Question

1. For the purpose of the Medicare Levy Surcharge, what are reportable superannuation contributions and reportable fringe benefits, and how do these amounts effect the calculation of the Medicare Levy Surcharge?

2. What is Goods & Services Tax (GST) and how does the GST effect the preparation of an income tax return?

3. List and describe the key sources of information and data required to calculate taxable income

country: Australia

Answer 1

Part-1) The Medicare levy surcharge (MLS) is levied on Australian taxpayers who do not have an appropriate level of private patient hospital cover and earn above a certain income.

MLS is designed to encourage individuals to take out private patient hospital cover and to use the private hospital system to reduce demand on the public Medicare system.

Reportable fringe benefits amount

You have a reportable fringe benefits amount if the total taxable value of certain fringe benefits provided to you or your associate (for example, a relative) exceeds $2,000 in an FBT year (1 April to 31 March). Employers are required to gross-up this amount and report it on your payment summary.

The total amount of reportable fringe benefits you receive from all your employers for a year is called your reportable fringe benefits total

Reportable fringe benefits - facts for employees

• Reportable fringe benefits – facts for employees

  This information is for employees who receive fringe benefits from their employer and have the taxable value of those benefits recorded on their payment summary.

  Reportable fringe benefits amount

  You have a reportable fringe benefits amount if the total taxable value of certain fringe benefits provided to you or your associate (for example, a relative) exceeds $2,000 in an FBT year (1 April to 31 March). Employers are required to gross-up this amount and report it on your payment summary.

  The total amount of reportable fringe benefits you receive from all your employers for a year is called your reportable fringe benefits total.

  Amounts reported on your payment summary

  The reportable fringe benefits amount shown on your payment summary for an income year (1 July to 30 June) is the grossed-up taxable value of the reportable benefits provided in the previous FBT year (1 April to 31 March).

  For example, the reportable fringe benefits amount on your payment summary for the year ending 30 June 2019 would be the grossed-up taxable value of the reportable benefits provided from 1 April 2018 to 31 March 2019.

  Employment finished between 1 April and 30 June

  You may finish employment between 1 April and 30 June, and your employer has provided you with fringe benefits exceeding a total of $2,000 during this time. Your employer must show the reportable fringe benefits amount on your payment summary for the income tax year ended 30 June in the following year. This is even though you won't have received any salary or wages from that employer in the following income year.

  Your employer has until 14 July following the end of the income year covered by the payment summary to provide you with a payment summary.

  Example: Finishing employment

  Joan finishes employment with her employer on 15 May 2018. From 1 April 2018 to 15 May 2018, Joan receives fringe benefits from that employer with a reportable value of $4,000.

  Joan's employer is required to report this reportable fringe benefits amount on Joan's payment summary for the income year ended 30 June 2019. Joan's employer has until 14 July 2019 to issue the payment summary.

• Effect the calculation of the medicare levy surcharge-

• As a single, you’ll pay 1% if your taxable income is above $90,000, 1.25% if you earn over $105,000, and the maximum rate of 1.5% if you earn over $140,000. Couples and families are taxed based on their combined taxable income. Couples will pay a 1% levy on a combined income of over $180,000, 1.25% on a combined income of over $210,000, and the maximum rate of 1.5% if they have a combined earning over $280,000.
  
  Still confused? We’ve outlined the three tiers in this handy table so you can see where you fit in.

  	No Charge	Tier 1	Tier 2	Tier 3
  Singles	Less Than $90,000	$90,001-$105,000	$105,001-$140,000	$140,001+
  Couples and Families	Less Than $180,000 (combined)	$180,000-$210,000 (combined)	$210,001-$280,000 (combined)	$280,000+ (combined)
  Medicare Levy Surcharge	0%	1%	1.25%	1.5%

  
  If you have two or more dependent children, the family threshold will increase by $1,500 for each dependent child after the first child². If you’re subject to the Medicare Levy Surcharge, everyone in your family will need coverage in order to not pay the levy.

• part-2)

• What is GST?

• GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

  • In other words,Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

  • Goods and Services Tax in Australia is a value added tax of 10% on most goods and services sales, with some exemptions and concessions. GST is levied on most transactions in the production process, but is in many cases refunded to all parties in the chain of production other than the final consumer.

  • Effect on preparation of an income tax return-

  • While businesses across the nation are now preparing to set up the infrastructure for GST implementation the Income Tax authorities, too, are taking proactive measures to catch wrongdoers whose book of accounts show evidence of deliberate discrepancies – in comparison to their GST returns – made for tax evasion.

    It has been noticed at times that businesses report a different value of stock in their annual VAT return as compared to their Income Tax return. This valuation is sometimes inflated to show higher profits to maintain the credit score against the loans taken from the bank, while on the other hand, many SMEs deflate the value of stock to attract less tax liability.

  • Part-3)sources of information and data required to calculate taxable income-

  • Your taxable income is the income you have to pay tax on. It is the term used for the amount left after you have deducted all the expenses you are allowed to claim from your assessable income.

    Here's a step by step guide on how to calculate one's total taxable income: As per the income tax laws, a person can have a total of 5 sources of income which are: Income from salary, Income from House Property, Income from Business or Profession, Income from Capital Gains, Income from Other sources.