Jason is a sole trader in the architecture industry. For the year ending 30 June 2019, Jason hired a 3D model designer, Sarah, to help him with the growing business. At the end of the year he has the following information:

Sales revenue:	$ 280,000
Wage (Sarah):	$ 52,500
Other deductible expenses:	$ 112,500
Net income before tax:	$ 115,000

For the week ending on 30 June 2019, using the tax tables published by the ATO, answer the following questions:

1. Sarah worked for 35 hours. Her hourly wage rate is $30/hr. She claims the tax-free threshold. How much PAYG withholding amount should be deducted from her pay for the week?

Answer:

2. If Sarah discloses that she has an outstanding HELP loan balance, should Jason deduct more from her pay? If so, how much should be deducted for HELP repayment from her pay for the week?

3. If Sarah’s contract gave her the permission to use up to $3,000 worth of the 3D printing provided by the business for the year, what would be the impact on her HELP repayments?

For the year ending 30 June 2019, Jason has no other sources of income or losses carried forward. He was covered by a private health insurance for the full year.

Jason thought that he could apply the concessional small business tax rate (27.5%) and his estimated income tax payable for the year should be $31,625.

4. Advise Jason on his income tax liability. Ensure you explain to him if the small business tax rate applies to his situation and if he is entitled to any tax concessions.

5. If Jason withdrew $5,500 from the net income before tax and then paid the amount to his own superannuation fund, what would be the tax impact of this transaction?

Prior to her employment, Sarah was enrolled in a university degree course using HELP loan. She then started working in a small designing company in the previous financial year (2017-2018) and earned a gross wage of $52,500.

Based on her income level she was advised not to repay any HELP loan. In the current financial year (2018 - 2019) she has again earned a gross wage of $52,500. However, she heard that the government is reforming the HELP repayment system and this year she may be liable for repayment. She sent you the following link:

https://thenewdaily.com.au/news/national/2018/06/26/when-do-i-repay-university-debt/

6. Using information from reliable sources, compare the HELP repayment requirement for both years and explain the tax impact of the new requirement on Sarah’s income.