Bonita de Fabio is a 29-year-old consultant physiotherapist who works for several major sporting clubs. For the 2020-2021 financial year, her gross income from her consulting activities was $125,975. To allow her to earn this income, Bonita pays an annual registration fee of $148 to the Physiotherapy Board of Australia (as well as $50 for a Certificate of Registration Status), $765 each year for professional indemnity insurance, and approximately $1,850 per year on compulsory continuing professional development (CPD) and first-aid training. To get to and from her client sessions at the different sporting clubs she works at, Bonita has a car valued at $17,000, owned outright, for which she has expenses of $4,375 per year. These costs include registration, compulsory third party (CTP) and third-party property insurance. Bonita has no other insurance on the vehicle, as she feels it is too old to warrant the additional expense. Bonita keeps a logbook of the distance that she travels moving between the sporting facilities at which she treats her different clients and has estimated that she covers 2,850 kilometres each year for this purpose. Bonita owns her own two-bedroom apartment, which is valued at $695,000, against which she holds a mortgage of $565,000 with 23.5 years remaining. Her annual mortgage repayments are currently $34,120, but her fixed rate reverts to a variable rate in 6 months. She has furniture and other personal effects valued at $115,000. Her other assets are $18,750 which she holds in a transaction account at her bank, which earnt her $14.25 in interest for the 2021-2022 financial year; a term deposit of $15,000 earning 0.85 per cent per year; and a superannuation account balance of $66,150 with Spaceship Super (a highgrowth-focused, no-insurance, superannuation product offering), to which she contributes an additional $7,650 per year. 

However, this does not provide Bonita with life insurance, TPD or other cover. Given her excellent health, and knowledge of the fitness and therapy industries, Bonita has put off consideration of this form of cover believing it is better suited to those of a more advanced age. Bonita’s other major expenses are comprised of electricity ($3,250 p.a., with 10% being related to her working from home for business purposes), strata fees ($5,950 p.a.) on her apartment which provides her with home building cover (her sole form of property and property-related cover), council rates ($1,800), water ($950), groceries and household products ($16,900), sports club uniforms that she wears in her role as a consultant physiotherapist to each club ($1,090), non-work-related clothing ($2,910), private health insurance (a total of $3,175 prior to claiming the private health insurance rebate through the tax system), medical and other health-related costs ($1,075), mobile phone and the Internet ($1,680 per year, 40% of which is estimated to be related to business expenses), and entertainment ($5,380 per year). Although she has a credit card with a $12,000 limit, Bonita ensures that she largely uses her debit card to make payments (so that her credit card limit is available for emergencies), and so she only has a current balance of $295 on this credit card.

 5 Looking forward Bonita believes that she will be able to charge her clients 7.5 per cent more than for 2021- 2022 in the 2022-2023 financial year. Assume that her health insurance, council rates, electricity charges, and water charges all increase by an average rate of 5.5 per cent next year, and that all other expenses will increase by an average rate of 7.5 percent. 

Her interest receipts, etc., on her existing deposits, will remain unchanged. Bonita has just inherited $60,000 from her grandfather’s estate, and the funds will be made available to her in a week (i.e., on 7 July 2023). Bonita wishes to grow the value of her non superannuation investments in a tax-effective manner and believes that, as she is still young, she has a moderately high ability to tolerate risk. However, she does not wish to spend significant time on managing these investments. For this reason, she is thinking about investing all her funds into a friend’s new healthy food and delivery service. She is confident that as she and her friends are in the health sector, the business should be successful. 

Notes: 

a. You may assume that Bonita meets the requirements to be classified as self-employed and that her personal superannuation contributions meet requirements to be defined as allowable deductions for the purposes of calculating taxable income. This means that you will also need to consider whether these contributions need to be added back to determine surcharge income (if applicable). 

b. You may assume that Bonita’s private health insurance has the level of hospital coverage required to allow her to receive the private health insurance rebate. 

c. As her net taxable income in 2021-2022 will exceed $66,667 (when you calculate it) Bonita’s low-income tax offset would be $0. You will need to determine how much, if anything, she would have received for the low and middle-income tax offset in 2021- 2022.

Required

Determine Bonita’s net taxes and levies for the 2021-2022 financial year (use appropriate information identified from the ATO website: https://www.ato.gov.au/Individuals/ and that given to you in the following notes).

Note: Answers should be required in Excel form with proper Reasoning.

Answer rating: 100% (QA)

To determine Bonitas net taxes and levies you would need to consider the following components 1 Gross Income Bonitas gross income from her consulting ... View the full answer