You are the newly appointed tax practitioner to complete Emilys tax return and have downloaded the prefill
Question:
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):
- Taxable income (2 mark)
- Basic tax liability (ignore tax offsets in this question) (1 mark)
- Medicare levy and Medicare levy surcharge (1 mark)
- HELP repayment (1 mark)
Operations and Supply Chain Management
ISBN: 978-0078024023
14th edition
Authors: F. Robert Jacobs, Richard Chase