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%

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. +