Computation of the Taxable Income and the Tax Payable for Ethan Jones

Questions: Ethan Jones a Medical Registrar in a Melbourne Public Hospital earned a gross pay of $220,000 during the year finished 30 June 2014. He had PAYGW deducted of $73,000 from this pay. He pay relinquished $10,000 of his gross pay to an ATO directed superannuation subsidize. He got premium salary paid by the bank of $4,500 into his ledger. Anyway he didn't give a Tax File Number and assessment of was deducted of $3,682 from the intrigue determined for the year. He got profits of $7,000 from completely franked dispersions for the year finished 30 June 2014. He got extra pay and paid costs as follows: Unfranked profits of $30,000 Somewhat franked profits (franked to 20%) of $10,000. Capital misfortunes at a bargain of portions of $15,000. Overal deficit from carrying on an independent company of $25,000. Bank charges of $50 on his speculation account into which he banked his profits and premium. Duty Agents Fees of $800. General Interest Charge of $550 on late installment of his personal assessment bill for the year finished 30 June 2013. Sum was not requested until December 2013. Acquisition of a wager ticket for $150 from the Salvation Army. The prize was an engine vehicle. Blessing to Royal Childrens Hospital of $1. Membership to the Professional Cooks Association of $300. Clothing of $200 no receipts Stopping meter expenses on visiting customers $190 no receipts Defensive garments $290 no receipts Stopping fine of $170 on lapsed meter while visiting a customer Installment of $5,000 to ANR superannuation subsidize. Acquisition of a clinical brief case costing $600 for work. The short case was bought on 2/7/2014. Additional Information: Investment property Ethan Jones bought a Motel during the 2014 tax assessment year and got rental pay from the inn business administrator during the year finished 30 June 2014. Subtleties of the money related exchanges for the year finished 30 June 2014 were as per the following: Inn Purchased 1/9/2013 - land and structures 500,000 Inn Building Construction cost development in 2002 200,000 Home loan - Period of advance is 30 years 450,000 Inn was recorded by the Real Estate Agency accessible for Rent on 1/9/2013 Garage - fabricated 15/05/2014 18,000 Leased from 1/10/2013 13,000 Overal deficit on lease from fundamental home see below* 10,000 Overview charges on acquisition of property 800 Stamp Duty on Transfer of Land 32,000 Stamp Duty on Loan 500 Valuation charges re advance application 500 Advance Application Fees 600 Advance Mortgage Insurance (LMI) 8,000 Advance Establishment charges 700 Conveyancing charges on move of land 10,000 Home loan documentation - Bank 2,000 Home loan agent commission 3,500 Bank charges on Transfer of Land 1,400 Bank charges - speculation account 120 Venturing out to review investment property utilizing 6cylinder V6 - 3000 kms ? Capital Gain Ethan has capital resources yet chosen to discard the accompanying resources because of his obligation levels because of the acquisition of the inn Resource Cost Buy Date Date of Removal Continues House in Toorak 500,000 15/03/2009 16/05/2014 700,000 Offers in Coles Ltd 17,200 18/06/1997 17/03/2014 23,200 Offers in BHP Billiton 16,000 18/11/2008 19/04/2014 6,800 Ultralight airplane 13,000 18/01/2013 19/11/2013 14,000 Painting 600 03/03/1969 30/01/2014 25,700 Gold Watch 450 21/10/1985 29/12/2013 50,000 Houseboat 10,500 28/9/1987 29/06/2014 85,000 Notes: The House in Toorak was leased from date of procurement for the initial 3 years of possession. Ethan then involved the premises as his primary living arrangement. During the time of possession the property made a misfortune from the rental of $10,000, which was asserted by Ethan needs to guarantee as an expense derivation in his assessment form see above.* The Ultra-light airplane and the Houseboat were for Ethans own utilization. Ethan likewise has the accompanying capital misfortunes conveyed forward from the earlier year. Capital misfortune on the offer of Macquarie portions of $5,000. Capital misfortune from the offer of his troop which was wrecked in a fender bender of $5,500. Capital misfortune from the offer of a wedding band that was given by his ex of $3,500. Ethan wishes to limit his net capital additions. Required: Ascertain the available pay and the assessment payable for Ethan Jones corresponding to the year finished 30 June 2014. Answers: Ethan Jones Calculation of the Taxable Income and the Tax Payable for Ethan Jones for the year finished 30.06.2014 Specifics Subtleties Amount($) Profit sorted as close to home an) Income From Salary 1 137000.00 b) Interest Income 2 Nil c) Dividend Income 3 46950.00 A 183950.00 Salary From Business or Trade