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• #15319
Keymaster
Post count: 702

Ryan is a tradesman who receives a weekly salary of \$1500. He bought new tools for \$2600 on 30 September and calculates depreciation using the declining balance method at a rate of 12% per annum.
a. What is Ryan’s gross annual income?
b. Calculate Ryan’s taxable income for this financial year if the only tax deduction is the depreciation for his tools.

c. Use the tax table (below) to calculate Ryan’s tax payable.
d.What is the salvage value of the tools after the first financial year?
e. What is the allowable tax deduction in the next financial year?

a. Income = \$1,500 × 52
= \$78,000

b. 9 months worth of depreciation
\$2,600 × 0.12 = \$312
for the 9 months = \$312 × 9/12
= \$234
Taxable income = \$78,000 – \$234
= \$77,766

c.

 TAXABLE INCOME TAX \$0 – \$6000 Nil Nil \$6001 – \$35,000 Nil 15c for each \$1 in excess of \$6000 \$35,001 – \$80,000 \$4350 30c for each \$1 in excess of \$35,000 \$80,001 – \$180,000 \$17,850 38c for each \$1 in excess of \$80,000 \$180,001 and over \$55,850 45c for each \$1 in excess of \$180,000

tax = \$4,350 + 0.30(77,766 – 35,000)
= \$17,179.80

d. Value after first year = \$2,600 – \$234
= \$2,366

e. tax deduction after another year = \$2,366 × 0.12
= \$283.92

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Keymaster
Post count: 702

On the 1st July, 2000, Australia will be getting a new taxation system which involves reduced rates of income tax at the same time as the introduction of a Goods and Services Tax (GST). Below are shown the Income Tax tables before and after the change. A taxpayer has a taxable income of \$49000. Use the tables to determine the savings in Income Tax for this taxpayer.

 Old Tax Rates Current scale Taxable Income Tax Payable 0 – 5400 Nil 5401 – 20700 20c for each \$ over \$5400 20701 – 38000 \$3060 plus 34c for each \$ over \$20700 38001 – 50000 \$8942 plus 43c for each \$ over \$38000 50000 & over \$14102 plus 47c for each \$ over \$50000
 New Tax Rates From 1st July New scale Taxable Income Tax Payable 0 – 6000 Nil 6001 – 20000 17c for each \$ over \$6000 20001 – 50000 \$2380 plus 30c for each \$ over \$20000 50001 – 60000 \$11380 plus 42c for each \$ over \$60000 60000 & over \$15580 plus 47c for each \$ over \$60000

From the old tax rates:
8942 + 0.43 × (49,000 – 38,000) = \$13,672

From the new tax rates:
2380 + 0.30 × (49,000 – 20,000) = \$11,080

∴ the saving will be \$13,672 – \$11,080 = \$2592

Keymaster
Post count: 702

The Income Tax rates for the 2003-2004 financial year are shown in the table below.

 TAXABLE INCOME TAX \$1 – \$6000 Nil Nil \$6001 – \$21600 Nil 17c for each \$1 in excess of \$6000 \$21601 – \$52000 \$2562 30c for each \$1 in excess of \$21600 \$52001 – \$62500 \$11772 42c for each \$1 in excess of \$52000 \$625001 and over \$16182 47c for each \$1 in excess of \$162500

Kay has a total income of \$65 500. Her tax payable is \$11 898.
a. Determine her taxable income
.
b. How much did Kay claim as allowable tax deductions?
c. Kay must also pay a Medicare Levy of \$768. If she paid \$12,200 as PAYG tax, calculate the additional amount of tax that Kay must pay.

a. 11,898 = 11,772 + 0.42(x – 52,000)
126 = 0.42(x – 52,000)
÷ 0.42
300 = x – 52,000
x = \$52,300
Taxable Income = \$52,300

b. deductions = 65,500 – 52,300
= \$13,200

c. tax paid = \$12,200
tax due = \$11,898 + \$768
Refund = \$11,898 + \$768 – \$12,200
= \$466

Keymaster
Post count: 702

Using the tax table below, calculate the taxable income if \$25,416 was paid in tax.

 TAXABLE INCOME TAX \$1 – \$8,000 Nil Nil \$8,001 – \$23,600 Nil 16c for each \$1 in excess of \$8,000 \$23,601 – \$65,000 \$2,496 30c for each \$1 in excess of \$23,600 \$65,001 – \$97,000 \$14,916 42c for each \$1 in excess of \$65,000 \$97,001 and over \$28,356 48c for each \$1 in excess of \$97,000

Find the tax bracket, which will have to be the \$65,001 – \$97,000, as the one below is too high.

25,416 = 14,916 + 0.42(x – 65,000)               subtract 14,916 from both sides

10,500 = 0.42(x – 65,000)               divide both sides by 0.42

25,000 = x – 65,000               tadd 65,000 to both sides

x = 90,000

∴ Taxable Income was \$90,000