Question

Queston:

Jack is a 50-year-old resident from Sydney who is single and employed as a legal practitioner. During the 2018/19 income year, he earned salary of $130,000. He also owned an investment property in Melbourne for which he derived rent of $10,000. Additionally, Jack is a shareholder in a company from which he received franked dividend off $6000. He is also a beneficiary of a family trust and was entitled to $15,000 of the income of the trust estate.

During the income year, Jack undertook a professional development course which costed $800. He also works from home on a part-time basis for which $700 was the depreciation value of the computer that he uses in his study at home for work related matters. He decided to repair the fence of his investment property which costed him $6000 and in the previous income year, he paid $500 to an accountant to prepare his tax return. He had a private health insurance for the whole income year and does not have any outstanding help debt.

Calculate Jacks Income Tax Liability for the 2018/19 income year.

Taxpayers, who earn over $26,668/year, pay a Medicare Levy of 2% of their taxable income.

Australian income tax rates between 2018/19 (residents)

Income thresholds Rate Tax payable on this income

$0 – $18,200 0% Nil

$18,201 – $37,000 19% 19c for each $1 over $18,200

$37,001 – $90,000 32.5% $3,572 plus 32.5% of amounts over $37,000

$90,001 – $180,000 37% $20,797 plus 37% of amounts over $90,000

$180,001 and over 45% $54,097 plus 45% of amounts over $180,000

Answer 1