course material

1. Australian Taxation Law
Australian Taxation LawAustralian Taxation LawPermalink: https:// /australian-taxation-
law/Please determine the calculated correctly………………… According to the Australian Tax
Office, which is the body responsible for collection of tax on behalf of the Australian
government, the following are the Personal Income Tax rates applied in the year
2011/2012.Taxable Income RangeTax on this Income0 – $6,000Nil$6,000 – $37,00015c for
each $1 over $6,000$37001 – $80,000$4,650 plus 30c for each $1 over $37,000$80,001 -
$180,000$17,550 plus 37c for each $1 over $80,000$180,001 and Over$54,550 plus 45c for
each $1 over $180,000 Individual Tax Liability is calculated as follows:Determine the
Taxable Income. This includes that Salaries/Wages and Interests received, less all expenses
incurred in acquiring this income. This expenses may be travelling expenses, dues to union
bodies and other personal deductions such as various tax related expenses.After
determining the Taxable Income, apply the necessary tax rates depending on which bracket
the Income lies to determine the gross tax payable.By subtracting any rebates or tax offsets
you derive the Net Tax Payable.A 1.5% Medicare Levy is mandatory and is added to the
taxpayer’s taxable income. The Medical levy may however e increased of decreased in the
case of an exemption or surcharge
reduction.Salary XXInterests
XXAssessable Income XXLess:
Subscriptions XXMembership
fee XX (XX) Taxable
Income XXGross Tax Payable(% of Taxable
Income) XXLess: Rebate on Medical
expense (XX)Ordinary Tax
Payable XXAdd: Medical Levy (1.5% × Taxable
income) XX 2011/2012 Tax Payable XXCapital gain,
though referred to separately is included in the individual’s income proceeds. It is the
proceeds arising from the sale or disposal of an asset. A Capital Loss may however also
occur incase the proceeds from the sale of the asset are less than the cost of acquisition of
the asset.Capital Gain of the Asset = Proceeds from Sale – Cost of Acquiring the
AssetProceeds from Sale = Selling Price – Cost of Sale= $305,000 – (6,000 + 600)=
$298,400Cost of Acquiring Asset = Buying price + Cost of Purchase= $85,000 + $5,000=
$90,000Capital Gain of the Asset = $298,400 – $90,000= $208,400From the calculation
above, it is therefore evident that from the sale of the House, James realized a Capital Gain of

2. $208,400. There are not Capital losses in the current or previous years. The business has
also been in existence for more than a year. According to the 1999 indexation on capital
gains, the Company Gain realized should be discounted by 50%Therefore, Net Company
Gain = 50% × $208,400= $104,200In the determination to James’ Taxable Income and his
Tax Payable for the year 2011/2012 as indicated below, there were various entries I
included and considered leaving out some. The Salary in this calculation was necessary as it
was the key item to be taxed when considering Taxable income. Judging from the fact that
the income of $95,000 was well past the taxable threshold, it as necessary that it be
included. Rent realized in the current year of $6,400 by James is also considered as part of
his income and is thus taxable.The disposal of the House raised money that after
calculations yielded a Capital Gain and as such it was necessary to include it in the
determination of Taxable income and Tax payable. If there were capital losses in the current
or previous years that had not been deducted off other periods’ Capital gains, it would have
been included. However, the year’s Capital gain calculation was straight forward and
involved subtracting the cost of acquiring the asset, which was the price of purchase of the
house and the costs involved in its purchase, from the proceeds of the sale which included
the selling price less the legal costs and agent commission.Management commission, repairs
to the fence, repaint of the stairs, replacement of the hot water system are all expenses
involved in the generation of the stated incomes. Expenses such as legal fees, agent
commission, and cost of purchase are however included in the direct calculation of the Cost
of Sale and purchase of the asset. Proceed from the sale of scrap is however omitted. This is
due to the fact that this is disposal of an already fully depreciated item. It is therefore not
taxable.James’ medical expenses for he year amounted to more than $2,000. A rebate is
therefore available to him. Normally the rebate would therefore be 20% of the excess
amount over $2,000. In the statement however, rebate amount have already been
scheduled. Contributions paid to health insurance funds do not qualify for rebate. This is
why the rebate from Medibank a private health insurance cover was not liable. The rebates
from the general practitioner and the dental work were liable.$ $Salary 95,000.00Net
Capital Gain 104,200.00Rent for the Year 6,400.00 Assessable
Income 205,600.00Less:Management Commission640Repairs to Fence1500Repaint
Stairs1200Hot water System Replacement4500New Air-
conditioner900 8,740.00 Taxable Income 196,860.00Gross Tax Payables$54,550 + (0.45
× 16,890) 62,137.00Less: Rebate on Medicare expense20% × (3300 –
2000) 260.00 Ordinary Tax Payable 61,877.00Add: Medicare Levy(1.5% ×
196,860) 2,952.902011/2012 Tax Payable 64,829.90ReferencesCarr, Edwin et al
Australian Master Tax Guide (2001)Leibler, Arnold (2010) Australian Guide to Legal
CitationAustralian Taxation Office (24 November
2011) http://www.ato.gov.au/content/00208572.htm Place your order now……………….