Taxation Law: Calculation of Income Tax Liability

Taxation law
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Contents
Introduction......................................................................................................................................3
Question 1........................................................................................................................................4
Question 2........................................................................................................................................7
Question 3......................................................................................................................................10
Question 4......................................................................................................................................13
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
In the present report, various taxation norms that are related to calculation of income tax liability
that can be levied ion case of situation provide herein. The income tax and its ruling are herein
discussed. The medical levy and medical levy surcharge have been considered in respect of
income tax liability in case of various case studies. The law that deals with income tax valuation
has been effectively considered herein.
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Question 1
Calculate the income tax payable, ignoring the Medicare levy, for the following taxpayers for the
year ended 30 June 2017:
(a) An Australian individual who is a resident with a taxable income of $18,000.
In present case, the liability of the Australian individual to pay income tax is related to his
taxable income. There is no taxable liability that can be imposed on his income. The
provision as provide under income tax rules provides that any individual who is earning
income below threshold of $18000 will fall under exemption limits in respect of his liability
to pay income tax (Australian Taxation Office, 2011).
(b) An Australian individual who is a non-resident with a taxable income of $18,000.
The income tax that is to be levied on a non-resident of Australia is to be levied at the rate of
32.5% of his total income therefore total tax that is to be payable is to be calculated as:
=$18,000*32.5
=$5850
(c) An Australian company with a taxable income of $18,000.
The tax rate that is applicable in the present case is 30% wherein the company has been
considered to be not belonging to small business entities. Thus the income tax that is to be
paid is
=$18,000*30%
=$5850
(d) An Australian company with a taxable income of $18,000.
The tax slab that provides for levying of tax rate on different income are herein provided on
which total income tax payable is to be determined :
Income Tax rate Payable income tax
0- 18,200 0% None
418,201-$ 37,000 19% 18,800*19=$3,572
$37,001 to $87,000 32.5% $50,000 × 32.5% = $16,250
$87,001 to $145,000 37% $58,000 × 37% = $21,460
Thus, total income tax to be paid is $3,572+$16,250+$21,460 = $41,282
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