Calculate Kim and Stewarts total tax liability (including Medicare). Their financial situation is as follows: Kims salary
Question:
Calculate Kim and Stewart’s total tax liability (including Medicare).
Their financial situation is as follows:
- Kim’s salary is $140,000 p.a. In addition to this $140,000, her employer pays 10% employer superannuation on her behalf.
- Stewart earns $90,000 salary as well as a taxable allowance of $30,000. His employer pays superannuation guarantee of 9.5% on his salary (not the taxable allowance). Stewart salary sacrifices to superannuation up to an amount so his total concessional contributions are $25,000. This salary sacrifice contribution reduces his assessable income.
- Stewart and Kim both earn rent from a jointly owned investment property of $15,000 p.a. (combined) and have an interest only loan of $100,000 (combined) on this property at an interest rate of 5% p.a.
- Kim owns an Australian share portfolio valued at $50,000, paying 4% dividends, which is 70% franked (imputation credits attached).
- Stewart owns a cash management account valued at $50,000 paying 5% interest.
- Stewart has income protection insurance owned personally (non-superannuation) with an annual premium of $2,500 owned and paid by him personally.
- Stewart has a gross nominal $6,000 capital gain from the sale of shares owned for 2 years (this is before any CGT discount).
- Kim donated $1,500 to a charity, which is a tax-deductible gift.
- Kim and Stewart have private hospital insurance cover in place.
Calculate the tax payable for each of Kim and Stewart using the table below as a guide.
Round all figures to the nearest whole dollar.
Your response should include calculations to show:
- Assessable income
- Deductions
- Taxable income
- Income tax payable
- Medicare levy
- Tax offsets
- Final income tax payable
Use the following table as a guide. You may need to add rows to complete your answer.
Show your workings. Full marks will not be awarded if workings are not provided.
Stewart | Kim | |
Income | ||
Salary | ||
Allowance | ||
Other income | ||
Dividends | ||
Imputation credits | ||
Capital gain | ||
Less Exempt Income | ||
Assessable Income | ||
Less: Deductions | ||
Work related expenses | ||
Disallowed deductions | ||
Taxable Income | ||
Income tax payable | ||
Less Tax Offsets | ||
Imputation credit | ||
Income Tax Payable | ||
Plus: Medicare Levy | ||
Plus: Medicare Levy Surcharge | ||
Total Income Tax Payable |
Personal Finance Turning Money into Wealth
ISBN: 978-0133856439
7th edition
Authors: Arthur J. Keown