FNS50215 Diploma of Accounting Module 4.1 Assignment Solution

This assignment solution addresses the requirements of the FNS50215 Diploma of Accounting Module 4.1, focusing on preparing tax documentation for individuals. The assignment includes various assessment activities, such as calculating Medicare Levy liabilities for different taxpayers based on their taxable income and family status. It also involves tax calculations for individuals with diverse income sources, including employment income, fringe benefits, and dividend income, and determining the net tax payable or refundable, considering factors like PAYG installments, Medicare Levy Surcharge, and franking credits. The solution covers the application of tax regulations to various financial scenarios, including income from both Australian and foreign sources, and requires the use of the textbook 'Prepare Tax Documentation for Individuals' by Peter Baker, Geoff Cliff & Sonia Deaner, 14th Edition. The document provides detailed calculations and explanations for each question, demonstrating the application of relevant tax principles and legislation.

FNS50215 Diploma of Accounting
Module 4.1 Assignment
Instructions:
 This assignment contains multiple Assessment Activities
 Please complete the Declaration of Authenticity at the bottom of this page
 Save this assignment (e.g. on your desktop)
 To complete the assignment, read the instructions for each question carefully.
 You may be required to refer to your learning materials or other sources to complete
this assessment.
 You are required to type all your responses in the spaces provided
 Once you have completed all parts of the assignment and saved it, login to the
Monarch Institute LMS to submit your assignment for grading
 To submit your assignment click on the file “Submit Diploma of Accounting Module 4.1
Assignment” in the Module 4.1 section of your course and upload your assignment file.
 Please be sure to click “Continue” after clicking “submit”. This ensures your assessor receives
notification of your submission – very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other person’s work has been used without due
acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purpose
of detecting plagiarism.
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the
above student declaration.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 1 of 33

Units Covered: FNSACC502
Important assessment information
Aims of this assessment
This assessment focuses on preparing tax documentation for individuals.
Marking and feedback
This assignment contains multiple Assessment Activities each containing specific instructions.
You are required to attempt all questions.
This particular assessment forms part of your overall assessment for the following unit(s) of
competency:
 FNSACC502 Prepare tax documentation for individuals
Grading for this assessment will be deemed “competent” or “not-yet-competent” in line with
specified educational standards under the Australian Qualifications Framework.
What does “competent” mean?
These answers contain relevant and accurate information in response to the question/s with
limited serious errors in fact or application. If incorrect information is contained in an answer, it
must be fundamentally outweighed by the accurate information provided. This will be assessed
against a marking guide provided to assessors for their determination.
What does “not-yet-competent” mean?
This occurs when an assessment does not meet the marking guide standards provided to
assessors. These answers either do not address the question specifically, or are wrong from a
legislative perspective, or are incorrectly applied. Answers that omit to provide a response to any
significant issue (where multiple issues must be addressed in a question) may also be deemed
not-yet-competent. Answers that have faulty reasoning, a poor standard of expression or include
plagiarism may also be deemed not-yet-competent. Please note, additional information regarding
Monarch’s plagiarism policy is contained in the Student Information Guide which can be found
here: http://www.monarch.edu.au/student-info/
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 2 of 33

Units Covered: FNSACC502
What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be
given one more opportunity to re-submit the assessment after consultation with your Trainer/
Assessor. You will know your assessment is deemed ‘not-yet-competent’ if your grade book in the
Monarch LMS says “NYC” after you have received an email from your assessor advising your
assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas
deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting
competency after resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our
Complaints & Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions:
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter
areas raised in the question in full as part of the response.
Performance based questions:
A performance based question requires you to clearly demonstrate your ability to complete
certain tasks, that is, to perform these tasks.
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to
assist you 
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 3 of 33

