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Taxation 1)! MIS85-B11i In 1984, the Taxation Office published the following table for calculating weekly taxation instalments on incomes greater than $751 per week.

Weekly earnings No General exemption $751 - $1276: $355·65 plus 61 cents for each $1 of earnings in excess of $750. $1277 and over: $676·50 plus 60 cents for each $1 of earnings in excess of $1276.

Weekly earnings With General exemption $751 - $1441: $276·72 plus 61 cents for each $1 of earnings in excess of $750. $1442 and over: $698·25 plus 60 cents for each $1 of earnings in excess of $1441.

Amounts so calculated should be rounded to the nearest 5 cents

Use this table to calculate the weekly taxation instalment for a person who claims a general exemption and has a weekly income of $862.¤ « $345·04 » 2)! MIS87-B11iii Freddie receives an annual salary of $23 806. To calculate his fortnightly salary F his 14A employer uses the formula F  where A is his annual salary. Freddie receives a 365  25 1 holiday loading calculated at the rate of 17 % of his salary for the 4 weeks of his holiday. 2 a. Calculate his holiday pay, before tax, to the nearest cent. b. After deductions his taxable income is $22 714. Use the table below to calculate the tax payable.

Taxable income $ Tax $1 - 4594 NIL $4595 - 12 499 NIL plus 25 cents for each $1 over $4595 $12 500 - 19 499 $1976·25 plus 30 cents for each $1 over $12 500 $19 500 - 27 999 $4076·25 plus 46 cents for each $1 over $19 500 $28 000 - 34 999 $7986·25 plus 48 cents for each $1 over $28 000 $35 000 and over $11 346·25 plus 60 cents for each $1 over $35 000 « a) $2144·33 b) $5554·69 » 3)! MIS90-B11c Most pensions paid by Government departments are taxable. Special rebates operate in relation to the taxation of pensioners' incomes. The maximum pensioner rebate is $430. This reduces by 12·5 cents for every dollar earned in excess of $6892. i. A pensioner's total income for the year is $8200. Calculate the rebate payable. ii. What is the smallest income for which there is no rebate?¤ « i) $266·50 ii) $10·322 » 4)! MIS93-B32a The following table can be used to find the tax payable on various incomes.

Taxable Tax on the Percentage Payable on ¤©BOARD OF STUDIES NSW 1984 - 2006 ©EDUDATA SOFTWARE PTY LTD: DATA VER5.0 2006 37 M_BANK\YR11-GEN\FINANCE03.HSC

income Amount in Income in Excess of Column 1 Amount in Column 1 5 251 Nil 20·5% 17 650 2 542·00 24·5% 20 600 3 264·75 29·5% 20 700 3 294·25 38·5% 35 000 8 799·75 42·5% 36 000 9 224·75 46·5% 50 000 15 734·75 47·0%

i. Mr Allen's taxable income is $30 950. How much tax will he have to pay? ii. The GENeral Medicare Levy is 1·25% of taxable income. How much does the Medicare Levy cost Mr Allen this year? iii. Ms Cook stated that if she reduced her income by one dollar, she would reduce her tax by 42·5 cents. Between what two amounts of money was her taxable income?¤ « i) $7240·50 ii) $386·88 iii) $35 001 and $36 000. » 5)! MIS94-B32a The tables below give rates for income tax and the Medicare levy.

Taxable Income Tax $1 - $5 400 Nil $5 401 - $20 700 Nil plus 20 cents for each $1 over $5 400 $20 701 - $36 000 $3060·00 plus 38 cents for each $1 over $20 700 $36 001 - $50 000 $8 874·00 plus 46 cents for each $1 over $36 000 $50 001 and over $15 314·00 plus 47 cents for each $1 over $50 000

Medicare Levy If your taxable income is less than $11 888, your Medicare levy is nil. If your taxable income is: • more than $11 887 but less than $12 681, your Medicare levy is 20 cents for every dollar above $11 887; • more than $12 680, your Medicare levy is 1·25% of your taxable income.

i. Ted's taxable income is $39 500. How much tax will he have to pay? ii. What will be Ted's Medicare levy? iii. Ted keeps $10 000 in a special bank account which pays interest at a rate of 5% per annum. Ted has to pay tax on his interest at a rate of 46%. How much does Ted earn, after tax, on this bank account in one year?¤ « i) $10 484 ii) $493·75 iii) $270 » 6)! MIS95-B27d The solid line on the graph shows the tax payable on taxable incomes up to $50 000 in Australia in 1993. The broken line shows a possible 25% flat tax rate.

