Question 6 Individual Tax Liability (12 marks) Brendan Marley is a New Zealand tax resident. He works full time at Mitre 10 Mega. He is also a musician and works part time at the local bar on Fridays and Saturdays. Brendan received the following gross amounts during the income year ended 31 March 2020. Ref 1 2 3 4 5 6 7 8 9 10 Description Salary Bar income Interest Garage sale receipts Dividends Tips Board fees Lotto- Powerball winnings Free Holiday voucher Loan Source Mitre 10 Mega Local bar ANZ Bank Various people Mercury Energy Ltd Various fans School Board of Trustees LOTTO New Zealand Mitre 10 Mega Kiwi Bank Amount $ 58,000 15,000 200 1,000 600 400 980 750 350 14,000 Supplementary Notes - the numbers in this section refer to the items in the table above. 1. PAYE of $10,420 was deducted by Mitre 10 Mega. 2. Brendan worked part time as a musician at the local bar (as an independent contractor). 3. Brendan provided his ID number to ANZ Bank and RWT was deducted at 30%. 4. Brendan had a garage sale to sell items that he did not need. 5. This dividend from Mercury Energy Ltd was fully imputed and an appropriate amount of RWT was deducted. 6. Brendan received cash tips from his part time work at the local bar. 7. Brendan is on the Board of Trustees of the local primary school. Withholding tax of $280 was deducted from this amount. 8. Brendan won various amounts playing Lotto during the year. 9. To recognise 20 years of service, he received a $500 gift voucher from Mitre 10 Mega 10. Brendan took a loan of $14,000 from BNZ to renovate his house. Brendan made the following payments during the income year ended 31 March 2020: Fees of $750 to you for preparing his income tax return. Income protection insurance premiums $860. Provisional tax $3,800. Cost of transporting musical instruments to local bar where he works as a musician $2,600. Required: (a) For the year ended 31 March 2020, calculate Brendan's income tax liability and the terminal tax to be paid or tax refund. Show all workings in the form of an IR3 return. (10 marks) (6) Explain with reasons the incomes/receipts and payments/expenses not included in the calculation. (2 marks) Question 6 Individual Tax Liability (12 marks) Brendan Marley is a New Zealand tax resident. He works full time at Mitre 10 Mega. He is also a musician and works part time at the local bar on Fridays and Saturdays. Brendan received the following gross amounts during the income year ended 31 March 2020. Ref 1 2 3 4 5 6 7 8 9 10 Description Salary Bar income Interest Garage sale receipts Dividends Tips Board fees Lotto- Powerball winnings Free Holiday voucher Loan Source Mitre 10 Mega Local bar ANZ Bank Various people Mercury Energy Ltd Various fans School Board of Trustees LOTTO New Zealand Mitre 10 Mega Kiwi Bank Amount $ 58,000 15,000 200 1,000 600 400 980 750 350 14,000 Supplementary Notes - the numbers in this section refer to the items in the table above. 1. PAYE of $10,420 was deducted by Mitre 10 Mega. 2. Brendan worked part time as a musician at the local bar (as an independent contractor). 3. Brendan provided his ID number to ANZ Bank and RWT was deducted at 30%. 4. Brendan had a garage sale to sell items that he did not need. 5. This dividend from Mercury Energy Ltd was fully imputed and an appropriate amount of RWT was deducted. 6. Brendan received cash tips from his part time work at the local bar. 7. Brendan is on the Board of Trustees of the local primary school. Withholding tax of $280 was deducted from this amount. 8. Brendan won various amounts playing Lotto during the year. 9. To recognise 20 years of service, he received a $500 gift voucher from Mitre 10 Mega 10. Brendan took a loan of $14,000 from BNZ to renovate his house. Brendan made the following payments during the income year ended 31 March 2020: Fees of $750 to you for preparing his income tax return. Income protection insurance premiums $860. Provisional tax $3,800. Cost of transporting musical instruments to local bar where he works as a musician $2,600. Required: (a) For the year ended 31 March 2020, calculate Brendan's income tax liability and the terminal tax to be paid or tax refund. Show all workings in the form of an IR3 return. (10 marks) (6) Explain with reasons the incomes/receipts and payments/expenses not included in the calculation. (2 marks)