Units Covered: FNSACC502
Assessment Activities
Short Answer and Worked Answer Questions
FNSACC502 – Prepare tax documentation for individuals
The following questions are based on the material in the textbook “Prepare Tax Documentation for
Individuals” by Peter Baker, Geoff Cliff & Sonia Deaner, 14th Edition (January 2017).
Activity instructions to candidates
 This is an open book assessment activity.
 You may use a financial calculator or computer application to help calculate values
 You are required to read this assessment and answer all questions that follow.
 Please type your answers in the spaces provided.
 Please ensure you have read “Important assessment information” at the front of this assessment
 Estimated time for completion of this assessment activity: approximately 3 hours
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 4 of 33

Units Covered: FNSACC502
The following questions are based on the material in Chapter 1:
Q1.1.5.
(Application of Medicare Levy using family thresholds)
Required: For each taxpayer, calculate their liability for Medicare Levy.
The following persons are resident taxpayers who are not liable for the Medicare Levy Surcharge. The
information given relates to the 2015/16 tax year:
a. Glenn derived taxable income of $22,000 and his wife Rowena derived taxable income of $6,000. They
do not have any children.
It is not needed for Glen for bearing any medicine levy because of the fact that the taxable income is less than
the family threshold where $6000. Thus, it cannot be applied to medical levy.
b. Kath derived taxable income of $41,000 and her husband Fred derived taxable income of $18,000.
They have three dependent children.
Taxable income of Kath = $41,000
Taxable income of Fred = $18,000
3 Dependent Children
{(1500 × 3) – 1500} = $3000
Total = $62,000
= ($62,000 × 2%)
= $1240
c. Beck derived taxable income of $29,000 and her de facto partner Roy derived taxable income $40,000.
They have four dependent children.
Taxable income of Beck = $29,000
Taxable income of Roy = $40,000
3 Dependent Children
(1500 × 3) = $4500
Total = $73500
= ($73500 × 2%)
= $1,470
d. Will derived taxable income of $36,000 and his wife Tina derived taxable income of $22,000. They
have three dependent children.
Taxable income of Will = $36,000
Taxable income of Tina = $22,000
3 Dependent Children
(1500 × 2) = $3000
Total = $61,000
= ($61,000 × 2%)
= $1,220
Q2.1.19.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 5 of 33

Units Covered: FNSACC502
(Tax calculation for family)
Fred, a resident taxpayer aged 47, has taxable income of $145,345 and reportable fringe benefits of $17,170.
During the year Fred has paid PAYG tax instalments totalling $13,480. His wife, Jani, has taxable income of
$27,000.
They have seven children and no private health insurance.
Required: Calculate Fred’s net tax payable for the 2016/17 tax year.
Tip: Check if Medicare Levy Surcharge will apply to Fred and, if applicable, include in your calculations.
The following questions are based on the material in Chapter 2:
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 6 of 33
Particulars Amount
Taxable Income of Fred 145345
Reportable Fringe Benefits 27000
Taxable income of Jani 27000
PAYG instalment -13480
Taxable Income 185865
Dependent children (3*1500) 4500
Less: Exemption of First Child 1500 3000
Taxable income for Medicare levy 188865
Medicare levy 3777.3
Medicare levy surcharge 1888.65
Net Medicare levy 5665.95

Units Covered: FNSACC502
Q3.2.3
(Income from personal exertion)
Ned Markson is a resident taxpayer employed by Acme Holdings Ltd. The following transactions were all as a
consequence of Ned’s employment:
 Net weekly wages totalled $78,000 for the year.
 Total PAYG tax withheld from Ned’s weekly wages from Acme and forwarded to the ATO amounted to
$19,000.
 Additional wages paid to Ned as a Christmas bonus of $6,000 net (net of $4,200 PAYG tax withheld).
 Reimbursement of out-of-pocket travel costs of $1,200 that Ned incurred during his employment.
 A taxable travel allowance totalling $2,800. No PAYG was withheld from this amount.
 Acme paid health insurance premiums for Ned and his wife to the value of $2,750.
 Superannuation contributed $10,000 to Acme Holdings Superannuation Fund on behalf of Ned.
Required:
For each of these transactions indicate which amounts are to be included in Ned’s assessable income and
provide Ned’s total assessable income.
Particulars Amount ($) Amount ($)
Net weekly wages 78000
Additional wages paid 10200
Fringe Benefit for Travelling Cost 1200
Travel allowance 2800
Health insurance premium 2750
94950
Less: Deductions
Superannuation -10000
PAYG on weekly wages -19000
PAYG on Additional Wages -4200 -33200
Assessable Income 61750
Q4.2.13
(Calculation of tax payable from dividend income)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 7 of 33

