Detailed calculation process
Scenario:
I am 67 years old, married and have children
My salary is $56,000, with bonuses $3,000, received bank interests of $800, also fully franked dividends $5,400; deductions that are related to earning my salary are $2,342; I do not have private hospital health insurance and a PAYG amount of $12,167
My wife Mandy, who's not working and in receipt of a disability support pension, with $730 adjusted taxable income (including the pension), and no family tax benefits.
Would you be able to show me how to calculate my taxable income and possibly tax payable/refund (including Medicare Levy, 2016/17)
Calculation Process:
All legislation references are to ITAA97 unless otherwise stated
Taxable income=Assessable Income-deductions
- Assessable income= Salary+ Bonuses+ Bank interest+ Dividends +Gross up for franking credit
- =$56,000+$3,000+$800+$5,400+($5,400*30/70)
- =$67,514
According to s207-20, Gross up for franking credit= Fully franked dividends *30/70
= $5,400*30/70 =$2,314
- Taxable income= Assessable income -Deductions = $67,514-$2,342= $65,172
Tax payable = Tax – tax offsets
According to 2016/17 tax rates,
Tax payable on $65,172 is:
- (Under $18,200) $0
- ($37,000-$18,200) *19%=$3,572
- ($65,172-$37,000) *32.5%=$9,155.90
- Total=$0+$3,572+$6,175=$12,727.90
- Add: Medicare levy= Taxable income *2%= $65,172*2%= $1303.44
Tax offsets are as following:
- According to s 61-10, Dependent invalid carer tax offset (DICTO)
- DICTO= Maximum tax offset available (2016/17)-Reduced for Adjusted taxable income for offsets
- = $2,62- [1/4*($730-$282)] =$2,515
According to s 159H, 159 N, Low income tax offset (LITO)
- LITO= Maximum tax offset available (2016/17)- Reduced for taxable income
- =$445- [($65,172-$37,000) *0.015] = $445-$422.58
- =$22.42
According to s 207-20, Gross up for franking credit= Fully franked dividends *30/70 = $5,400*30/70 =$2,314
So,
tax payable= $12,727.90+$1303.44(Medicare levy)-$2,515(DICTO)-$22.42(LITO)-$2314.28(Franking credit)
=$9179.64 (< PAYG $12,167)
Therefore, Tax refund = PAYG- tax payable= $12,167-$9,179.64= $2,987.36