Emily Ng has been employed in her family’s restaurant, ‘Malua Bay’, as manager since it opened in October 2020 in Malua Bay, regional New South Wales. Prior to October 2020, Emily worked at ‘Digital Co.’ in Sydney as a digital account manager. As part of her new role, Emily carries out various activities. These include waitressing, stocktaking, accounts and staffing management, set up and cleaning, ordering and supply collection (as well as other ad hoc activities).

You are the newly appointed tax practitioner to complete Emily’s tax return and have downloaded the prefill report for Emily’s tax return (hint, you can read what a prefill report is here (Links to an external site.)).

Key outputs from the Prefill Report are as follows:

Item 1: Salary or Wages

Payer Details	Income Type	Gross $	PAYG Withheld $
Digital Co.	Salary	$10,000	$1,000
Malua Bay	Salary	$50,000	$15,000

Item IT1: Reportable Fringe Benefits

Payer Details	Amount $
Malua Bay	$15,000

Item 10: Interest Income

Payer Details	Amount $
ABC Bank	$20,000

Medicare Levy Surcharge

Health Insurer	Membership Number	Number of days this policy provides an appropriate level of private patient hospital cover	Premiums Paid $	Rebate Received $
B HealthPHI	C 897654	365	$3,125	$475

Number of dependent children: Zero

Spouse: Nil

Higher Education Loan Program (HELP)

HELP Balance $

$5,000

From the above, you determine that out of the above details, Emily’s ordinary income include salary and interest.

Emily has provided you with the following information:

• Invoice for the preparation of the prior year tax return, $95 (deduction allowed by section 25-5 ITAA97)
• Travel expenses of $4,500 (deduction allowed by section 8-1 ITAA97)
• Home running expenses of $100 calculated under the ‘short-cut’ method relating to the period Emily worked from home whilst employed by Malua Bay (the home office deduction is allowed by section 8-1 ITAA97 and the method employed in line with the temporary COVID-19 mechanisms introduced. You can read further on this here (Links to an external site.))

Required:

Determine for Emily the following (assuming Emily is a resident of Australia for tax purposes):

1. Taxable income (2 mark)
2. Basic tax liability (ignore tax offsets in this question) (1 mark)
3. Medicare levy and Medicare levy surcharge (1 mark)
4. HELP repayment (1 mark)

In doing so, clearly label all relevant figures, clearly articulate all relevant analysis and show all workings.

You are not required to include references to legislation, case law or tax rulings.

Answer rating: 100% (QA)

1 Taxable income is the portion of an individuals or a companys income used to calculate how much ta... View the full answer