Units Covered: FNSACC502
Jim Dough, a single resident taxpayer, received the following amounts from investments during the 2016/17
tax year:
Fully Franked Dividends – Dynamic Ltd (franking credit $9,000) $ 21,000
Partly Franked Dividends – Static Ltd (franking credit $2,400) 15,000
Unfranked Dividends – Lost Ground Ltd 20,000
Jim had no other income or deductions during the year.
Required:
a. Calculate Dough’s taxable income for the 2016/17 tax year.
b. Calculate Dough’s net tax payable or refundable for the 2016/17 tax year.
a.
Assessable Income
Fully Franked Dividend Amount ($) Amount ($)
Fully Franked (Net) 12000
Franking Credits 9000 21000
Static Ltd
Fully Franked (Net) 12600
Franking Credits 2400 15000
Unfranked Dividend 20000
Total Taxable Income 56000
b.
Assessable Income
Fully Franked Dividend Amount ($) Amount ($)
Fully Franked (Net) 12000
Franking Credits 9000 21000
Static Ltd
Fully Franked (Net) 12600
Franking Credits 2400 15000
Unfranked Dividend 20000
Total Taxable Income 56000
Tax on Taxable Income 9647
Add: Medicare Levy 1120
Less: Franking offset 15000
Net Tax Refundable 4233
The following questions are based on the material in Chapter 3:
Q5.3.5
(Taxable income from Australian and foreign sources)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 8 of 33

Units Covered: FNSACC502
Yvette Jankic, a resident single taxpayer aged 31, worked in New Zealand from 1 July 2016 until 15 November
2016 and has provided the following information for the 2016/17 tax year:
Receipts $
Interest (net of TFN tax withheld $490) 510
Interest from United Kingdom (net of withholding tax $300) 2,700
Dividend from the U.S. state of Georgia (net of withholding tax $2,100) 3,900
Gross salary – Australian employment (PAYG tax $5,285 withheld) 21,000
Reportable fringe benefit as per PAYG Summary 6,252
Net salary – New Zealand employment (tax withheld $2,540) 12,650
Bonus from Australian Employer for exceptional performance 2,000
Payments $
Interest and Dividend deductions relating to United Kingdom and Georgia investments 250
Work-related deductions relating to Australian employment 300
Note – Yvette does not have private health insurance.
Required:
a. Calculate Yvette’s taxable income for the 2016/17 tax year.
b. Calculate Yvette’s net tax payable or refundable for the 2016/17 tax year.
a.
Calculation of Assessable income
Particulars Amount ($) Amount ($)
Interest (Net) 510
TFN tax withheld 490 1000
Interest from United Kingdom (net) 2700
Withholding tax 300 3000
Dividend from the U.S. state of Georgia 3900
Withholding tax 2100 6000
Gross salary – Australian employment 21000
PAYG tax 5285 26285
Reportable fringe benefit as per PAYG Summary 6252
Net salary – New Zealand employment (Net) 12650
Tax withheld 2540 15190
Bonus from Australian Employer for exceptional performance 2,000
Taxable Income 59727
b.
Calculation of Assessable income
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 9 of 33

