Lou's Tax Return Calculation

This assignment involves calculating Lou's tax return. It covers various income sources like employment, business, and rental properties. The document also details deductions applicable to Lou based on his donations and expenses. Capital gains from the sale of assets are also calculated. The solution provides a comprehensive breakdown of each section of Lou's tax return.

INDIVIDUAL TAX

Table of Contents
Discuss whether the four deposits are assessable income or otherwise, using Sectional references from
the I.T.A.A. or other reference.................................................................................................................3
REFERENCES............................................................................................................................................7

Discuss whether the four deposits are assessable income or otherwise, using Sectional references
from the I.T.A.A. or other reference
Tour deposits are assessable income because as per the Australian taxation regulations, all
the income that an entity derive from the ordinary course of business are considered as an taxable
income and will be the taxed by the statutory bodies at applicable rates. Thus, as per Income Tax
Assessment Act, 1997, section 6.5m, assessable incomes comprises income which is generated in
the ordinary concept for a given accounting year. Thus, according to the legislation, the income
which Lou has received for the Environment Tour will be included in the assessable income. In
the given case, Lou has received advance deposits from the four consumers at 1000 each for the
tour in 2017/18. Although the amount is refundable, still, it will be included in the current year's
income and in future, if the trip is not launched then such amount will be deductible in that year
but currently, it is included in the assessable income.
To
Tax agent
Date: 17th May 2017
Sub: description about net tax payable
This is to inform that taxable income of Lou tide for the year 2016/2017 is 56859.44 charged on the
total income earned by Mr Lou tide in a financial year 2016. It can be seen that income earned by Mr
Lou tide is higher and he also gets deductions from its income of 12052 that reduces its income and
generated a tax of 56859.44*30% that it generated a tax amount of 17057.832. The working notes of all
the taxable income of Lou is given as below.
Sincerely
Lou tide
Workings
3 Employer Lump
sums Lump sum A (Total tax withheld shown in the payment summary): $3800
Lump sum B: $800
Lump Sum D (Redundancy from the Bottlemart): $44,000

Total tax withheld:
$3800 + $800 + $44,000 = $48600
10 Gross Interest Gross interest:
Interest on saving deposits with the spouse: $25
(As per the ATO taxation guidelines, if an assess has joint account with any other, then
only his or her part will be credited in the gross interest, Therefore, 50% of interest
amounted to 25 has been included in gross interest)
1 Year term deposit in Lou's name - $1700
Here, only $1700 interest has been included because it is credited in the current year
2016/17 however, $1800 will be credited in the next year, 2017/18, therefore, it will be
taxed in the future year)
Gross interest: $25 + $1,800 = $1825
11 Dividends
Particulars Tax rate
(Assume
tax rate
30%)
Franked
dividend
Franking Credit
((Dividend amount/(1-
tax rate))-Dividend
amount)
Barola 30% 75 32.14
Woolworth
s
30% 350 150
Coles
Group Ltd
30% 73.71 31.59
D1 Work-related car
expenditures
Total car expenses - $510+$325+$65+$1145+$800+$140+$600+$500+$1400+$2188+
$280+$160= $8,113
Total kilometres travelled: 130569 kms – 113900 kms = 16669 kms
Business kms (Environment tours): 1000kms/16669 kms*100
= 6%
Car expenditures for the business (Environmental tour) purpose:
= 1000*6% = 487

Car expenditures for employment purpose:
$8113 - $487 = $7626
D5 Other work-rel Teaching aids
Watch
Calculator
Diary, for recording matters like
student information/questions
Purchase of “Age” newspaper
Parking fine whilst visiting Tax
Office
Cost of being in the union AEU
Purchase suit
Laundry of suit
New briefcase (with key, store
confidential work records, 20
year life)
Purchase umbrella rainy days
Taxi fares from work to home
on days finished late
Telephone landline
Telephone mobile
Subscriptions
Total
$45
$150
$50
$12
$175
$90
$320
$340
$140
$250
$29
$179
(1300*60%) = $780
(1480*60%)= $888
$52
D9 Gifts According to the ATO taxation ruling under D9, it is stated that donation or gifts to an
approved organisation equal to or above $2 is considered as tax-deductible, henceforht,
Lou can claim deductions for the following donations under section D9, mentioned
below:

Donation to St. Vincent de Pauls society: $24
Donation to Monash Soccer Club: $70
Donation to RSPCA: $550
Total donation: $24 + $70+ $550 = $624
T1 Spouse offset It is not available because it is only available if taxpayer's age goes beyond 60 years. In
the given case, Lou is 57 years old therefore, this deductions will not be available.
18 Capital gains
-Boral Ltd
Particulars Amount
Sales Consideration $6000
- cost of improvement $29
Capital gain $5971
-Coles Myer
(sold within 12
mths)
Particulars Amount
Sales consideration $4850
- cost of improvement $42
Capital gain $4808
P8 Other business
income Whole package value: 11750*4 = 47000
Fares collected: 91286
Deposits: (1000*4) = 4000
Total: 47,000+91,286 + 4000= 142286

REFERENCES
Online
D9 Gifts, 2016. [Online]. Available through: <
https://www.ato.gov.au/Individuals/Tax-return/2016/Tax-return/Deduction-
questions-D1-D10/D9-Gifts-or-donations-2016/>. [Accessed on 15th May
2017].