Tax - Computation of Income Tax for Assessment Year 2018

This article provides a detailed computation of income tax for the assessment year 2018, including deductions and allowances. It covers income from employment, capital gains, rent, and dividends, as well as expenses connected to income and benefits from employers. The article also discusses rental property, losses and gains on CGT, and allowable and non-allowable expenses.

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

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To,
Mr.Client
Sir,
With all due respect, it is glad to me to inform you that your income tax return for the
assessment year 2018 is prepared and the taxation liability strikes $ 12265.S
to The incomes that are subjected to taxability are discussed as follows:
Salary and your other incomes
When we prepare your tax return, s. This financial your income source was mainly:
- Salary Income ( including the additional benefits that are not taxed earlier)
- Rent received from your investment property will be considered as income (Chalk
et al. 2018).
- Shares that you sold during the year ( commonwealth bank share and others)
- Income received in forms of franked dividends are not liable to be taxed but they
are to be calculated for the rate. If the dividends are partially franked then they are
to be taxed by the remaining portion. (Barnes et al. 2017)
In calculation of the assessable income, all the relevant sections and divisions are taken into
consideration.
Expenses connected to your income
As per Division 8 of the ITAA 1997 (section 8-1(2) and 8-5 (2)) the income tax assessment

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act 1997 all the expenses are allowed as deductible if it its spend for the generation of
income.
- Car expenses incurred while using the car for work purposes
- Personal contribution you paid to superannuation
- Income protection insurance
- Brokerage fees paid when selling the shares
- Repair, and other expenses including the stamp duty , interest on borrowings
and others
 Subscription of magazine.( as it is for personal knowledge development)
is an deductible expense as the Assesse is using this to upgrade the
knowledge of business environment.
Not Deductible
As per the ITAA 1997, the expenses are not allowable as:
Car allowances as the assesse has not kept the logbook therefore not entitled to
avail the deduction under TR 97/7 and under section 8-1 of the ITAA.
Rental property
At the process of computing the rental income only rent of 8 weeks are considered ( many
and june)
In addition to that the depreciation and repair expense are to be deducted As The decline in
value of your assets for your rental property due to wear and tear may also be deducted from
your rent received and may reduce the total income you have received in the year (Taylor and
Richardson 2014).
The expenses regarding the duties and other charges are paid will be deducted from the rental
income.

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Benefits from your employer (perquisites)
In the employment period the employer has to spend a potion of the income to generate the
income. These are allowed as deductions.
Losses and gains on CGT
Under section 104.5 of ITAA 1997.When your capital properties (share of any tangible
assets)that you sold in the accounting period they are to be considered as CGT asset if not
hold for trading. In addition to that, assesse will received the capital gains only if the sale
proceeds are exceeding the cost (index or other) cost of acquisition (Okello 2014).
.
Thank you for considering these suggestions
Yours sincerely
Accountant

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Reference
Barnes, P., Galler, L. and Oosterhuis, P., 2017. TEI Roundtable No. 13: Ethics and Tax
Planning. Tax Executive, 69, p.41.
Chalk, M.N.A., Keen, M.M. and Perry, M.V.J., 2018. The Tax Cuts and Jobs Act: An
Appraisal. International Monetary Fund.
Okello, A., 2014. Managing Income Tax Compliance through Self-Assessment (No. 14-41).
International Monetary Fund.
Taylor, G. and Richardson, G., 2014. Incentives for corporate tax planning and reporting:
Empirical evidence from Australia. Journal of Contemporary Accounting &
Economics, 10(1), pp.1-15.

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APPENDIX:
Computation of income tax for
For the assessment Year 2017-18
Particulars Amount Amount
Income From Employment $ 1,38,771 $ 1,38,771
Income From capital gain $ 48,616 $ 48,616
Income From rent $ -10,490 $ -10,490
Income From Dividends ( Fully Franked) $ 1,725 $ -
Gross Total Income $ 1,76,898
Less: Deductions Allowable $ 10,133
Assessable income $ 1,66,765
Tax On income Amount Amount
Up to 18200 nil
18201 to 37000 @19% $ 3,572
37001 to 87000 @32.5% $ 16,250
87001 to 166765 @37% $ 29,513
Total $ 49,334
Less: Offset and rebates
Tax With Healed $ 32,032 $ 32,032
Medicare Levy $ 3,335 $ 3,335
Medicare Levy surcharge $ 1,668 $ 1,668
Total Deduction $ 37,035
Tax Payable $ 12,299
Notes:
Calculation of employment
Particulars Amount Amount
Gross Payments 120000
Travel Allowance 2011
Car Allowance 16184.34
Telephone Expense 576
Total 138771.3

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Allowable Car Expense
Particulars Amount Allowable
Registration & Insurance 1672 1672
Fuel & oil 6240 6240
Service 1100 1100
Tyres 1060 1060
Tools fro Roads and tunnels 725 725
Speeding Fine 240
lease Payments 8940 8940
Total 19977 19737
Kms Driven 36000
Cost Per Km 0.54825
Work related Km 29520
Allowable Car Expense 16184.34
Telephone allowance
Particulars Amount Amount
Monthly Usage 60 720
Allowable 80% 576
2.
Incoem form capital Gains
perticulars amount amount
Capital Gain

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Share investment Commonwealth Bank
Particulars unit
Amoun
t Amount Amount
Sale proceeds 750 76.17 57127.5
Less: Brokerage 115
Net Sale Proceeds 57012.5 57012.5
Less: cost of Acquisition
A: Share purchased on sept 1991
Cost of acquisition 500 6.7 3350
Index Cost
6361.04
6
6361.04
6
Bonus share (march 2008) 150 0
Share (july 2008) 100 38.54 3854
Index Cost
4681.34
2
4681.34
2
CGT
45970.1
1
Share investment Grand mothers share
Particulars unit
Amoun
t Amount Amount
Sale proceeds 2000 5.22 10440
Less: Brokerage 20
Net Sale Proceeds 10420 10420
Less: cost of Acquisition
A: Share purchased on July 2008
Cost of acquisition 2000 3.2 6400
Index Cost
7773.89
4
7773.89
4
CGT
2646.10
6
Total Capital Gain
48616.2
2
3.

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Rental Income
Particulars Amount Amount
Gross Rental Income 2960 2960
Less: Vacancy 0 0
Net Rental Income
Less: council rates 485
General Deduction
Stove 1200
Carpet 3300
Painting 4100
Water charges 185
Insurance 1340
Interest on Borrowing 2000
Travel to property 840
Total 12965
Income from house property -10490
4.
Dividend Income
Particulars
No Of
Share
Dividen
d Amount
29-Sep-17 750 2.3 1725
5.
Computation of allowable deduction
Particulars
Allowanc
e
Allowabl
e
Net
Allowed
Purchase Of Suits 960 960 960
Conference 2855 1427.5 1427.5
Superannuation Contribution 4100 13183.28 4100
Donation yo cancer council 800 800 800
Donation to art union prize
home 50 0 0

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Investment property magazine 100 0 0
Registered tax aged preparer 245 245 245
Insurance 2600 13267.32 2600
Cost of medical cost
reimbursement
Total 10132.5