Q1 (Tax calculation for family)

Fred, a resident taxpayer aged 47, has taxable income of $145,345 and reportable fringe benefits of $17,170. During the year Fred has paid PAYG tax instalments totalling $13,480. His wife, Jani, has taxable income of $27,000.

They have seven children and no private health insurance.

Medicare Levy Surcharge rate for families ( no Trier ) is = $180,000 or less ,for (Trier 1) is = $180,001 210,000 , for (Trier 2 ) is = $210,001- 280,000 ,for (Trier 3) is = $280,001 or more.

Medicare Levy Surcharge rate for ( No Trier ) is = nill

Medicare Levy Surcharge rate for ( No Trier1 ) is = 1%

Medicare Levy Surcharge rate for ( No Trier 2 ) is = 1.25%

Medicare Levy Surcharge rate for ( No Trier 3 ) is = 1.5%

The Medicare Levy Surcharge is payable for number of days a taxpayer or any of their dependants did not have a private patient hospital cover and income for surcharge purposes or combined family income for surcharge purposes was above the relavent threshold.The MLS is calculated at the rate applicable to taxpayers income for surcharge purposes as per the above taxable of income Tier thresholds. However the amount of MLS is calculated on taxpayers taxable income plus reportable fringe benefits ,unlike the Medicare levy which is based solely upon taxpayers taxable income.

Required: Calculate Freds net tax payable for the 2017/18 tax year.

Tip: Check if Medicare Levy Surcharge will apply to Fred and, if applicable, include in your calculations.

Q2 (Foreign Pension)

Elizabeth Windsor is 59 years old. She is a resident taxpayer with private health insurance. She also received a government pension from the United Kingdom that is taxable in Australia but not in the United Kingdom. Elizabeth is subject to tax as an Australian resident taxpayer but exempt from tax in the United Kingdom.

During the 2017/18 tax year, Elizabeth derived interest and unfranked dividends of $39,000 and also received $25,000 of pension.

Foreign pensions :

United kingdom = 8% of the annual amount of pension received.

The 15% tax offset is not available for taxpayers aged less than 56 years unless they retire due to permanent disability.

Less than 56 = no tax offset

56 to less 60 = 15% tax offset

60 and over 10% tax offset if in relation to untaxed element or no tax offset if in relation to taxed element which is tax free.

Required:

1. Calculate Elizabeths taxable income for the 2017/18 tax year.
2. Calculate Elizabeths tax payable or refundable for the 2017/18 tax year.