TLAW303 Taxation Law Assignment: Income, Medicare, and Tax Liability

This assignment solution provides detailed calculations for income tax liabilities, Medicare levies, and Medicare surcharges for various scenarios, adhering to Australian tax laws and regulations. The solution addresses four key questions, calculating income tax payable for individuals and companies with different taxable incomes, including non-residents and working holiday visa holders. It also covers the calculation of Medicare levy and surcharge for different taxpayers, including those with private health insurance and families with dependents. Furthermore, the solution determines income tax payable or refundable, considering salary income, bank interest, and allowable deductions, as well as PAYG tax deducted. Finally, the assignment calculates tax liabilities, including Medicare levy, and income tax payable or refundable for individuals with unfranked dividends and PAYG tax withheld. The solution references relevant legislative provisions from the Income Tax Assessment Act 1997 and the Fringe Benefits Tax Assessment Act 1986.

Running head: TAXATION LAW
Taxation Law
Name of the Student:
Name of the University:
Authors Note:

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TAXATION LAW
Contents
Answer to question 1:......................................................................................................................2
Answer to question 2:......................................................................................................................4
Answer to question 3:......................................................................................................................6
Answer to question 4:....................................................................................................................11
References:....................................................................................................................................14

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Answer to question 1:
Sub question No. Amount ($) Explanation (wherever necessary)
(a) Income tax payable Nil Since taxable income up-to $18,200 is not
taxable (Hoopes, Robinson and Slemrod,
2018)
(b) Income tax payable 4,500.00 30% of taxable income
(c)
Up-to $18200, Nil
From $18,201 to $37000 @19% 3,571.81
From $37001 to $87000 @32.5% 16,249.68
From $87001 to $155000 @37% 25,159.63
Income tax payable 44,981.12
(d) Income tax payable 46,500.00 30% of taxable income
(e)

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Up-to $18200, Nil
From $18,201 to $37000 @19% 3,571.81
From $37001 to $87000 @32.5% 16,249.68
From $87001 to $180000 @37% 34,409.63
Above $180001 @45% 33,749.55
Income tax payable 87,980.67
(f) Income tax payable 76,500.00 30% of taxable income (Dixon and Nassios,
2016)
(g)
From $0 to $37000 @15% 5,550.00
From $37001 to $87000 @32.5% 16,249.68
From $87001 to $180000 @37% 34,409.63
Above $180001 @45% 33,749.55
Income tax payable 89,958.86

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Answer to question 2:
(a) An Australian with annual taxable income of less than $21,980, in case of seniors and
pensioners less than $34,758 will not have to pay Medicare levy of at all for the income
year 2017-18. Hence, the Australian resident with taxable income of $18,000 will not
have to pay any Medicare levy and Medical Surcharge for the year ending on June 30,
2018. Medicare surcharge is not required to be paid on taxable income of $90,000 or less.
Hence, no Medicare surcharge is payable by the person (Richardson, 2015).
(b) As mentioned earlier for senior citizens and pensioners the exemption limit for Medicare
levy is $34,758. Since, the taxable income of the person eligible for senior tax offset of
$32,000 will not be required to pay any Medicare Levy and Medicare surcharge for the
year 2017-18 (McClure, Lanis and Govendir, 2017).
(c) A non-resident Australian for tax purposes is exempted from payment of Medicare levy
as well as Medicare surcharge irrespective of his or her taxable income. Thus, there is no
levy or surcharge is payable by the non-resident for Medicare purpose in the tax year
ending on June 30, 2018.
(d)
(e) Companies are not subjected to Medicare levy and Medicare surcharge in Australia.
Hence, irrespective of the taxable income of a company, it does not required to pay any
Medicare levy and Medicare surcharge. The Australian company with taxable income of
$2,500,000 is not liable to pay Medicare levy or Medicare surcharge in the year (Council,
2017).
(f) Medicare levy is generally charged @2% of taxable income. The liability to Medicare
levy and Medicare surcharge does not alter on the basis of an individual’s private health

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cover or insurance. Thus, the amount of Medicare levy for the individual would be
(150000 x 2%) =$3,000 and Medicare surcharge would be
Medicare surcharge
Up-to $90000 nil
From $90001 to 105000 @1% 1
49.99
From$105001 to $140000
@1.25%
4
37.49
Above $140001 @1.5% 1
49.99
Medicare surcharge 7
37.46
(g) Medicare levy and Medicare surcharge of Victor and his family is calculated below:
Medicare levy of Victor and his wife
Total taxable income (110000+75000) 185,000.
00
Medicare levy @2% (185000 x 2%) 3,700.

