H & R Block Basic Course
Chapter 6
HINTS ·
In income tax there are a number of
different incomes. You should make a list of how these different incomes
are defined. It will be invaluable in the final exam. This week is a good
week to start. Basic Medicare is calculated on taxable income
(less post 83 taxed element of an ETP for taxpayers 55+y), and SFSS is
calculated on taxable income, but Medicare surcharge is calculated on a
special income, and HELP is calculated on HELP Repayment Income. Later in
the course you will strike other special incomes that you can add to the
list. ·
Foreign employment income is always
taxable if the period of continuous employment is 91 days or less (it can
be with more than one employer). If the period of continuous employment is
more than 91 days then the income is exempt provided that the income has
been ordinarily liable for income tax in the foreign country. If the
foreign employment income has not been liable for foreign income tax then
it is assessable in ·
These rules refer to foreign employment
income only. Foreign business
income is always assessable. ·
If a taxpayer is under 18y on June 30 then
item A1 must be filled out in ALL
cases.
Question 1
a) 24,874 x
1.5% = $373.11.
b)
30,847 – 30,001 x 20% = $169.20.
c)
50,277 x 1.5% = $754.16. There is no Medicare
surcharge payable because the child is seen as a dependant for surcharge
purposes (but not for basic Medicare purposes). Hence the taxpayer is subject
to the 100,000 family threshold for Medicare
surcharge.
d)
Nil. The taxpayer is below the 2007 senior
Australian’s threshold of 24,867.
e)
58,760+45,829 = 104,589 family income. Therefore they
are both subject to the surcharge.
|
BASIC MEDICARE |
MEDICARE SURCHARGE |
HIM |
58,760 x 1.5% = $881.40 |
58,760 x 1.0% = $587.60 |
HER |
45,829 x 1.5% = $687.44 |
45,829 x 1.0% = $458.29 |
Question 2
a)
Nil. He is below the HELP threshold of $38,149.
b)
Nil. He qualifies for a family reduction of basic
Medicare, and so will not be assessed for HELP.
c)
65,289 x 7% = $4570. She will have to pay $4000, since
this is the amount of the debt. She would be better off making a full voluntary
payment before lodging her return: 4000/1.1 = $3636 will clear her whole debt,
because she will get the 10% discount.
Question 3
|
TAXPAYER |
BASIC MEDICARE |
MCARE SURCHARGE |
OTHER |
a |
Sally Single, T.I. $16,702 |
|
N 365 days |
|
b |
Tamara Single navy officer. T.I. $37,500 |
M1 V 365 days |
N 365 days |
|
c |
Ben Married, 2 children, family
income $51,360 Residency ceased |
M1 V 193 days |
N 365 days |
A2 20.12.06 Spouse details |
Question 4
a)
No. Taxable professional income is below $2500.
b)
Yes. A television newsreader is seen as a performer.
c)
No. Taxable professional income is below $2500.
FAMILY REDUCTION OF BASIC MEDICARE
This is not as difficult as it looks.
1]
Work out the Medicare by the shading calculation, and by the 1.5% calculation.
2]
The difference between the two figures is the FAMILY REDUCTION AMOUNT.
3]
If one partner is below the single Medicare threshold then the other partner
gets all the family reduction amount.
4]
If both partners are liable for Medicare then the family reduction amount is
apportioned according to the partners’ taxable incomes.
5]
Each partner then pays T.I. x 1.5% LESS their share of the family reduction
amount.
6]
If one partner doesn’t need all of their share, the excess can be transferred
to the other partner.