Provide all the details of the business transactions

Reference no: EM132394211

Assignment

Question 1

a. Australian Taxation Office depicts exemption is available on the foreign employment income from paying tax if the individual is a member of the Australian police force or defense or company engaged in aid work overseas. Thus, Rafael would not pay tax on gross wages because he was employed on an approved overseas aid project (Ato, 2019).

If an individual has paid tax in the nation from where income has been earned then he or she would be able to claim the foreign income tax offset. Thus, Rafael would be able to claim the foreign income tax offset. PAYG tax was withheld and the gross salary is being received by Rafael.

Gross salary = $34,000

Less: PYAG tax withheld = $5400

Taxable income = $28600

b. The taxable income is $28600 which comes under the slab of $18201-$37000.

Net tax payable = 19% * ($28600-$18200)
= 19% *10399
= $1976
Question 2

Australian Taxation Office explains that most of the people who visit or come on a working holiday visa in Australia are not considered to be the residents of the country. It consists of the people on 462 or 417 visas. They do not have the intention to stay in Australia rather they have a holiday and also work sometimes. The resident for the tax purpose can be determined on the basis of the intention and purpose of the individual coming in Australia on the visa.

To become the resident of Australia the individual has to show his or her working and living arrangements are being consistent with making the country as his or her home (Ato, 2019). It means developing habits and routines that are adopted by the individual. The second factor is that living in the country for more than six months and do not have a place to live in another nation and make an intention to residing in Australia. Mee Kong has been for 10 months in Australia but she has been employed as the medical research scientist.

She has lived in a rented apartment but she has no intention of residing in Australia. One may decide to work and live in one place for twelve months but it does not he or she is the Australian resident. The behavior and routines associated with the social arrangements and works should show the individual would stay in the nation. Therefore, Mee Kong is not a resident of Australia for tax purposes.

Question 3

Gross salary	$ 87,500
Allowances	$1,250
Interest from term deposit A/C #123456	$400
Tax withheld	-$20,325
Allowable work deductions	-$7,450 (receipts and logbook supplied)
Union fees	$450
Dry cleaning of work clothing	$150
Taxable Income	$61975
Medicare Levy	$1240
Medical Levy Surcharges	$620

The taxable income is $61975 which comes under the slab of $37,001-$87,000.
Tax payable = $3572+[32.5% * ($61975-$37000)]
                             = $3572 +(32.5% *24975)
                             = $11689
Net tax payable = $11689+$1240+$620
                             = $31549
Question 4

Assessable income	$
Gross wages	78,800
Honorarium for duties as president of the swim club	350
70% franked dividend from Fl Ltd-amount received	2,900
Bank interest ($97+$103)	200
Fully franked dividend from F/S Ltd-amount received	3,300
Unranked dividend from Back Ltd	1,750
Deductions
Laundry of uniform (estimate)	75
Investment journals	230
Sunglasses used for driving	150
Taxable Income	86845
Income Tax [$3572+19%*(86845-37000)]	13043
Medicare levy (2%*86845)	1737
Medicare levy surcharges (1%*89745)	868
HELP Repayment	6600
Net Income tax	22248
PAYG withheld	20500
Tax payable	1748

Question 5

a) If an individual is using a car for work-related purposes then he or she can claim the deduction for the car expenses. However, the individual cannot claim the travel cost between work and home because it is considered as private travel. There are two methods for estimating the motor vehicle deductions that are cents per kilometer method and logbook method (Ato, 2019). The individual can claim oil costs, fuel, insurance, repairs, registration, parking fees, road tolls, and car wash on the basis of the records.

A single rate is being used in cents per kilometer method. Thus, the individual can claim on the basis of 68 cents per kilometer. The individual can claim a maximum of five thousand kilometers per car. An individual can deduct 12 percent of the cost of the car and can also claim one-third of all the car expenses. However, the capital expenses are excluded such as money borrowed for purchasing the car, purchase price and any improvement costs.

Cents per kilometer method

Claim on traveling expenses = 5000 km * 68 cents

= 340000 cents or $3400
Claim on Purchase cost = 12%*37250
= $4470
Expenses

Items	Amount ($)	Amount ($) One-third of the expenses
Fuel	3120	1040
Insurance	563	188
Repairs	742	247
parking fees	80	27
Registration	543	181
Road tolls	167	56
Car wash	90	30
Depreciation	5588	1863
Total	10893	3632

Motor vehicle deductions = $3400+$4470+$3632
= $11502
An individual under the logbook method can claim on the basis of business use percentage of the car expenses. The expense consists of a decrease in value, running cost and other expenses (Ato, 2019).

Logbook method

5270 kilometers is related to business purposes and total kilometer traveled was (4917+5270+5243=15430) kilometers.

Business use percentage = 5270/15430*100= 34%

Total car expenses = $10893

Motor vehicle deductions = 34%*10893= $3704

b) The Cents per kilometer method is considered to be more appropriate than the Logbook method because it will assist Brian to decrease his tax.

Question 6

a. Gill made a mistake while reporting the GST was that he not omitted the decimal point. The mistake increased the value of sales and non-capital purchases (Ato, 2019).

b. GST = 10% * sale of the products or services
= 10%*10100
= 1010
c. The form would include the name of the business and its owner. It will include the sales of the products and services and the non-capital purchase of Gill. GST would be calculated and reported quarterly.

d. Gill has to provide all the details of the business transactions. He should also provide a copy of the GST form in which the mistake has been done in order to understand the errors and omissions.

Reference no: EM132394211

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