a) Small Business Misfortune (25000.00) b) Rental Income From Motel 4 111152.00 B 86152.00 Salary from Sale of Capital Assets 5 - C 77217.00 Net Total Income D =A+B+C 347319.00 Reasoning from the Capital Gain Income 6 E (6541.00) Available Income D-E 340778.00 Duty Payable on Above including Medicare Levy 7 136928.22 Table Showing Details 1. Calculation Of Income From Salary Pay got as compensation = $220000 Less : Deductions for PAYGW = $73000 Compensation penance as super pay penance = $10000 Available Salary Income of the Individual = $137000 2. computation of intrigue pay Intrigue Income got or gathered = $4500 Conclusion at source from the above pay = $3682 The above salary will not be remembered for the pay on the grounds that the expense has been as of now deducted from this pay. Since the Tax File Number was not presented the assessment was deducted at Highest Marginal Rate of Tax. 3. Salary Earned or Received as Dividends Franked Distribution = $7000 Conveyance of Unfranked nature = $30000 Halfway Part of the franked dispersion = $10000(20% of the aggregate sum) Costs deductible from the above wages = ($50)(Bank Charges) All out Dividend Income = $46950.00 Likewise there is qualification of credit from the above profit pay uniquely comparable to the franked ones adding up to = $7000 + 10000*20% = $9000 4. Investment property Income Here the most significant thing to note what is the aim of the assessee corresponding to the property being referred to. We have to take a gander at the point from where the expectation is available. The expectation is there from 1.09.2013. So this date shapes the premise of stipend of any use comparable to the property being referred to. Any cost brought about before this date will not be took into consideration finding while at the same time figuring the available rental pay. So there is a requirement for computation of the proportion for the costs caused equitably consistently. Complete number of days = 365 (Office) Reasonable period 01.09.2013 to 30.06.2014 comprises of 303 days. Thus the cost brought about equally during the year will be permitted up to this proportion. Rental salary receipt is from 01.10.2013. we can investigate every single point as following: an) Income from most recent 9 months = 13000*9 = $117000.00 b) Main home rental misfortune will be completely available adding up to $10000.00 c) The expenses paid for review are connected with the property cost. There isn't salary sway. d) Stamp obligation on move of the capital resource (land for this situation) is a piece of capital increase computation. e) Stamp Duty on credit part is to be included with the capital resources for which the advance was taken. f) Fees on valuation of the property will be suitable in the proportion of 303/365 adds up to $500*303/365 = $415. g) The expenses on credit application are a capital consumption. h) Loan contract protection is admissible in the proportion of 303/365 and since the rent time frame is 30 years then the sum again will be isolated by 30 = $221(8000*303/365*30) I) Loan foundation costs are not income. j) The expenses corresponding to the exchange of the land will be a piece of the capital addition figuring. So there is no treatment here. k) A proportionate derivation will be took into consideration the documentation charges according to the home loan $2000*303/365 = $1660 l) Mortgage Broker Commission is a roundabout cost according to the property advance. So this isn't reasonable. m) Bank charges regarding the exchange of the land will be managed in the capital addition part. n) Investment Account bank charges = 120*303/365 = $100 o) The sum for the voyaging costs acquired for Inspection of the property is permissible. Without any sum it is thought to be $1000. p) Borrowing costs according to the home loan are permitted uniquely for a piece of the 30 years and that too in the proportion determined. $450000/30*303/365 = $12452 Available Rental Income = 117000 + 10000-415-221-1660-100-1000-12452 = $11152 5. Figuring of the Capital Gain Income 6. a) House in TOORAK: If assessee is utilizing the property for primary living arrangement the whole property will be not available but rather the exclusion is accessible proportionately if the assessee isn't utilizing the spot for own home. Fractional exclusion is determined as follows: Absolute Capital Gain * Number of days the property was utilized for own living arrangement/all out long stretches of possession. For this situation the assessee has a property since 15.03.2009 yet for multi year the property was leased. The deal date is 16.05.2014. So the assessee is qualified for a halfway exclusion as it were. The measure of halfway exception will be determined as talked about in the recipe. S