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Assignment on Income Tax PDF

   

Added on  2021-05-31

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TAXATION LAWINCOME TAX CALCULATION AND RELEVANT LAW APPLIEDCourse: Professor’s NameInstitutionCityDate

TAXATION LAWQuestion 1; Employment income is what an Australian resident or non-resident individual earns as salary or wage for the period he has worked for. Income tax, on the other hand, is what has been earnedfor tax purpose Hoopes (2018.Pg 24.) This question requires us to calculate the tax payable for individual using the Australian tax brackets available as well as the relevant tax methods available for respective items. We are further informed not to bother with the 2% medical levy that all employees are entitled to.(a)Tax payable for individual earning an income of 15000 as at 30th June 2018, this tasks us to apply 2017/2018 bracket rates as shown below;Taxable Income Tax on this income0-$182000 Nil$18201-$37000 19c for each $1 over $18200$37001-$87000 $3572 plus 32.5c for each $1 over $37000$87001-$180000 $19,822 plus 37c for each $1 over $87000$180000 and over $54,232 plus 45c for each $1 over $180000 From the above analysis, this income of 15000 dollars falls in the first bracket of between 0 and 18200 dollars that has nil figure to be subjected thus no taxable pay is to be paid or calculated on this thus the taxable pay is zero.(b)Non-resident is a foreign resident who works in Australia he is eligible to pay tax but of course, at a base rate different from that of the resident, for instance, there is no exemption to low earners however much you earn it is subjected to tax. This is the bracket rate applicable;Taxable income Tax on this income0-$87000 32.5c for each $1$87001-180000 $28275 plus 37c for each $1 over $87000

TAXATION LAW$180001 and over $62,685 plus 45c for each $1 over 180000From this the non-resident is expected to pay the tax of;=15000*32.5/100=$4875, tax payable thus is $4875(c)Companies income are taxed at the corporate tax rate of 30% or 27.5$ in case it falls under theminimum base rate of turnover less than 25million dollars. This is income of 15000 dollars is less than the minimum base rate thus qualifies for this hence the tax payable is;=15000*27.5%=$4125, tax payable=$4125(d)Here we will use the bracket for resident citizen for tax purposes here below;Taxable Income Tax on this income$87001-$180000 $19,822 plus 37c for each $1 over $87000The base =19200=155000-87000=68000*0.37=25160 is what is to be taxed plus the base thus tax payable is;=19200+25160=$44360(e)For non-resident we use bracket;Taxable Income Tax on this income$87001-180000 $28275 plus 37c for each $1 over $87000=155000-87000=68000=68000*0.37=25160Tax payable=25160+28275=$53435(f) 155000 dollars for a company is still in the bracket lower than the threshold of less than 25million hence the tax payable is;=155000*27.5%=42625dollars is the tax payable.(g) The individual resident with the income of 255000, we use the bracket,Taxable Income Tax on this income

TAXATION LAW$180000 and over $54,232 plus 45c for each $1 over $180000This amount is more than 180000, hence=255000-180000=75000Thus the tax=75000*0.45=33750Total tax payable=33750+54232=87982(h)For non-resident, we use the bracket,Taxable Income Tax on this income$180001 and over $62,685 plus 45c for each $1 over 180000Thus 255000-180000=75000*0.45=33750Hence total tax payable=33750+62685=$96435(i)For a company, it is still at the base of fewer turnovers of 25mHence=255000*27.5Tax payable=255000*0.275=$70125(j)Since this small business entity has the turnover less than the threshold of 10m hence the tax payable=100*0.275=$27.5 Question 2;(a)This Australian resident with an income of 18000 is exempted for both the medical levy and medical levy surcharge because his income is less than 21655 for both medical levy surcharge and medical levy, hence pays zero medical levies and surcharge(b)For senior tax offset, this resident is too not eligible to pay medical levy and surcharge because his income of 32000 is less than the threshold of 34244 for seniors and similarly it is lower than 90000 for minimum medical levy surcharge hence medical levy is zero and surchargeis zero too.

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