Assignment on Tax payable
Added on 2021-02-19
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MAJOR ASSESSMENT
TABLE OF CONTENTSLETTER...........................................................................................................................................1INCOME......................................................................................................................................2OTHER INCOME.......................................................................................................................3CAPITAL GAINS.......................................................................................................................4RENTAL PROPERTY ...............................................................................................................6DEDUCTIONS............................................................................................................................7OTHER ISSUES..........................................................................................................................7TAX PAYABLE, OFFSETS AND LEVIES...............................................................................8REFERENCES..............................................................................................................................10
LETTER22nd January 2018 This letter is written regarding income tax return for financial year 2018/19.Tax payable liability net this year amounts to $ 33503 . It is assumed all information provided byyou are correct. It is calculated on total assessable income $203928 less allowed deductions of $33135. This is giving taxable income amounting to $170793 and placing you in tax bracket of37cents /$. Income tax payable is $50690. 2% flat rate is applicable on taxable income asMedicare levy. Private health care was not taken for full financial year therefore liability ofpaying medical surcharge for days for which you did not had health care and it amounts to 1.5%for 274 days. 2% Budget repair levy is charged over taxable income due to large debt owing ofAustralia on income over $180000.Dividends received during year from from Electric Blue amounts to $84000 which arefully franked. Inheritance of dividend from father of $2465 are fully franked. Amounts aregrossed by tax paid and included to assessable income and after tax calculations are allowed asoffset. BHP is pre CGT asset and was acquired at market value at death date on July 15, 2016.Shares were valued at $20.30 per share on this date and were sold for $ 64075on 5th Jan at$25.63. Profit of $13210 on disposal of BHP.MYR is post CGT asset that was acquired at cost price and shares were purchased byfather at $4.10. Shares are sold at $1.35 for 13500 on 5th January which resulted in loss $23430. Iwas not able to determine the reason behind selling these shares at such loss on disposal of BHPshares. Loss resulted from disposing MYR will offset gain of BHP & the net loss of $10220 willbe carried forward to offset future gains of next year.Capital work deduction of $4500 is allowable for rental property. There are somedeductible expenses for producing assessable income. Interest on loan is deductible as loan is forrental property and producing income. Since the rent rates are within normal rates prevailing andat arm's length transaction it is not differently treated for in come tax.For the car Audi Q5 deduction is claimed under cents/km method. The deduction of$3400 is available. Depreciation is not claimable by for car expenses that are calculated on cent/1
km. If log book is kept it is valid for 5 years provided no substantial changes are made to worktravel.Mobile phone $1188 is directly paid by company and is not reportable as it is less than$2000. Additional superannuation of $6000 under salary sacrifice is reportable by employer andalso taxed by company. Personal contribution is also reportable of $6000 as undersuperannuation guarantee law 10 % of income has resulted from activities treated as employeeand is taxed by them. For dry cleaning of work suits deduction is not available as covered under negative limbs8-1 as that could be domestic or private nature or for private usage. As rebate of $83 is receivedyou cannot claim deduction for private health care. Entitlement for tax deductible gifts are notavailable therefore donations are denied to Sea Shepherd. Membership fees is deductible as itis in continuation of business.As regarding support documents it is obligatory to preserve them for 5years underDivision 900 s900-165 and it is recommended to maintain proper system of filing. At the time ofqueries from Australian Tax Office , information and proofs are available to support claims. Hoping that made available makes sense and you are satisfied with tax return. Feel free incontacting regarding any queries or suggestions. INCOME1.Director's Salary of Electric Blue Pty. Ltd$160000PAY Withheld$49897Net Salary$110103Superannuation $60009.5% is the mandatory superannuation rate and above is additional contribution. In ordinaryconcepts there is no nexus for genuine salary sacrifices and income is not assessable TR2001/10.Reportable super contributions by employer is not included in assessable income of employeeand it doesn't affects the method of calculating employees' super contribution (ATO 2018,Reportable employer super contributions - for employers).Salary will be assessable u/s 6-5 ITAA 1997.2
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