FNSACC502 Assignment Solution: Medicare Levy and Tax Calculation

This assignment solution for FNSACC502 covers various aspects of Australian taxation, including the calculation of Medicare Levy for different family scenarios based on their taxable incomes and dependent children. It addresses tax calculations for individuals with reportable fringe benefits, PAYG tax installments, and dividend income. The solution also delves into calculating taxable income from both Australian and foreign sources, considering factors like foreign tax offsets and reportable fringe benefits. Furthermore, it tackles capital gains tax calculations, comparing indexed cost base and discount methods for asset disposals, and partial main residence exemptions. The assignment provides detailed computations and explanations for each scenario, offering a comprehensive understanding of the relevant tax principles and their practical application. Desklib provides more solved assignments like these to help students.

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.
Glenn and Rowena does not have to pay the Medicare levy since their combined family taxable income stands
$28,000 which does not exceed the family Medicare levy threshold of $36,001.
b. Kath derived taxable income of $41,000 and her husband Fred derived taxable income of $18,000.
They have three dependent children.
Computation of Medicare Levy
In the Books of Kath and Fred
For the year ended 2015/16
Particulars
Amount
($)
Amount
($)
Assessable Income
Kath 41000
Fred 18000
Total Assessable Income 59000
Medicare Levy Payable (41,000*2%) 820
c. Beck derived taxable income of $29,000 and her de facto partner Roy derived taxable income $23,000.
They have four dependent children.
Computation of Medicare Levy
In the Books of Beck and Roy
For the year ended 2015/16
Particulars Amount ($) Amount ($)
Assessable Income
Beck 29000
Roy 23000
Total Assessable Income 52000
Medicare Levy Payable Nil
d. Will derived taxable income of $36,000 and his wife Tina derived taxable income of $22,000. They
have three dependent children.
Computation of Medicare Levy

Units Covered: FNSACC502
In the Books of Will and Tina
For the year ended 2015/16
Particulars
Amou
nt ($)
Amou
nt ($)
Assessable Income
Will 36000
Tina 22000
Total Assessable Income 58000
Medicare Levy Payable (36000*2%) 720
Q2.1.19.
(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.

Units Covered: FNSACC502
The following questions are based on the material in Chapter 2:
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 $10,000 to Acme Holdings Superannuation Fund on behalf of Ned.
Computation of Taxable Income
In the books of Fred for the year 2016/17
Particulars
Amou
nt ($)
Amoun
t ($)
Assessable Income
Gross Salary
14534
5
Add: PayG 13480
Add: Fringe benefit 17170
Total Assessable Income 175995
Allowable Deductions 0
Total taxable Income 175995
Tax on taxable income
52750.
15
Add: Medicare levy 3519.9
Less: PayG 13480
Total Tax Payable
42790.
05

Units Covered: FNSACC502
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.
Answer: Transactions that will be included in the taxable income of Ned are as follows;
a. The total amount of net weekly wages will be included in the assessable income of Ned
b. The receipt of Christmas bonus will be included in the Ned’s assessable income
c. Ned will be subjected to claiming an allowable deductions on the travelling cost since it is not covered under the
fringe benefit tax.
d. Ned will be able to claim an allowable deductions relating to the cost incurred on travelling allowance since
under section 8-1 of the ITAA 1997 the expenditure incurred by Ned is in the course of employment and the
same can be claimed as allowable deductions.
e. The superannuation contribution that is made by Ned will be subjected to allowable deductions under section
8-1 of the ITAA 1997.
f. The premium paid by Ned will be subjected to allowable deductions.
The total amount assessable income of Ned is stated below;
Computation of Assessable Income
In the books of Ned Markson
For the year 2016/17
Particulars
Amou
nt ($)
Amou
nt ($)
Assessable Income
Net Weekly Wages 78000
Christmas Bonus 6000
Total Assessable Income 84000
Travelling cost 1200
Travelling Allowances 2800
Superannuation Contribution 10000
Premium on health insurance 2750
Total Allowable Deductions 16750
Total Assessable Income 67250
Q4.2.13
(Calculation of tax payable from dividend income)
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:

