Income Tax Law Tax Return Australia

Requirement : FILL OUT THE TABLE BELOW after reading facts.

General Facts:

Zane Brown is employed as a lawyer at Copland Lawyers (a large law firm) in

Brisbane; he is an Australian resident for tax purposes. Zane has been working for

Copland Lawyers since he graduated from university. Zane is currently single, and

has no dependants.

Last year, Zane utilised the services of a local registered tax agent Tax King in Albion

to complete his 2016/17 income tax return. However, he was quite dissatisfied with

their service and has approached you to assist him in preparing his 2017/18 income

tax return.

Zane has supplied you with the following information relating to his personal income

tax affairs for the year ended 30 June 2018. However, he is not certain as to which

items are assessable or deductible. Accordingly, he asks you to carefully go through

each item to determine whether it is assessable or deductible. Zane advises you that

he wishes to minimise his 2017/18 taxable income wherever legally possible, and that

he does not wish to create a low value pool.

1. Personal information

Full Name: Zane Brown

Date of Birth: 26 September 1986

Main occupation: Lawyer

Tax File Number: 188 388 295

Telephone Number: (07) 3242 5432

Postal Address: 35 Prince Street

Newmarket QLD 4051

Home Address: As above

2. 2016/17 income tax return

On 10 May 2018, Zane received an invoice (dated 5 May 2018) for $550 from Tax

King for their work in completing his 2016/17 income tax return. Zane paid this on

12 May 2018.

Zanes 2016/17 notice of assessment showed he had additional income tax payable

of $2,455. As Zane paid this amount late (on 23 June 2018), the Australian Taxation

Office imposed a total of $178 in general interest charges (GIC), which Zane also paid

on 23 June 2018.

3. Salary and Wages

For the entire 2017/18 income year, Zane worked as a lawyer for Copland Lawyers

(as an employee).

Zane was provided with a PAYG Payment Summary from Copland Lawyers in relation

to the period 1 July 2017 to 30 June 2018, which revealed the following information:

Name of Payer: Copland Lawyers

ABN of Withholder: 52 470 422 737

Gross payments: $140,000

Allowances: - refer to note (a) $5,000

PAYG tax withheld: $44,200

Reportable employer superannuation contribution: $10,000

Note:

(a) The allowance (of $5,000) is made of up of the following:

a clothing allowance of $1,500,

a phone allowance of $1,000,

a professional development allowance of $2,500 (to attend legal

conferences, seminars and workshops, etc).

4. Interest

Zane maintains several bank accounts. He provides you with the following information

in relation to interest earned during the 2017/18 income year:

NAB transaction account (gross interest) - refer to note (a) $3

ING Direct savings account (net interest) - refer to note (b) $408

Suncorp Bank term deposit (gross interest) - refer to note (c) $1,660

Notes:

(a) The NAB bank account is Zanes ordinary transaction account and is where his

fortnightly pay from Copland Lawyers is deposited into.

(b) Zane opened his ING Direct savings account on

8 July 2017 as they offered a higher interest rate than his previous bank. When

opening the bank account, Zane was in a hurry and inadvertently forgot to

provide the bank with his tax file number. Accordingly, for the 2017/18 income

year, the bank deducted 49% TFN withholding tax ($392) in respect of the

interest earned. The net amount of $408 was credited to his account during the

2017/18 income year.

(c) On 28 July 2017, Zane deposited $60,000 in a six-month term deposit with

Suncorp Bank paying 3% p.a. interest. Rather than receiving the interest on the

maturity of the term deposit on 28 January 2018, Zane elected to rollover the

interest of $900 together with the principal of $60,000 for a further six months to

mature on 28 July 2018. Zane estimates that approximately $760 in interest

would be accruing on this new term deposit from 28 January 2018 to 30 June

2018.

5. Share Investments - Australian

Zane owns shares in several Australian listed public companies. During the 2017/18

income year, he received the following dividend income:

Company Name Date paid Cash received (franking percentage)

Wesfarmers 28 October 2017 $480 (fully franked)

Tabcorp 30 October 2017 $700 (60% franked)

Computershare 24 April 2018 $540 (unfranked)

In the case of all dividends received, the company tax rate was 30%.

In terms of the Wesfarmers dividend, Zane elected to take part in the companys

dividend reinvestment scheme. So instead of receiving the cash dividend of $480, on

28 October 2017, Zane was issued with 12 additional shares in Wesfarmers valued at

$40 each.

Fill out following table

Item 1 Salary and Wages

Salary	Assessable or not?	Amount assessable	Reasons/evidence
Copland Lawyers $140,000	Assessable	$140,000	Salary is ordinary income from personal exertion (as per the s 6(1) definition) and is therefore assessable under s 6-5 of the ITAA97. The gross salary earned is assessed rather than the net amount actually received
PAYG tax withheld Copland Lawyers $44,200
Reportable Employer Super Contribution (RESC): $10,000
Total assessable income		$ x

Item 2 Allowances, earnings, tips, directors fees etc.

Allowances, earnings, etc.	Assessable or not?	Amount assessable	Reasons/evidence
Clothing allowance $1,500
Phone allowance $1,000
Professional development allowance $2,500
Myer voucher $500
Frequent flyer points value $1,900
Total assessable income		$ x

Item 10 Gross Interest

Interest	Assessable or not?	Amount assessable	Reasons/evidence
NAB $3
ING Direct $408
ING Direct $392
Suncorp $1,660
Total interest assessable		$ x	Label L
TFN withheld		$ y	Label M

Item 11 Dividends

Item	Unfranked Amount assessable	Franked Amount assessable	Franking Credit	Reasons/evidence
Wesfarmers $480 (fully franked) [Taken as additional shares]
Tabcorp $700 (60% franked)
Computershare $540 (unfranked)
TOTAL	$ x Label S	$ x Label T	$ x Label U