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Q1 (Superannuation lump sum and income stream) On 14 August 2017, Tammy Gochi, aged 53, retired from her job as chief executive officer of Megacorp

Q1

(Superannuation lump sum and income stream)

On 14 August 2017, Tammy Gochi, aged 53, retired from her job as chief executive officer of Megacorp Limited to commence service as a volunteer for Whalepeace International. She received a superannuation lump sum of $160,000 which entirely comprised an element taxed in the fund. PAYG tax of $34,500 was withheld from the lumpsum.

During the remainder of the 2017/18 tax year, Tammy also received a superannuation income stream benefit of $40,000 from the fund. PAYG taxof $9,780 was withheld from this amount. The entire amount was taxed in thefund.

Tammy's only other income during the 2017/18 tax year was gross salary of $36,290 for the period up to the date of her retirement. PAYG tax of $9,035 was withheld by her employer. Tammy has private hospitalinsurance.

Required:

a.Calculate Tammy's taxable income for the 2017/18 taxyear.

Gross salary = 36290

Super lump sum = 160,000

Sup income stream = 40,000

Total Assessable income is = 236290

b.Calculate Tammy's net tax payable or refundable for the 2017/18 taxyear.

Taxable income =236,290

Tax on taxable income =54,232 + 45% * (236,290 - 180,000 ) = 79,562.5

Add : Medicare levy = 2% * (236,290 -160,000)= 1525.8

Less : PAYG tax withheld = 34,500 + 9,780 + 9,035= 53315

Less :lump sum tax offset =

Tax payable =

Working on Lump sum tax offset :

Tax on taxable income = 54,232 + 45%* (236,290-180,000 ) = 79,562.5

Less : Tax wages= 0+19%*(36,290 -18,200)=3437.1

Tax on lump sum = in this part I have to use 15%

image text in transcribedimage text in transcribed
Payment to a dependant A death benefit ETP taxable component paid to a dependant beneficiary is taxed as follows: Tax-free up to $200,000 (the amount of the ETP cap). Taxable at the highest rate of 45% (plus Medicare Levy) for any amount in excess of the ETP cap of $200,000 - s.82-65(2). Payment to a non-dependant A death benefit ETP taxable component paid to a non-dependant is taxed as follows: Taxable at a maximum of 30% (plus Medicare Levy) up to the ETP cap of $200,000. Taxable at the highest rate of 45% (plus Medicare Levy) for any amount in excess of the ETP cap of $200,000. Whole-of-income cap and ETP tax offset The availability of the employment termination payment (ETP) tax offset has been limited. Since 1 July 2012, only that part of an affected ETP that takes a taxpayer's total annual taxable income (including the ETP) to no more than $180,000 receives the ETP tax offset.Superannuateon lump sums The taxable component of a superannuateon lump sum benefit is assessable and is taxed at marginal tax rates. A tax offset applies to limit the tax rate to a maximum of 20% (plus Medicare Levy) of the element taxed in the fund - s.301-35. Superannuateon income streams The taxable component of a superannuateon income stream benefit is assessable and is taxed at marginal tax rates (plus Medicare Levy). If the benefit is also a disability superannuateon benefit a tax offset of 15% of the taxable component applies - s.301-40. Summary of tax treatment of element taxed in the fund Age of recipient Lump sum Income stream 60 and over Tax-free (not assessable income or Tax-free (not assessable exempt income). income or exempt income). Assessable. Preservation age to Taxed at 0% on the first $200,000 in Assessable. 59 2017/18 (i.e. "the low cap amount"). Taxed at marginal rates. * Taxed at a maximum of 15% on any A 15% tax offset is available. excess over $200,000 in 2017/18. * Assessable. Below preservation Assessable. A 15% tax offset is available if age Taxed up to a maximum of 20%. * the benefit is a disability benefit. Departing Australia super payment DSAP tax 38%. (DSAP). DASP for Working Holiday Makers DSAP tax 65%. (WHM) plus 2% Medicare Levy in all cases where applicable. +

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