Taxation Assignment: Income Tax Liability Calculations

This assignment provides a detailed analysis of income tax liabilities for two individuals, Piper and David, covering various income sources, deductions, and tax calculations. The solution addresses specific scenarios, including salary income, additional income, and superannuation transfers from foreign funds. It explains the tax implications of Woolworths vouchers, depreciation, education expenses, and travel expenses. The assignment also examines the ATO guidelines regarding the transfer of superannuation funds from foreign countries to Australia, including the tax treatment of fund value changes. Additionally, it discusses the deductibility of expenses related to seminars, workshops, and educational courses, considering their connection to the individual's work and the allocation of travel expenses. The solution references ATO guidelines to support its conclusions and calculations.

Running head: TAX ASSIGNMENT
Taxation Assignment
Name of the Student
Name of the University
Author Note

1TAX ASSIGNMENT
Table of Contents
Answer to Question 1...................................................................................................................2
Answer to Question 2...................................................................................................................3
Answer to Question 3...................................................................................................................4
Answer to Question 4...................................................................................................................5
References....................................................................................................................................6

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Answer to Question 1
Income Tax Liability of Piper in respect of CIY
Particulars $ $
Salary Income 90000
Additional salary from Baccalaureate University 25000
Other Income
Woolworths voucher 500
Superannuation amount transferred from South
Africa
-
Income from meals cooked 100
Less: Deductions from the income
PAYG from Piper's salary (20747)
PAYG withheld from additional salary (8125)
Depreciation on printer (83)
Costs incurred on law degree (5000)
Travelling expenses (672)
Fees for practising certificate (1200)
Amount incurred on books (450)
Taxable income for the year 79323
Income Tax for the year 17327

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To calculate the tax liability of Piper for the given year, her salary and part time salary
both are included as a part of her income. The contribution from foreign fund has been excluded
as it has decreased in value since the time the last contribution was made in South Africa. The
voucher received by her does not come under the definition of a gift as suggested by ATO and
hence is taxed in her hands. The PAYG instalments are reduced as they are paid as a tax by the
employer. As her education related expenses are in relation to her profession, all the expenses
incurred in this regard are exempt from tax in her hands.
Answer to Question 2
Income Tax Liability of
David
Particulars Amount Amount
Income from Salary 60000
Less: PAYG withheld from
salary
(10500)
Taxable income for the year 49500
Income tax payable for the
year
7472
In this case, the salary earned by David in the given year is 60000. The PAYG deductions
are reduced from his salary to calculate the annual income tax payable by him. His total tax
liability is $7472.

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Answer to Question 3
In the given situation, Piper had invested her money in a retirement fund in South Africa
that was valued at R25000000 (ZAR) at the time of her immigration to Australia along with her
husband David. After which, she stopped contributing to that particular fund. In CIY 2018, she
plans to transfer the amounts from the fund to her bank account in Australia. According to the
guidelines of the ATO, there are two aspects of the transfer of a superannuation fund from a
foreign country to Australia. These include the transfer to a superannuation fund in Australia or
to the taxpayer’s bank account in Australia. In a situation where the amount is transferred to a
complying retirement fund in Australia, the amount is added to the already existing contributions
in Australia and tax may be levied on the excess contribution made to a superannuation fund in
the country. If a person is older than 65 years, then this contribution to the funds is limited to
$150000 in an income year. Any additional amount contributed to the fund is to be taxable in the
person’s hands. However, if the person is less than 65 years of age, then the contribution limit is
up to 3 times the non-concessional contributions made (Ato.gov.au 2019). If the contributions
are paid directly to a bank or to another person on behalf of the taxpayer, then the entire amount
of contribution is charged in the taxable income of a person in a given financial year. If the
amount of funds change in value from the time the last contribution was made before leaving the
particular foreign country, then the excess increase in the value of the fund should be taxed. In
this case, Piper had left South Africa in 2015. At that time, the value of the contribution made to
the fund was ZAR 2500000. If this amount increased in value at the time of transfer, then the
increase in value is liable for taxation in the given financial year. This means that if the value of
the fund went above ZAR 2500000, then the excess would be taxed in the hands of Piper. One of
the most tax management techniques followed by the taxpayers is to limit the transfer of funds to

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the taxable limits. This means that if the limit of the contribution was $150000 and the person
had $2000000 in his fund, then the contribution in the CIY is limited to $150000. The remaining
$50000 is transferred to the superannuation fund in the next year (Ato.gov.au 2019). The
superannuation contribution cap will also not be applicable in case of a transfer made to one self.
Answer to Question 4
The guidelines of ATO suggest that a person can claim the expenses incurred on
seminars, workshops and educational conferences if they have a sufficient amount of connection
to the work of the person. These workshops also include formal educational courses provided by
professional bodies. If attending the seminar or workshop needs any travel expenses, then the
amount of travel expenditure incurred for private purposes should be deducted and the part that
is only incurred for business purposes can be claimed (Ato.gov.au 2019). In Pier’s situation, the
studies being undertaken by her is the master’s degree which is sufficiently connected to her job
as it allows her to enhance her job in the future. In order to continue her studies, she has incurred
a variety of expenses like tuition fees and the cost of books. In a similar manner, the trip is also
related to her work as it helps her in continuing her studies which ultimately benefit her
profession. However, before claiming the expenses for her trip, she should deduct the part that
was spent for private purposes and should claim deductions only on the part that was incurred as
a part of the study related expenditure. However, if it is proven that the seminar was in any
manner not related to her work, then these deductions cannot be claimed from her annual income
as they are not covered under the ATO guidelines.

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References
Ato.gov.au. (2019). Tax treatment of transfers from foreign super funds. [Online] Available at:
https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/Tax-
treatment-of-transfers-from-foreign-super-funds/?
anchor=Transferringamountstoyourself#Transferringamountstoyourself [Accessed 27 Sep.
2019].
Ato.gov.au. (2019). Seminars, conferences and education workshops. [Online] Available at:
https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-
work-related-deductions/Seminars,-conferences-and-education-workshops/ [Accessed 27 Sep.
2019].
Ato.gov.au. (2019). Tax treatment of transfers from foreign super funds. [Online] Available at:
https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/Tax-
treatment-of-transfers-from-foreign-super-funds/ [Accessed 27 Sep. 2019].