What is meant by the term assessable income

Reference no: EM133144311

MP223 Taxation Law Assessment

Question 1. Taxation and Health in Australia

a) In Australia, Medicare provides certain health services to Australian citizens and residents. To pay for the Medicare system, the Australian Taxation Office imposes a Medicare Levy on certain people. In this regard, please answer the following questions:

What is the rate of the Medicare Levy?

How is the Medicare Levy calculated?

Explain the Medicare Levy Exemption.

Explain the Medicare Levy Reduction for Low-Income Earners.

b) A Medicare Levy Surcharge is payable by some people in Australia. Please explain who is liable to pay the Medicare Levy Surcharge.

c) Certain rates and thresholds are relevant for the calculation of the Medicare Levy Surcharge . Please complete the below table with the relevant information for the Medicare Levy Surcharge income thresholds and rates for the 2021-2022 income tax year.

d) Maria is 35 years old. She is single with no dependents.

In the 2020-2021 income year, Maria does not have any private patient hospital cover.

Maria's taxable income for the 2020-2021 income year is $90,000.

When Maria completes her 2020-2021 income tax return, she also completes the income test section and declares total reportable fringe benefits of $27,000.

Maria's income for Medicare Levy Surcharge purposes is $117,000 (i.e.$90,000 taxable income and $27,000 total reportable fringe benefits).

Please calculate Maria's Medicare Levy Surcharge for the 2020-2021 income year.

Question 2. Income Tax

a) Name the two principal Commonwealth statutes that govern personal income tax in Australia.

b) What is meant by the term ‘assessable income'?

c) Provide at least four (4) examples of ‘assessable income'.

d) What is not considered to be ‘assessable income'?

e) Provide at least two (2) examples on income that is not ‘assessable income'.

f) Please complete the below table in relation to the personal income tax rates applicable to Australian residents in the 2021-2022 income tax year. Please note that rates do not include the Medicare Levy.

g) Tax offsets, also known as rebates, directly reduce the amount of tax payable by an individual taxpayer. They are applied after the tax has been calculated. Provide at least two (2) examples of common tax offsets.

h) Please complete the below table in relation to the company income tax rates applicable to Australian companies in the 2021-2022 income tax year.

Question 3. PAYG Withholding and Superannuation

a) Explain the superannuation system in Australia.

b) What is the compulsory percentage of an employee's earnings that an employer must pay into the employee's superannuation account from 1 July 2021?

c) Explain the PAYG withholding system in Australia.

d) Explain the Single Touch Payroll (STP) system.

Question 4. Fringe Benefits Tax and Salary Sacrifice

a) Explain the meaning of ‘salary sacrifice'. What is the benefit for an employee in being involved in a salary sacrifice arrangement?

b) What types of employee benefits may be included a salary sacrifice arrangement?

c) What are the implications of salary sacrifice arrangements on employers?

d) Explain how fringe benefits tax is calculated in Australia.

Attachment:- Taxation Law.rar

Reference no: EM133144311

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