This activity provides for a practical demonstration of the skills needed to prepare non-complex income tax returns for individuals in accordance with statutory requirements. This encompasses gathering and verifying data, calculating taxable income and ensuring compliance.

It is a requirement for this activity (as outlined in the unit informationfrom training.gov.au) that you have access to and the use of a range of common office equipment, technology, software and consumables.

Use the following information to complete a tax return for this client. Submit the completed return in a manner that is accepted by the taxation office. This can be an electronic or hard copy return.

As a tax agent you will not use the Individual Tax Return as supplied by the ATO. You will create a Statement of Income that will list all types of Income, less all types of Deductions to arrive at Net Income. You will work out the tax payable on the Net Income plus any levys and or gains. You will reduce the Tax payable by any Tax Offsets. You will show either a Refund amount from the ATO or a further Tax Liability.

Where necessary you will need to support the tax return using spreadsheets, databases and internet information.

In completing this activity you must show that you can apply statute, regulation and precedent to a clients circumstances, develop options to resolve client related taxation matters and plan and sequence your work correctly.

An existing client of many years provides this information for you to complete their current tax return.

Income

Employer:	ABC Imports
Gross salary:	$87,500
Allowances:	Allowance for company logo clothing $1,250
Interest from term deposit A/C #123456:	$400
Tax withheld:	$20,325
Allowable work deductions	$7,450 (receipts and log book supplied)
Union fees	$450
Dry cleaning of work clothing	$150
Non-working spouse and no children.
Private health membership was cancelled on July 1st of the income year.

Use the table and the information provided for 201516 to calculate the taxpayers taxable income and the liability for income tax. Provide reasons for your treatment.

Taxable income	Tax on this income
0 - $18,200	Nil
$18,201 - $37,000	19c for each $1 over $18,200
$37,001 - $80,000	$3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000	$17,547 plus 37c for each $1 over $80,000
$180,001 plus	$54,547 plus 47c for each $1 over $180,001

These rates do not include the Medicare levy of 2%, or the Medicare Levy Surcharge which is calculated at the rate of 1 to 1.5% of taxable income. Complete the calculation for each tax bracket and round all calculations to the nearest dollar. Do not use the ATO website withholding calculator as that might provide a slightly different figure.

These figures are only examples to be used for this activity and will not necessarily be accurate in terms of current ATO requirements.

Prepare a short report (23 pages):

What other information would you need to gather and how would it be used?

How would you verify your data and ensure compliance?

Are there any extra client related taxation matters that might need to be addressed? Explain.

Submit the completed tax return and the report.