Units Covered: FNSACC502
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.
Computation of Assessable Income
In the books of Jim Dough
For the year 2016/17
Particulars Amount ($) Amount ($)
Assessable Income
Australian Sourced Dividend Income 78000
Fully Franked Dividends 21000
Gross up Franking Credits 9000 30000
Partly Franked Dividends 15000
Gross up Franking Credits 2400 17400
Un-franked Dividend 20000
Total Taxable Income 67400
b.
Computation of Assessable Income
In the books of Jim Dough
For the year 2016/17
Particulars Amount ($) Amount ($)
Assessable Income
Australian Sourced Dividend Income 78000
Fully Franked Dividends 21000
Gross up Franking Credits 9000 30000
Partly Franked Dividends 15000
Gross up Franking Credits 2400 17400
Un-franked Dividend 20000
Total Taxable Income 67400
Tax on taxable income 13452
Add: Medicare levy 1348
Less: Franking Credit 11400
Total tax payable 3400
The following questions are based on the material in Chapter 3:
Q5.3.5
(Taxable income from Australian and foreign sources)
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

Units Covered: FNSACC502
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.
Computation of Assessable Income
In the books of Yvette Jankic
For the year 2016/17
Particulars
Amou
nt ($)
Amou
nt ($)
Assessable Income
Gross Salary 21000
Add: PayG 5285 26285
Add: Fringe benefit 6252
Salary from New Zealand Employment 12650
Add: Withholding 2540 15190
Bonus from Australian employer 2000
Interest 510
Interest from UK 2700
Dividend from US State of Georgia 3900
Total Assessable Income 50585
Allowable Deductions
Interest and dividend deductions 250
Work related deductions 300
Total allowable deductions 550
Total Taxable Income 50035
b.
Computation of Assessable Income

Units Covered: FNSACC502
In the books of Yvette Jankic
For the year 2016/17
Particulars Amount ($) Amount ($)
Assessable Income
Gross Salary 21000
Add: PayG 5285 26285
Add: Fringe benefit 6252
Salary from New Zealand Employment 12650
Add: Withholding 2540 15190
Bonus from Australian employer 2000
Interest 510
Interest from UK 2700
Dividend from US State of Georgia 3900
Total Assessable Income 50585
Allowable Deductions
Interest and dividend deductions 250
Work related deductions 300
Total allowable deductions 550
Total Taxable Income 50035
Tax on taxable income 7808.38
Add: Medicare levy 1000.7
Less: Foreign Income tax offset
Interest 20
Interest from UK 300
Dividend from US State of Georgia 1800
PayG withheld 5285
New Zealand Employment tax withheld 2540
Net tax refundable -1135.92
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.

Units Covered: FNSACC502
Computation of Capital Gains Tax of Sale of Land
Particulars Amount ($)
Sale Price 125000
Less: Cost of Selling 0
Adjusted Sale Price 125000
Purchase Price 74000
Add: Cost of Purchase 0
Adjusted purchase Price of asset 74000
Capital Gains/(loss) 51000
CGT Old Regime
Indexed capital gain/loss 29,080
Tax payable under old regime (marginal tax rate x indexation
factor x capital gain)
5,540
CGT New Regime
Tax payable under Discount regime (marginal tax rate x half
capital gain)
4,413
Computation of Capital Gains Tax of Sale of Shares
Particulars Amount ($)
Sale price $32,000
less Cost of selling $0
Adjusted sale price $32,000
Purchase price $8,000
add Cost of purchase and ownership $0
Adjusted purchase price of asset $8,000
Capital gain/loss $24,000
CGT Old Regime
Indexed capital gain/loss 24,000
Tax payable under old regime (marginal tax rate x indexation factor x
capital gain)
3,940
CGT New Regime
Tax payable under Discount regime (marginal tax rate x half capital gain)
1,020
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

Units Covered: FNSACC502
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.
Computation of Capital Gains Tax
In the books of Brad Emersion
For the Year ended 2016/17
Asset 1
Asset name Shares AA
Indexation option
Capital gain $
CGT payable $
Discount method
Capital gain $ 23,000
CGT payable $
Least capital gain $
Least CGT payable method Indexation
option
Q8.4.37
(Partial main residence exemption)
Benita Ford, a resident taxpayer purchased a house on 30 June 2007 which she used as her main residence
for 2 years until 30 June 2009. She then leased the property to tenants for 8 years until the property was sold
on 30 June 2017. Benita will apply the main residence exemption for 6 years of this period.
 The house was originally purchased for $420,000.
 The market value of the property on 30 June 2009 was $475,000.
 The house was sold for $705,000.

