of the Taxable Income
=2% * $84,654	$1,693.08
Less: Franking Credit	-$4,200.00
Less: TFN Tax withheld on Interest Received	-$846.00
Tax Payable	$13,549.33
Working #2
Tax for 2017-18 as per Single Taxable Income Tax Brackets & Rates, 2017
=$5,226.25 plus 25% of the excess over $37,950
=$5,226.25 + [25% * ($84,654 - $37,950)
=$5,226.25 + $11,676
=$16902.25