Tom is a single 25-year-old engineer who works in Perth. During the 2020/21 income year, Tom earned $110,000 in salary, from which his employer withheld $28,444 under the PAYG Withholding system. Tom has reportable superannuation contributions of $10,000 and a reportable fringe benefits total of $5,000 for the year. Tom earned $160 in interest during the year on a savings account he has with Bankwest. The bank statement shows a ‘TFN withholding tax’ amount of $75.20 in relation to the interest earned. Tom holds shares in Telstra Corporation Ltd from which he received franked dividends totaling $400 during the year. The total franking credits allocated to these dividends (the franking credit amount) was $171.42. Tom knows from past experience that the correct treatment of franked dividends is to (i) include both the cash amount of the dividends and the franking credit amount in his assessable income, and (ii) claim a franking credit tax offset equal to the franking credit amount. Tom sold his shares in Fortescue Metals Group Ltd during the year and made a net capital gain of $1,246. Tom has an investment property that he co-owns equally with his brother. Tom financed his half of the purchase price of the property with a bank loan. Tom paid $6,550 in interest on the bank loan during the year. The total rent received from tenants during the year was $20,800 and deductible rental property expenditure (council rates, utilities, insurance, maintenance costs) totaled $3,860. 

Tom is entitled to the following additional deductions: $600 for a professional conference he attended $375 for fees charged by a registered tax agent to prepare his 2019/20 income tax return Tom participates in a Lotto syndicate with a group of work colleagues. Each member contributes $10 a month to participate in lottery games. The syndicate won a total of $24,000 during the year, with Tom’s share being $600. During the year, Tom made a tax-deductible donation of $100 to the Perth Children's Hospital Foundation.

Scenario 1: Assume Tom does not have private health insurance.

Scenario 2: Assume Tom has private health insurance. 

Tom has a complying health insurance policy with a registered health insurance provider. Tom paid premiums totaling $1,080 for the period 1 July 2020 to 31 March 2021 and $360 for the period 1 April 2021 to 30 June 2021. Tom has not chosen to claim any private health insurance tax offset in the form of reduced premiums through his health fund. Consult the Australian Taxation Office website for details about the private health insurance tax offset.

Scenario 3: Modified income

Return to the original case details and assume (as in Scenario 1) that Tom does not have private health insurance. Now assume that Tom worked for only half of the year of income and, accordingly, that the amounts stated in the first paragraph of the Case details (salary, PAYG withholding, reportable superannuation contributions, and reportable fringe benefits total) are all halved. All other information remains the same.

Recompute Tom’s tax liability under this scenario.

Assume now that Tom has an outstanding HELP loan of $6,476. Explain the taxation implications (if any) of Tom’s HELP loan under the above scenarios.