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16 15 14 13 12 11 10 Tax payable (thousands 9 of 8 dollars) 7 6 5 4 3 2 1 0 0 5 10 15 20 25 30 35 40 45 50 Taxable income (thousands of dollars) key 25% flat rate 1993 tax i. What was the tax payable on an income of $4000 in 1993? ii. Bernie's taxable income in 1993 was $15 000. What was the tax payable on his income? iii. Kerry's taxable income in 1993 was $5000 more than Bernie's. How much more tax did Kerry pay than Bernie? iv. How many cents in the dollar did Kerry pay in tax on the $5000? v. The broken line on the graph represents a flat tax rate of 25%. Suppose that the taxation system changed to a flat tax rate of 25%. In what range of incomes would more tax be paid under this new system?¤ « i) Zero ii) $1800 iii) $1200 iv) 24 cents in the dollar v) All incomes less than $37 000 » 7)! MIS96-B27d For the 1994-95 financial year, Claudia’s taxable income was $49 540. i. Calculate the tax on her income using the table below.

Taxable income range Tax payable $20 701 - $38 000 $3060 plus 34c for each $1 over $20 700 $38 001 - $50 000 $8942 plus 43c for each $1 over $38 000 $50 000 and over $14 102 plus 47c for each $1 over $50 000

ii. The total amount of tax that Claudia had to pay is the amount calculated in part (i) plus the Medicare levy. The Medicare levy was 1·5% of taxable income. ¤©BOARD OF STUDIES NSW 1984 - 2006 ©EDUDATA SOFTWARE PTY LTD: DATA VER5.0 2006 39 M_BANK\YR11-GEN\FINANCE03.HSC

Calculate the total amount of tax that Claudia paid. iii. During the 1994-95 financial year, tax instalments of $573·30 per fortnight were deducted from Claudia’s salary. Calculate the refund Claudia received for the 1994-95 financial year. iv. For the 1995-96 financial year, Claudia’s taxable income increased by $3148. Using the above table, calculate how much more tax (including the Medicare levy) Claudia had to pay for 1995-96.¤ « i) $13 904·20 ii) $14 647·30 iii) $258·50 iv) $1508·38 » 8)! MIS97-B27d The table below gives the personal income tax rates.

Taxable Income Tax payable Tax bracket $0 - $5400 Nil A $5401 - $20 700 $0 plus 20c for each $1 over $5400 B $20 701 - $38 000 $3060 plus 34c for each $1 over $20 700 C $38 001 - $50 000 $8942 plus 43c for each $1 over $38 000 D Over $50 000 $14 102 plus 47c for each $1 over $50 000 E

i. Find the tax payable on a taxable income of $60 000. ii. The graph of the taxable income against tax payable has been started below. Using the values in the table, and your answer in part (i), complete the graph.

Tax payable 10 (thousands of dollars) 9

0 0 5 10 15 20 25 30 35 40 45 50 55 60 Taxable income (thousands of dollars) iii. Rosemary pays $11 400 in tax. From your graph, read off the value of her taxable income. iv. What percentage of her taxable income is paid as tax?

v. Stefan pays 20% of his taxable income in tax. Which tax bracket (A, B, C, D or E from the table) applies to his taxable income? 20 19 18 17 16 15 14 13 12 Tax payable (thousands of dollars) 11 10 9 8 7 6 5 4 3 2 1 0 0 5 10 15 20 25 30 35 40 45 50 55 60 Taxable income (thousands of dollars) « i) $18 802 ii) iii) $43 500 iv) 26·2% (to 1 dp) v) B » 9)! MIS99-27c The table below gives personal income tax rates.

Taxable Income Tax Payable $0 – $5500 Nil $5501 – $21 200 Nil plus 20 cents for each $1 over $5500 $21 201 – $39 400 $3140 plus A for each $1 over $21 200 $39 401 – $54 200 $9146 plus 44 cents for each $1 over $39 400 Over $54 200 $15 658 plus 48 cents for each $1 over $54 200

i. Sonia has a taxable income of $45 000. Use the table to calculate the tax on Sonia’s income. ii. Sonia must also pay the Medicare levy of 1·5% of taxable income. Calculate the amount Sonia must pay for Medicare.

iii. Throughout the year Sonia has $460 tax per fortnight deducted from her salary. How much does Sonia owe the tax department at the end of the financial year? iv. This table was designed so that a person with a taxable income of $35 000 would pay 22% of that income in tax (not including the Medicare levy). What is the value of A in the table?¤ « i) $11 610 ii) $675 iii) $325 iv) 33 cents » 10)! GEN01-10 The table shows personal income tax rates.

