Taxable Income and Allowable Deductions for Janet Brown's Assessment

This assignment provides a detailed calculation of Janet Brown's taxable income for the year ending June 30, 2018. It includes the determination of gross income from various sources such as rental income, sale of shares, and fringe benefits. The solution meticulously calculates allowable deductions including expenses for roof repairs, air conditioning installation, interest on a loan, and court fees. It then calculates the net taxable income and determines the applicable Medicare levy. The assignment offers explanations for each calculation, including the application of tax brackets and the basis for the car fringe benefit calculation. The solution references Australian tax law and relevant publications to support its analysis, providing a comprehensive understanding of Janet Brown's tax liability.

TAX CALCULATION AND ADVISE
JANET BROWN TAXABLE INCOME AND ADVISE
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TAX CALCULATION AND ADVISE
Part A
Janet Brown Statement Of Taxable Income
Gain On For The Year Ending 30Th June 2018
Gross Income=
Income From Renting Newport Hse $2500*10=$25000
Sale Of Telstra Shares $(10000-5000) = $5000
Gain On Sale Of Russian Babushka Doll $(17700-600)= $17100
Cost per each =1000/5=$200
Cost for 3=$200*3=600
Sale For 3=$5900*3=17700
Car Fringe Benefit = 30000-500 for petrol $25500
Total Gross Income= $72600
Less Allowable Deductions
Expense on repairing the roof $22000
Installation of new air condition $4000
Interest paid on the Newport hse loan 3%*$30000=$9000
Loss resulting from sale of Orica share $10000-$6000=$4000
Court Fees $25000
Total Allowable Deductions=22000+4000+9000+4000+25000= ($64000)
Net Taxable Income =$72600-$64000= $8600
Medicare Care Levy=2%*$72600=$1452

TAX CALCULATION AND ADVISE
Using the below tax individual bracket we can now calculate Janet Taxable Pay;
0-$18,200 - Nil
From the taxable income figure of $8600 we clearly conclude that Janet lies in the first
bracket hence not eligible to pay income tax since her income is not within the level of being
subjected to taxation as further advised by McKerchar (2007.Pg 17) is refrained from paying tax
however since she qualifies for medical levy, her total tax payable is;
Total taxable pay=net taxable pay+medical levy
=0+1452=$1452
Note 1; Taxable income is that earnings that are eligible for subjection to tax as required by the
tax law after allowable deductions have been considered hence, therefore, the need to calculate
this income as well as accounting for the allowable deductions must be factored;
Taxable Income=Gross Income-Allowable Deductions
Note 2; Medical Levy, on the other hand, is the partly contributions made by individual tax
residents for the purpose of accessing private health care services however it depends on the
income one gets thus only applicable when income is above $27069 for the juniors but for the
seniors should be above $42806 either way Janet qualifies for either of the two since her taxable
income is $72600 and going with the information available there exist a presumption that Janet
has schemed for private health insurance a stated in the letter
Medical Levy=2% Of Gross Income
Note 3; Concerning the car fringe benefit we are basing it on the operational cost method
since we are not able to ascertain the purchasing cost or base value as we’ve not been informed.
The percentage usage of the vehicle is likewise not outlined thus an assumption has been made to
have been used at 100%.

TAX CALCULATION AND ADVISE
Note 4; Janet Brown for tax purposes is deemed to be an Australian tax resident hence all the tax
application including rates and refrains she is entitled to Woellner (2011, Pg.53).
All the notes and calculations are based on income assessment tax act of Australia as well
as the international taxation standards set in place.

TAX CALCULATION AND ADVISE
References
McKerchar, M., 2007, June. Tax complexity and its impact on tax compliance and tax
administration in Australia. In IRS Research Conference.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2011. Australian Taxation Law
Select: legislation and commentary. CCH Australia.