Taxation Essay Example

Taxation

Question 19

POLLY’S HAIRDRESSING

EXPENCES BUDGET

FOR THE QUARTER ENDING 30TH JUNE

Amount GST Total ($)

Amount GST Total ($)

Amount GST Total ($)

Advertising

Hairdressers wages

30000 30000

30000 30000

30,000 30000

Water, electricity, tele

400 40 440

400 40 440

400 40 440

5000 500 5500

5000 500 5500

5000 500 5500

Supplies

900 90 990

35,450 545 35,995

36,350 635 36,985

35,450 545 35,995

Question 20.

(Resident)

1st $6000 exempt

Next$(6001-43000) ×.15= 5550

Next$(43001-56239) ×0.30=3971.7

Total tax =$9521.7

Average rate of taxation =9521.7/56239 ×100% =16.93%

The amount is exempt from taxation.

Average taxation rate =0%

1st $ 6000 exempt

Next$ (6001-6823) ×0.15= 123.45

Total tax= $123.45

Average taxation rate = 123.45/6823×100%= 1.81%

1st $ 6000 exempt

Next$ (6001-37500) × 0.15= 4725

Total tax =$ 4725

Average rate of taxation = 4725/37500×100%

Average range

1st $6000 exempt

Next$ (6001-43000)× 0.15= 5550

Next$ (43001-76590)× 0.30= 10077

Total tax =$15627

Average rate of taxation =15627/76590×100%

1st $6000 exempt

Next$ (6001-43000)× 0.15=5550

Next $(430001-66000)× 0.30= 6900

Total tax=12450

Average rate of taxation= 12450/66000×100%

1st$ 6000 exempt

Next $(60001-35263)× 0.15=4389.45

Total tax= $4389.45

Average rate of taxation 4389.45/35263×100%

1st$ 6000 exempt

Next $ (6001-42369)×0.15=5455.35

Total tax =$5455.35

Average rate of taxation 5455.35/42369×100%

(Non resident)

1st $(0-37000) × 0.29= 10730

Next$(35001-56239) ×0.30 + 10730=17101.7

Total tax =$27831.7

Average rate of taxation 17101.7/56239×100%

1st $(0-4582)× 0.29= 1328.78

Total tax= $ 1328.78

Average rate of taxation 1328.78/4582×100%

1st $ (0-6823)× 0.29= 1978.67

Total tax= $1978.67

Average rate of taxation 1978.67/6823×100%

1st $(0-37000)× 0.29= 10730

Next$ (37500-35001) × 0.30 +10730= 11480

Average rate of taxation =11480/37500×100%

1st $(0-37000) =10730

Next$ (35001-76590)× 0.30 +10730 = 23207

Total tax =$ 23207

Average tax rate= 23207/76590×100%

1st $ (0-37000) × 0.29=10730

Next$ (35001-66000) × 0.30 +10730=20030

Total tax= $20030

Average taxation rate= 20030/66000×100%

1st$ (0-35236) ×0.29=10226.27

Total tax= $10226.27

Average taxation rate = 10226.27/35263

1st $ (0-37000) × 0.29=10730

Next $(42369-35001) ×0.30 +10730= 12904.4

Total tax =$ 12904.4

Average rate of taxation =12904.4/42369×100%

Question 21

  1. Seans part year tax free threshold for 2004-2005 income,

  1. Sean’s eligible deduction consists of his train fare to his first job and the fare he uses to travel from his first job to the next.

=$200+$ 200 = $400.

  1. Sean taxable income

For the year 2004-2005

Employment income 29000

Less allowable expenses (400)

Taxable income 28600

1st $ 6000 exempt

Next $ (60001-28600) × 0.15= 3390

Total tax = $ 3390.

Noel Sturt

Employment income

For the income year 2006-2007.

Gross payments 56800

Less allowable expenses

Course fees 2500

Textbooks 90

Student union fee 50

Donation to red cross 200

Sharpe financial calculator 220 3060

Total taxable income 53740

1st $6000 exempt

Next$ (6001-21600) × 0.17=2652

Next $(21601-53740) × 0.30 +2652= 12294

Total tax= $ 12294

Andrew Lee

Taxable income

For the period 2006-2007

Receipts of case from debtors 29200

Sickness benefits insurance policy after accidents 4300

Royalties from rights to a patented process 2000

Insurance recovery- trading stock destroyed non-taxable

Forfeited deposits by customers 2300

Rent received from caretakers’ residence 2560

Mortgage loan secured against private residence non taxable

Dividends BD Ltd

Interest state bank 500

Less payment

Employee wages 3400

Payment to creditors for trading stock 46200

Personal superannuation scheme contribution (350)

Insurance trading stock and work care 2360

Factory rental 30000

Drawings (10000)

Rates and taxes on factory (2500)

Subscription to local trade association 500

Donation to Red Cross appeal 460

Repayment of mortgage loan

Principal 00

Interest 2600

Accountancy fees 350

Postage, telephone, light 1600

Motor vehicle expenses 5400

Entertainment of clients at local hotel 560

Expenses related to stamping mortgage documents (450) (80130)

Taxable income (LOSS) -39770

Tax =nil.

  1. William will need to keep his records for four years.

  2. Cindy does not claim the cost of travelling from her second job to home.

  3. George’s business use percentage =( 6000/11000)100= 54.55%

  4. Terry cannot claim education expenses due to the fact that what she is studying is not related to her current occupation.

  5. Since Maria does not have any other source of income she cannot be taxed on the AUS Study payment

Business tax deduction

Individual tax deduction

Levied at a fixed percentage on goods and services

Levied on companies income at a fixed percentage

It is an indirect taxation

The taxation scale varies with the level of income

A direct tax on one’s income

  1. Taxation compliance records are very important to a business since a business needs evidence that it complies with all rules and regulation. this will help the business avoid getting into problems with tax authorities and the state which will guarantee a peaceful environment of doing business.

  2. An audit officer will be interested in the following records when doing a tax audit

-records relating to purchases

-records relating to sales

-the balance sheet

-profit and loss account

i) Fringe benefit tax is a tax that is levied on most non cash benefit provided by the employer.

j) Ms Cindy

Taxable income.

Salary 820

Interest 150

Pension exempt

Donation (40)

Total taxable income 930

Salary 820

Interest 150

Pension exempt

Total taxable income 890

References:

Tom, E (2010), Fundamentals of taxation, Macmillan, Sydney.