Calculation of Income Tax Case Study Free Sample for Students

Questions: 1.Calculate the Net Income Tax Payable or refund due to the taxpayer for the 2015/2016 tax year. State the Specific Taxation Rules relevant to the above events to Support your Arguments and Calculations.2. Determine whether the above Events are assessable during the year ending 30 June 2016? Ensure you State the Specific Legislation, tax rulings and Case Law to Support your answer.3. Calculate the Amount of tax to be withheld by the Employer due to the Termination of her Employment. Answers: 1.Income of Mr Marc for the year ending on 30th June 2016: (Amount in $) Salary (6-5 ITAA97): 48000 Annual leave compensation received (6-5 ITAA97): 2500 Travel allowance (6-5 ITAA97): 1000 Worker compensation (Note 1): 5000 Interest Income (under subsection 6-5 (4)): 1000 Amount received as get well gesture: 500 Assessable Income: 58000 Calculation of income tax payable for the tax year 2015-16 Year 2015-16 ( Amount in $) Calculation of income tax payable by Mr Marc Particular Income Dividend Capital Gain Tax already paid Gross salary 48000 11500 Annual leave compensation 2500 Travel allowance 1000 Worker Compensation 5000 Interest income on term deposit 1000 150 Amount received as get well gesture 500 Total Income 58000.00 0 11650 Deductions (note 2) 500 Adjusted Income 57500 Personal allowance 10600 (Note: In present case as the income is below than 100,000 ; thus personal allowance will be provided) Taxable Income 46900 Tax (working note 3 ) 7213 Already Paid (note 4) Refund 4437 Working Notes Amount in $ Note -1 Worker Compensation In accordance with the case law (FCT v Dixon (1952) 86 CLR 540; replacement principle will be applied at amount received as worker compensation will be taxable, and rest amount will be exempted (Barkoczy, 2016). 5000 Note -2 Deduction Amount paid for firefighting gear 500 Note 3 Calculation of Tax 0-16227 0 0 16227-37000 19% 3946.87 37001-46900 32.5% 3217.00 Total Tax 7164.00 FBT $ 500 (1-49%) 980 Tax = 980 *49 % 49 Total tax 7213 Note-4 Tax already deducted Tax deducted by employer 11500 Tax deducted by bank 150 Total 11650 2.Determination of taxability of events By considering the provided case study, there are three events two are redundancy package and Payment in lieu of annual leave provided by the employer and last one is Rent free benefit received in the lease. In accordance with the Australian Taxation office, in the case where genuine redundancy at the time of termination then same will be taxable but at concessional rates. Same is supported in taxation ruling of TR 2009/2 (Redundancy payments, 2016). Same provisions are applied in case if payment is received in against of lieu of annual leave. This provision is covered under Section 15-25 of Taxation Administration Act 1953 (TAA). However, in the case of rent free lease for 6 months is not taxable the covered period is covered under concession lease terms. Further, the landlord is not in a position to get a deduction as rent is not payable by the tenant consequently it will not be considered income Jane Nobles. 3.Amount of tax to be withheld by employer Particulars Amount Payment related to genuine redundancy $529 (WN 1) Payment in lieu of annual leave $5600 Rent free benefit - Total taxable income $6129 Tax rate (inclusive of 2% medical levy) 17%(WN 2) Tax to be paid $1042 Working note 1 Redundancy benefit is not taxable up to a certain extent. By considering provisions of 2016/17 exempt amount is $9,936 along with $4,969 to be multiplied by years served by an employee. Exempt amount =$9936 + $4969*15 =$84471 Taxable amount: =$85000-$84471 =$529 Working note 2 ETP will be concessional taxed at a maximum of 32% in case age of the individual is below 55) and 17% will be applied if age is 55 or higher. This rate is inclusive of 2% medical levy up to the income of $195000. On higher income, tax to be paid at the rate of 47% (Australian tax legislation, 2002). References Australian tax legislation 2002. (2002) (1st ed.). Pyrmont, N.S.W. Barkoczy, S. (2016), Core Tax Legislation Study Guide, 19th edn, Oxford University Press. Cheng, H., Yang, C. (2013). Some Taxation Theorems in the Hotelling Model.Australian Economic Papers,52(3-4), 143-158. https://dx.doi.org/10.1111/1467-8454.12013 LAFFER, K. (2008). TAXATION REFORM IN AUSTRALIA.Economic Record,18(2), 168-179. https://dx.doi.org/10.1111/j.1475-4932.1942.tb02666.x Redundancy payments. (2017).Ato.gov.au. Retrieved 28 March 2017, from https://www.ato.gov.au/Individuals/Working/Working-as-an-employee/Leaving-your-job/Redundancy-payments/