Units Covered: FNSACC502
Particulars
Amount
($)
Amount
($)
Interest (Net) 510
TFN tax withheld 490 1000
Interest from United Kingdom (net) 2700
Withholding tax 300 3000
Dividend from the U.S. state of Georgia 3900
Withholding tax 2100 6000
Gross salary – Australian employment 21000
PAYG tax 5285 26285
Reportable fringe benefit as per PAYG Summary 6252
Net salary – New Zealand employment (Net) 12650
Tax withheld 2540 15190
Bonus from Australian Employer for exceptional performance 2,000
59727
Deductions
Interest and Dividend deductions relating to United Kingdom and Georgia
investments 250
Work-related deductions relating to Australian employment 300
Total allowable deductions 550
Taxable Income 59177
Tax on Income 10760
Medicare levy 1183.54
Less: Tax offset 10715
Net Tax Payable 1228.54
The following questions are based on the material in Chapter 4:
Q6.4.3
(Disposal of two assets)
On 10 April 1988, Penny Pleb, an Australian resident, purchased a block of land for $74,000 as an
investment. On 19 February 2017, she sold the land for $125,000.
Penny also sold shares in Prosperous Ltd for $32,000 on 1 August 2016. The shares had cost Penny $8,000 on
17 July 2008. Penny did not dispose of any other assets during the year, nor did she have any capital losses
from previous years.
Required:
Calculate the minimum net capital gain to be included in Penny's assessable income or capital loss to be
carried forward from the 2016/17 tax year.
Calculate using the indexed cost base method and also using only the discount method (without indexing) to
determine the most favourable outcome for Penny. Show your workings for each method.
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 10 of 33

Units Covered: FNSACC502
Indexation Method
Particulars Amount ($) Amount ($)
Sale of shares 32000
Indexed cost of shared 37764.83279
Net tax Refunded 5764.832794
There is not any need to consider the vacant land due to the fact that this does not qualify the criteria of
applicability of Indexation Method. Thus, it is not demonstrated in the above calculation.
Particulars Amount ($) Amount ($)
Sale of Shares 32000
Sales of Land 125000
Less: Cost of Land 74000
Cost of Shares 8000 82000
75000
Net capital Gains 37500
Q7.4.15
(Losses with indexed gains)
Brad Emerson, a resident taxpayer, sold the following CGT assets during the 2016/17 tax year:
ASSET COST
BASE
ACQUISITION
DATE
DISPOSAL
DATE
SALE
PRICE
Shares - AAA $48,000 19 Jan 87 20 Feb 17 $71,000
Shares - BBB $62,000 30 May 05 17 Apr 17 $77,000
Shares - CCC $49,000 8 Jun 09 24 Mar 17 $35,000
Required:
Determine the minimum amount of capital gains that Brad is able to include as assessable income in his
2016/17 income tax return.
Calculate using the indexed cost base method and also using only the discount method (without indexing) to
determine the most favourable outcome for Brad. Show your workings for each method.
Capital Gains Tax Calculations
For the year ended 2017
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 11 of 33

Units Covered: FNSACC502
Indexed Capital gains
Particulars Amount ($) Amount ($)
Shares in AAA
Sales Proceeds 71000
Cost Price 48000
Capital gains 23000
Indexed Capital gains 2917
Shares in BBB
Sales Proceeds 77000
Cost Price 62000
Capital gains 15000
Indexed Capital gains 1755
Shares - CCC
Sales Proceeds 35000
Cost Price 49000
Capital loss -14000
-9328
Capital Gains Tax Calculations
For the year ended 2017
50% CGT Discount
Particulars Amount ($) Amount ($)
Shares in AAA
Sales Proceeds 71000
Cost Price 48000
Capital gains 23000
50% CGT Discount 11500
Shares in BBB
Sales Proceeds 77000
Cost Price 62000
Capital gains 15000
50% CGT Discount 7500
Shares - CCC
Sales Proceeds 35000
Cost Price 49000
Capital loss -14000
Capital gains tax payable 5000
Q8.4.37
(Partial main residence exemption)
Diploma of Accounting - Module 4.1 Assignment (2017, 14Ed) 1803 Page 12 of 33