Taxation in Australis Practice - Assignment Example

Running header: Taxation Student’s name: Instructor’s name: Subject code: Date of submission: Question 19 POLLY’S HAIRDRESSING EXPENCES BUDGET FOR THE QUARTER ENDING 30TH JUNE APRIL MAY JUNE Amount GST Total ($) Amount GST Total ($) Amount GST Total ($) Advertising 50 5 55 50 5 55 50 5 55 Hairdressers wages 30000 30000 30000 30000 30,000 30000 Water, electricity, tele 400 40 440 400 40 440 400 40 440 Rent 5000 500 5500 5000 500 5500 5000 500 5500 Supplies 900 90 990 Total 35,450 545 35,995 36,350 635 36,985 35,450 545 35,995 Question 20. (Resident) a. $56239 1st $6000 exempt Next$(6001-43000) ×.15= 5550 Next$(43001-56239) ×0.30=3971.7 Total tax =$9521.7 Average rate of taxation =9521.7/56239 ×100% =16.93% b. $4582 The amount is exempt from taxation. Average taxation rate =0% c. $68235 1st $ 6000 exempt Next$ (6001-6823) ×0.15= 123.45 Total tax= $123.45 Average taxation rate = 123.45/6823×100%= 1.81% d. $37500 1st $ 6000 exempt Next$ (6001-37500) × 0.15= 4725 Total tax =$ 4725 Average rate of taxation = 4725/37500×100% =12.6% Average range e. $76590 1st $6000 exempt Next$ (6001-43000)× 0.15= 5550 Next$ (43001-76590)× 0.30= 10077 Total tax =$15627 Average rate of taxation =15627/76590×100% = 20.40% f. $66000 1st $6000 exempt Next$ (6001-43000)× 0.15=5550 Next $(430001-66000)× 0.30= 6900 Total tax=12450 Average rate of taxation= 12450/66000×100% =18.86% g. $35263 1st$ 6000 exempt Next $(60001-35263)× 0.15=4389.45 Total tax= $4389.45 Average rate of taxation 4389.45/35263×100% =12.45% h. $42369 1st$ 6000 exempt Next $ (6001-42369)×0.15=5455.35 Total tax =$5455.35 Average rate of taxation 5455.35/42369×100% = 12.88% (Non resident) a. $56239 1st $(0-37000) × 0.29= 10730 Next$(35001-56239) ×0.30 + 10730=17101.7 Total tax =$27831.7 Average rate of taxation 17101.7/56239×100% =30.41% b. $4582 1st $(0-4582)× 0.29= 1328.78 Total tax= $ 1328.78 Average rate of taxation 1328.78/4582×100% =29.00% c. $6823 1st $ (0-6823)× 0.29= 1978.67 Total tax= $1978.67 Average rate of taxation 1978.67/6823×100% =29% d. $37500 1st $(0-37000)× 0.29= 10730 Next$ (37500-35001) × 0.30 +10730= 11480 Average rate of taxation =11480/37500×100% = 30.61% e. $76590 1st $(0-37000) =10730 Next$ (35001-76590)× 0.30 +10730 = 23207 Total tax =$ 23207 Average tax rate= 23207/76590×100% =30.3% f. $66000 1st $ (0-37000) × 0.29=10730 Next$ (35001-66000) × 0.30 +10730=20030 Total tax= $20030 Average taxation rate= 20030/66000×100% =30.35% g. $35263 1st$ (0-35236) ×0.29=10226.27 Total tax= $10226.27 Average taxation rate = 10226.27/35263 =29% h. $42369 1st $ (0-37000) × 0.29=10730 Next $(42369-35001) ×0.30 +10730= 12904.4 Total tax =$ 12904.4 Average rate of taxation =12904.4/42369×100% =30.46% Question 21 PART A. 1. Seans part year tax free threshold for 2004-2005 income, =$6000 2. Sean’s eligible deduction consists of his train fare to his first job and the fare he uses to travel from his first job to the next. =$200+$ 200 = $400. 3. Sean taxable income For the year 2004-2005 $ Employment income 29000 Less allowable expenses (400) Taxable income 28600 4. 1st $ 6000 exempt Next $ (60001-28600) × 0.15= 3390 Total tax = $ 3390. PART B Noel Sturt Employment income For the income year 2006-2007. $ $ Gross payments 56800 Less allowable expenses Course fees 2500 Textbooks 90 Student union fee 50 Donation to red cross 200 Sharpe financial calculator 220 3060 Total taxable income 53740 $53740 1st $6000 exempt Next$ (6001-21600) × 0.17=2652 Next $(21601-53740) × 0.30 +2652= 12294 Total tax= $ 12294 PART C Andrew Lee Taxable income For the period 2006-2007 $ $ Receipts of case from debtors 29200 Sickness benefits insurance policy after accidents 4300 Royalties from rights to a patented process 2000 Insurance recovery- trading stock destroyed non-taxable Forfeited deposits by customers 2300 Rent received from caretakers’ residence 2560 Mortgage loan secured against private residence non taxable Dividends BD Ltd Interest state bank 500 Less payment Employee wages 3400 Payment to creditors for trading stock 46200 Personal superannuation scheme contribution (350) Insurance trading stock and work care 2360 Factory rental 30000 Drawings (10000) Rates and taxes on factory (2500) Subscription to local trade association 500 Donation to Red Cross appeal 460 Repayment of mortgage loan Principal 00 Interest 2600 Accountancy fees 350 Postage, telephone, light 1600 Motor vehicle expenses 5400 Entertainment of clients at local hotel 560 Expenses related to stamping mortgage documents (450) (80130) Taxable income (LOSS) -39770 . Tax =nil. Part D a) William will need to keep his records for four years. b) Cindy does not claim the cost of travelling from her second job to home. c) George’s business use percentage =( 6000/11000)100= 54.55% d) Terry cannot claim education expenses due to the fact that what she is studying is not related to her current occupation. e) Since Maria does not have any other source of income she cannot be taxed on the AUS Study payment f) Business tax deduction Individual tax deduction Levied at a fixed percentage on goods and services Levied on companies income at a fixed percentage It is an indirect taxation The taxation scale varies with the level of income A direct tax on one’s income g) Taxation compliance records are very important to a business since a business needs evidence that it complies with all rules and regulation. this will help the business avoid getting into problems with tax authorities and the state which will guarantee a peaceful environment of doing business. h) An audit officer will be interested in the following records when doing a tax audit -records relating to purchases -records relating to sales -the balance sheet -profit and loss account i) Fringe benefit tax is a tax that is levied on most non cash benefit provided by the employer. j) Ms Cindy Taxable income. $ Salary 820 Interest 150 Pension exempt Donation (40) Total taxable income 930 b) $ Salary 820 Interest 150 Pension exempt Total taxable income 890 References: Tom, E (2010), Fundamentals of taxation, Macmillan, Sydney. 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