Units Covered: FNSACC502
Benita did not dispose of any other assets during the 2016/17 tax year.
Required:
Calculate Benita’s Net Capital Gain in respect of the 2016/17 tax year (after allowing for the partial main
residence exemption).
Computation of Capital Gains Tax
In the Books of Benita Ford
For the Year ended 2016-17
Sale price $705,000
less Cost of selling $0
Adjusted sale price $705,000
Purchase price $420,000
add Cost of purchase and ownership $0
Adjusted purchase price of asset $420,000
Capital gain/loss $ 2,85,000
Number of days where the ownership was not the main residence 2,190
Total number of days in ownership 730
Net Capital Gains $ 8,55,000
Total Capital Gain from CGT Event x
Number of days in your ownership period
when the dwelling was not your main
residence
Total number of days in ownership period
The following questions are based on the material in Chapter 5:
Q9.5.29
(Foreign Pension)
Leonard Expat, a 58 year-old resident taxpayer with private health insurance, received a government pension
from the United Kingdom that is taxable in Australia, but not in the United Kingdom. Leonard is exempt from
tax in the United Kingdom, but subject to tax as an Australian resident taxpayer.
During the 2016/17 tax year, Leonard received $15,000 of pension, and also derived interest and unfranked
dividends of $48,000.

Units Covered: FNSACC502
Required:
a. Calculate Leonard’s taxable income for the 2016/17 tax year.
b. Calculate Leonard’s tax payable or refundable for the 2016/17 tax year.
a.
Computation of Taxable Income
In the Books of Leonard Expat
For the year ended 2016-17
Particulars Amount ($) Amount ($)
Assessable Income
Income From Pension 15000
Interest and Un-franked Dividend 48000
Total Assessable Income 63000
Allowable Deduction 0
Total Taxable Income 63000
b.
Computation of Taxable Income
In the Books of Leonard Expat
For the year ended 2016-17
Particulars Amount ($) Amount ($)
Assessable Income
Income From Pension 15000
Interest and Un-franked Dividend 48000
Total Assessable Income 63000
Allowable Deduction 0
Total Taxable Income 63000
Tax on Taxable Income 12022
Add: Medicare Levy 1260
Total Tax Payable 13282
The following questions are based on the material in Chapter 5
Q10.5.3
(Superannuation lump sum, low cap amount)
Stan Eckhardt, aged 57, received a superannuation lump sum of $310,000 from his superannuation fund
upon retirement on 15 April 2017. PAYG tax of $28,170 was withheld from the lump sum. The lump sum
comprised entirely of an element taxed in the fund.
Stan also received gross wages of $85,000 up to the date of his retirement. PAYG tax of $22,110 was
withheld from Stan’s wages. Stan has adequate private health insurance.
Required:
a. Calculate Stan’s taxable income for the 2016/17 tax year.
b. Calculate Stan’s net tax payable or refundable for the 2016/17 tax year.
a.

Units Covered: FNSACC502
Computation of Taxable Income
In the Books of Stan Eckhardt
For the year ended 2016-17
Particulars Amount ($) Amount ($)
Assessable Income
Gross Wages 85000
Superannuation Lump sum 310000
Total Assessable Income 395000
Allowable Deduction 0
Total Taxable Income 395000
b.
Computation of Taxable Income
In the Books of Stan Eckhardt
For the year ended 2016-17
Particulars Amount ($) Amount ($)
Assessable Income
Gross Wages 85000
Superannuation Lump sum 310000
Total Assessable Income 395000
Allowable Deduction 0
Total Taxable Income 395000
Tax on Taxable Income 150982
Add: Medicare Levy 7900
Less: 15% Tax Offset 46500
Less: PayG Withholding on Superannuation 28170
Less: PayG Withholding on Wages 22110
Total Tax Payable 62102
Q11.5.5
(Superannuation lump sum and income stream)
On 14 August 2016, Tammy Gochi, aged 53, retired from her job as chief executive officer of Megacorp
Limited to commence service as a volunteer for Whalepeace International. She received a superannuation
lump sum of $160,000 which entirely comprised an element taxed in the fund. PAYG tax of $34,500 was
withheld from the lump sum.
During the remainder of the 2016/17 tax year, Tammy also received a superannuation income stream benefit
of $40,000 from the fund. PAYG tax of $9,780 was withheld from this amount. The entire amount was taxed
in the fund.
Tammy’s only other income during the 2016/17 tax year was gross salary of $36,290 for the period up to the
date of her retirement. PAYG tax of $9,035 was withheld by her employer. Tammy has private hospital
insurance.
Required:
a. Calculate Tammy’s taxable income for the 2016/17 tax year.
b. Calculate Tammy’s net tax payable or refundable for the 2016/17 tax year.
a.