Taxable income Tax on this income $0 - $6 000 Nil $6 001 - $20 000 17 cents for each $1 over $6 000 $20 001 - $50 000 $2 380 plus 30 cents for each $1 over $20 000 $50 001 - $60 000 $11 380 plus 42 cents for each $1 over $50 000 $60 001 and over $15 580 plus 47 cents for each $1 over $60 000

Sandra has a grass income of $60 780 and deductions that total $2420. What is the tax payable on Sandra’s taxable income? (A) $13 526·60 (B) $14 891·20 (C) $15 946·60 (D) $17 084·00¤ «B » 11)! GEN01-27a George buys a television for $574·20, including 10% GST. What is the value of the GST component? ¤ « $52∙20 » 12)! GEN02-23a Jordan’s gross pay is $1500 per fortnight. i. Fortnightly deductions from Jordan’s gross pay are:  $266·17 for tax;  $7·88 for union fees;  $16·25 for private health insurance. Calculate his fortnightly net pay. 1 ii. Jordan is paid an annual leave loading of 17 % of 4 weeks' gross pay. Calculate 2 his annual leave loading. iii. Jordan visits Italy on his holidays. He pays 180 euros for a pair of boots. This price includes a value added tax of 20%. 1. What is the price of the boots before the tax was added? 2. How much is 180 euros in Australian dollars if $A1 is worth 0·58 euros? ¤ « i) $1206∙70 ii) $525 iii) 1) 150 euros 2) $310∙34 » 13)! GEN03-20 Iliana buys several items at the supermarket. The docket for her purchases is shown.

XYZ SUPERMARKET 27/04/03 12.53 Milk 1 L $119 *Pepsi 125 L $129 *Disinfectant $723 *Tea Tree Oil $413 Spinach $164 Soup $157

Total $1705

10% GST Included In Cost of Taxable Items

* = Taxable Items

What is the amount of GST included in the total? (A) $1×15 (B) $1×27 (C) $1×55 (D) $1×71¤ «A » 14)! GEN03-24b Vicki earns a taxable income of $58 624 from their job with an insurance company. She pays $14 410×80 tax on this income. i. Vicki has a second job which pays $900 gross income per month. What is Vicki’s total annual taxable income from both jobs, assuming that she has no allowable tax deductions? ii. Use the tax table below to calculate the total tax payable on her income from both jobs.

Taxable income Tax payable $0 - $6000 NIL $6001 - $22 000 18 cents for each $1 over $6000 $22 001 - $55 000 $2880 plus 30 cents for each $1 over $22 000 $55 001 - $66 000 $12 780 plus 45 cents for each $1 over $55 000 $66 001 and over $17 730 plus 48 cents for each $1 over $66 000

iii. Show that Vicki's monthly net income from her second job is $486×44. iv. Vicki plans to take a holiday in two years time which she estimates will cost $12 000. At the end of each month, Vicki invests the net income from her second job in an account which pays 4% per annum, compounded monthly. Will she have enough in this account, immediately after the twenty-fourth payment, to pay for her holiday? Justify your answer with calculations.¤ « i) $69 424 ii) $19 373∙52 ii) Proof iv) Yes. She will have $12 133∙21 in her account » 15)! GEN04-10 Using the tax table, determine the tax payable on a taxable income if $47 000

Taxable income Tax on this income

$0 - $6000 NIL $6001 - $22 000 16 cents for each $1 over $6000 $22 001 - $45 000 $2560 plus 25 cents for each $1 over $22 000 $45 001 - $60 000 $8310 plus 40 cents for each $1 over $45 000 $60 001 and over $14 310 plus 48 cents for each $1 over $60 000

(A) $8310×40 (B) $9109×60 (C) $9110×00 (D) $10 310×40¤ « C » 16)! GEN04-17 Rita purchased a camera for $880 while on holidays in Australia. This price included 10% GST. When she left Australia she received a refund of the GST. What was Rita’s refund? (A) $80 (B) $88 (C) $792 (D) $800¤ « A » 17)! Gen05-6 Janet’s gross income last year was $60 000. She had allowable tax deductions of $5000. Janet paid 1×5% of her taxable income for the Medicare levy. How much was Janet’s Medicare levy? (A) $750 (B) $825 (C) $900 (D) $975¤ « B » 18)! Gen06-22 This income tax table is used to calculate Evelyn’s tax payable.

Taxable Income Tax on Taxable Income $0 - $20 000 Nil $20 001 - $45 000 Nil plus 10 cents for each $1 over $20 000 $45 001 - $70 000 $2500 plus 35 cents for each $1 over $45 000 $70 001 and above $11 250 plus 52 cents for each $1 over $70 000

Evelyn’s taxable income increases from $50 000 to $80 000. What percentage of her increase will she pay in additional tax? (A) 15×25% (B) 40×7% (C) 43×5% (D) 52%¤ « B »