Questions. - Taxation Law 2024 By Black, Obst, Hanegbi, Joga...

Solutions Manual for Principles of Taxation Law 2024 By Black, Obst, Hanegbi, Jogarajan, Sadiq, Walpola, Clements, Krever (All Chapters 3-26, 100% Original Verified, A+ Grade) This is the Original Solutions Manual for 2024 Edition, All Other Files in The Market are Fake/Old Questions.No Questions for Solutions in Chapter 1 & 2. 1 / 4

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Principles of Taxation Law 2024

Answers to Questions

CHAPTER 3 – THE TAXATION FORMULA

Question 3.1

What is the basic income tax payable for an Australian resident individual with taxable income

for the 2023–24 income year of:

(a) $15,000?(b) $50,000?(c) $150,000?(d) $300,000?

Answer (a) Taxable income is below the $18,200 tax-free threshold; therefore no tax is payable.(b) First $18,200 → no tax payable.$18,201 to $45,000 = $26,800 x 19% = $5,092 $45,001 to $50,000 = $5,000 x 32.5% = $1,625 Therefore basic income tax payable = $6,717 (c) First $18,200 → no tax payable.$18,201 - $45,000 = $26,800 x 19% = $5,092 $45,001 to $120,000 = $75,000 x 32.5% = $24,375 $120,001 to $150,000 = $30,000 x 37% = $11,100 Therefore basic income tax payable = $40,567 (d) First $18,200 → no tax payable $18,201 - $45,000 = $26,800 x 19% = $5,092 $45,001 to $120,000 = $75,000 x 32.5% = $24,375 $120,001 - $180,000 = $60,000 x 37% = $22,200 $180,001 - $300,000 = $120,000 x 45% = $54,000 Therefore basic income tax payable = $105,667

Refer to [3.200].

Question 3.2

What is the basic income tax payable for a foreign resident individual with taxable Australian

income for the 2023–24 income year of:

(a) $15,000?(b) $50,000?(c) $150,000?(d) $300,000?

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Answer (a) Tax payable = $15,000 x 32.5% = $4,875 (no tax free threshold for foreign residents).(b) Tax payable = $50,000 x 32.5% = $16,250 (no tax free threshold for foreign residents).(c) Tax payable = ($120,000 x 32.5%) + ($30,000 x 37%) = $ 50,100 (d) Tax payable = ($120,000 x 32.5%) + ($60,000 x 37%) + ($120,000 x 45%) =

$39,000 + $22,200 + $54,000 = $115,200

Refer to [3.200].

Question 3.3 Calculate the Medicare levy payable (if any) for the year ending 30 June 2024 on the following amounts for a single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset (assume the same “threshold amount” and “phase-in limit” as for the

2022-23 income year):

(a) $20,000 (b) $27,000 (c) $35,000

Answer (a) $20,000 → full exemption from Medicare levy as a low income earner (below

the “threshold amount”): see [3.60].

(b) $27,000 → reduced Medicare levy payable because taxable income below

“phase-in limit”: see [3.60].

Medicare levy payable = ($27,000 - $24,276) x $0.10 = $272.40

(c) $35,000 → Medicare levy payable = $35,000 x 2% = $700: see [3.50].

Question 3.4 Calculate the Medicare levy surcharge payable (if any) on the following taxable income amounts for a single Australian resident taxpayer who does not have private health insurance for the entire income year.

(a) $50,000 (b) $100,000

Answer (a) $50,000 → No Medicare levy surcharge payable as below the threshold of

$93,000: see [3.80].

(b) $100,000 → Medicare levy surcharge payable at a rate of 1%. Medicare levy

surcharge = $100,000 x 1% = $1,000: see [3.80].

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Question 3.5 Following on from 3.4, calculate the Medicare levy surcharge payable if the individual had private health insurance for 100 days in the income year.

Answer (a) $50,000 → No Medicare levy surcharge payable as below the threshold of

$93,000: see [3.80].

(b) $100,000 → Medicare levy surcharge payable at a rate of 1% reduced for any days when the taxpayer had private health insurance.

Medicare levy surcharge = $100,000 x 1% x (365-100/365) = $726.03: see [3.80].

Question 3.6 Jill is an Australian resident for tax purposes. She has assessable income of $500,000. She has deductions of $100,000 and franking credit tax offsets of $30,000. What is Jill’s tax payable for the 2023–24 income year?

Answer • Income tax payable = (Taxable Income x Rate) – Tax Offsets: s 4-10 of ITAA 1997.

• Taxable income = assessable income less deductions: s 4-15 of ITAA 1997.

• Jill’s taxable income = $500,000 - $100,000 = $400,000.• Income tax payable = $150,667 - $30,000 (franking credits) = $120,667 See [3.120].

Question 3.7 Acme Pty Ltd has determined that its assessable income for the year is $789,000 and it has deductions of $300,000. What is Acme’s tax payable for the 2023–24 income year? Assume that Acme’s turnover is $250 million.

Answer • Income tax payable = (Taxable Income x Rate) – Tax Offsets: s 4-10 of ITAA 1997.

• Taxable income = assessable income less deductions: s 4-15 of ITAA 1997.

• Acme’s taxable income = $789,000 - $300,000 = $489,000.• Income tax payable = $489,000 x 30% = $146,700.

See [3.120].

Question 3.8 Linley is an Australian resident for income tax purposes. She has taxable income of $300,000.She has been provided with a receipt for an expense in the amount of $10,000. This expense will constitute a deduction. How much tax will Linley save for the 2023–24 income year as a result of the additional deduction?

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