Pat is a single 28-year-old resident who works as a project manager in Perth. During the 2021/22 income year, Pat earned $92,000 in salary, from which his employer withheld $22,256 in tax under the PAYG Withholding system. Pat has a reportable fringe benefits total of $4,400 for the year.

Pat has a savings account with ME Bank. His bank statement shows he earned $230 interest during the year, from which the bank withheld $108.10 in ‘TFN withholding tax’.

Pat holds shares in Commonwealth Bank of Australia Ltd from which he received a fully franked dividend of $375 during the year. The total franking credits allocated to the dividend (the franking credit amount) was $160.71. Pat knows from past experience that the correct treatment of franked dividends is to (i) include both the cash amount of the dividend and the franking credit amount in his assessable income, and (ii) claim a franking credit tax offset equal to the franking credit amount.

Pat sold his shares in Woolworths Group Ltd during the year and made a net capital gain of $2,324.

Pat has an investment property that he co-owns equally with his brother. Pat had financed his half of the purchase price of the property with a bank loan. During the year, Pat paid $7,222 in interest on his bank loan. The total rent received from tenants during the year was $22,880 and deductible rental property expenditure (council rates, utilities, insurance, and maintenance costs) totalled $4,446.

During the year, Pat incurred $800 of deductible work-related expenses, and he paid $400 in fees charged by a registered tax agent to prepare his 2020/21 income tax return. He also made a deductible donation of $200 to the Perth Children's Hospital Foundation.

Pat participates in a Lotto syndicate with a group of work colleagues. Each member contributes $10 a month to participate in lottery games. The syndicate won a total of $18,000 during the year, with Pat’s share being $1,000.

Part A: Tax liability statements

Prepare a statement showing Pat's taxable income and his tax liability for the 2021/22 income year under each of the following scenarios.
Consider all applicable offsets, credits and levies. Be sure to state whether Pat has additional tax to pay or is due a tax refund.

  For guidance on setting out your statement, you may find it helpful to refer to the sample income tax calculation at ¶8.10 of the textbook.

Scenarios

Scenario 1: Pat does not have private health insurance.

Scenario 2: Pat has private health insurance. 

  Pat has a complying health insurance policy with a registered health insurance provider.
  Pat paid premiums totalling $1,080 for the period 1 July 2021 to 31 March 2022 and $360 for the period 1 April 2022 to 30 June 2022.
  Pat has not elected to claim any private health insurance tax offset in the form of reduced premiums through his health fund.

  Consult the Australian Taxation Office website for details about the private health insurance tax offset.

Part B: Tax liability statement - Modified income

Return to the original case details and assume (as in Part A, Scenario 1) that Pat does not have private health insurance.

Assume now that instead of working full-time during the year, Pat worked on a part-time basis, earning half the full-time salary amount (0.5 FTE), and that the amounts stated in the first paragraph of the case details are as follows:

  Pat earned $46,000 in salary, from which his employer withheld $6,344 in tax under the PAYG Withholding system. Pat has a reportable fringe benefits total of $2,200 for the year.

Assume all other information remains the same.

Recompute Pat's tax liability under these revised assumptions.

Part C: Tax implications - HELP Loan

Assume now that Pat has an outstanding HELP loan of $5,934.

What effect (if any) does this new information have on the calculations you performed in (i) Part A - Scenario 1 and (ii) Part B?