Question
Income Tax Law Tax Return Australia Requirement : FILL OUT THE TABLE BELOW after reading facts. General Facts: Zane Brown is employed as a lawyer
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 |
|
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