The following questions are based on the material in Chapter 3:

Q5.3.5

(Taxable income from Australian and foreign sources)

Yvette Jankic, a resident single taxpayer aged 31, worked in New Zealand from 1 July 2017 until 15 November 2017 and has provided the following information for the 2017/18 tax year:

Receipts

Interest (net of TFN tax withheld $490) 510

Interest from United Kingdom (net of withholding tax $300) 2,700

Dividend from the U.S. state of Georgia (net of withholding tax $2,100) 3,900

Gross salary - Australian employment (PAYG tax $5,285 withheld) 21,000

Reportable fringe benefit as per PAYG Summary 6,252

Net salary - New Zealand employment (tax withheld $2,540) 12,650

Bonus from Australian Employer for exceptional performance 2,000

Payments

Interest and Dividend deductions relating to United Kingdom and Georgia investments 250

Work-related deductions relating to Australian employment 300

Note - Yvette does not have private health insurance.

a.Calculate Yvette's taxable income for the 2017/18 tax year.

Interest (Australia)$1,000

Interest (United Kingdom)$3,000

Dividend (USA)$6,000

Gross Salary - Australia$21,000

Gross Salary - New Zealand$15,190

Bonus from Australian Employer$2,000

Assessable Income$48,190

(Reportable Fringe Benefit is not included)

Less Deductions :

- Interest and Dividend Reductions from UK and USA$250

- Work related deductions relating to Aust. employment$300

Total deduction is$550

Total Taxable Income$47,640

b.Calculate Yvette's net tax payable or refundable for the 2017/18 tax year.

Tax payable is:

Tax on $47,640 ($3,572 + 32.5% x ($47,640 - $37,000)$ 7,030

Less: Low-Income Tax Offset ($445 - 1.5% x ($47,640 - $37,000))$285.40

$ 6,744.60

Add: Medicare Levy - 2% * $47,640$952.80

$ 7,697.40

Less: PAYG instalments tax withheld $5,285

Net TFN tax withheld Withholding (Tax on Australian Interest) $490

Foreign Income Tax Offset - limit$4,940

$10,715.00

Tax Refundable$3,017.60

*Foreign Income Tax Offset

Tax on $47,640 ($3,572 + 32.5% x ($47,640 - $37,000)$7,030

Less Tax on $23,700 (19% x ($23,700 - $18,200)$1,045

$5,985

However as Total Foreign Tax Paid is:

Withholding Tax on UK Interest is $300

Withholding Tax on USA Dividend is $2,100

Tax on New Zealand Employment is $2,540

Total Foreign Tax Paid$4,940

So we can only claim this amount as Foreign Income Tax Offset = ($4,940)

Can you check my working for both parts a and b