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00
For couples Medicare surcharge is nil up-to annual taxable
income of $180000 (Chardon, Freudenberg and Brimble, 2016).
Medicare surcharge up-to $180,000 no Medicare surcharge
From $180001 to $185000 @1% 50.
00
Thus, Medicare surcharge 50.
00
(h) Medicare Levy threshold for a family with 4 dependent children is $50,713.
Answer to question 3:
Income tax payable as per s4-15 of ITAA 1997:
Particulars Amount
($)
Amount
($)
Salary income 31,000
.00
Bank interest received 1,150
.00

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Allowed deductions 45
0.00
32,600
.00
Less: Allowable deduction 45
0.00
Taxable income 32,150.0
0
Tax liability under ITRA 1986:
Up-to $18200 Nil
From $18201 to $31700 @19% 2,65
0.31
Medicare levy:
Medicare levy @2% of taxable income
(31700 x 2%) 634.00

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Rob’s tax credit entitlement is calculated below:
Particulars Amount
($)
Amount
($)
Salary income 31,000
.00
Bank interest received 1,150
.00
Allowed deductions 45
0.00
32,600
.00
Less: Allowable deduction 45
0.00
Taxable income 32,150.0
0
Income tax payable / (Refundable)
Up-to $18200 Nil

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From $18201 to $31700
@19%
2,650
.31
Less: PAYG deducted 2,700
.00
Income tax credit (49.
69)
Thus, Rob is entitle to receive a tax credit of $49.69 (Toth and Burns, 2016).
Income tax payable or refundable is calculated below:
Particulars Amount
($)
Amount
($)
Salary income 31,000
.00
Bank interest received 1,150
.00
Allowed deductions 45
0.00
32,600
.00

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Less: Allowable deduction 45
0.00
Taxable income 32,150.0
0
Income tax payable / (Refundable)
Up-to $18200 Nil
From $18201 to $31700
@19%
2,650
.31
Less: PAYG deducted 2,700
.00
Income tax refund (49.
69)
Answer to question 4:
Particulars Amount
($)
Amount
($)
Gross salary 78,000
.00

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Unfranked dividend 2,000
.00
Unfranked portion of dividend (700
x 50%)
35
0.00
Taxable income under s4-15 of ITAA 1997 80,350.0
0
Tax liability under ITRA 1986:
Tax liability
Up to $18200 Nil
From $18201 to $37000 3,571
.81
From $37001 to $80350 @32.5% 14,088
.43
Tax liability 17,660
.24
Medicare levy of Rafael:

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Medicare levy
Taxable income 80,350
.00
Medicare levy@2% (80350 x 2%) 1,607
.00
PAYG tax withheld is $16,500 from Rafael (Eccleston and Smith, 2015).
Income tax payable or refundable for Rafael is calculated below:
Up to $18200 Nil
From $18201 to $37000 3,571
.81
From $37001 to $80350 @32.5% 14,088
.43
Income tax liability 17,660
.24
Less: PAYG withheld 16,500
.00
Income tax payable 1,160

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.24

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References:
Chardon, T., Freudenberg, B. and Brimble, M., 2016. Tax literacy in Australia: not knowing
your deduction from your offset. Austl. Tax F., 31, p.321. Available at:
https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/austraxrum31&section=16
[Accessed on 11 October 2018]
Council, A., 2017. Strengthening the Medicare Levy to secure the future of the NDIS and other
essential universal services. Available at:
https://www.acoss.org.au/wp-content/uploads/2017/09/ACOSS_medicare-levy-FINAL.pdf
[Accessed on 11 October 2018]
Dixon, J.M. and Nassios, J., 2016. Modelling the impacts of a cut to company tax in Australia.
Centre for Policy Studies, Victoria University.
Eccleston, R. and Smith, H., 2015. Fixing Funding in the Australian Federation: Issues and
Options for State Tax Reform. Australian Journal of Public Administration, 74(4), pp.435-447.
Hoopes, J.L., Robinson, L. and Slemrod, J., 2018. Public tax-return disclosure. Journal of
Accounting and Economics.
McClure, R., Lanis, R. and Govendir, B., 2017. Analysis of Tax Avoidance Strategies of Top
Foreign Multinationals Operating in Australia: An Expose.
Richardson, D., 2015. Company tax cuts: an Australian gift to the US internal revenue
service. TAI Briefing Paper.
Toth, S. and Burns, A., 2016. Mid market focus: Company tax rates: Consider the total tax
liability. Taxation in Australia, 51(5), p.245.

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