Taxation Law and Practice

 Task 1 Calculate of the net tax payable/ refundable situation for Jane

The Australian taxation system is one of the most popular taxation law in world. It induces approx 125 taxes including the commonwealth taxes such as the capital gains tax, fringe benefits, goods and services tax, incomes tax. Income tax department is a way of income for the country. The income of the government only depends on the income tax department. Under the Australia taxation law, people pay tax 0% to 45%. It depends on income level of the people. In this, income between $87,001 – $180,000, the tax rate is 30%.

Gross income of Jane = $79000

Jane reports interest income of $475.

Jane advises of investment expenses of $250.

Jane receives rental income of $35,000 from an investment property.  The associated expenses are:

Mortgage repayments: $25,000

Repairs: $2,000

Rates: $2,500

Insurance: $500

Calculation of Taxation
Particular Amount in $
Gross Income 79000
Brown Family Discretionary Trust 20000
Fully Francek Divided 20000
Sale of share 800
Interest income 475
Rental income 35000
Total Income 155275
Investment expenses 250
Mortgage repayments 25000
Repairs 2000
Rates 2500
Brokerrage cost 300
Total expense 30050
Debt 20000
Insurance 500
Donation 900
Income protection insurance policy 1000
Total of taxable deduction 22400

Assessable income = 155275

Less: Deduction = 22400

In the Australian income tax, section 80C provides provisions for tax deductions on a number of payments. It includes the some expenses that are the tax deductable. It contains the life insurance policies, superannuation/provident fund, uition fees paid to educate a maximum of two children, payments made towards construction or purchase of a residential property (Stantcheva, 2014).

Taxable income = 132875

Accruing the income tax law in section 26(1), in Australia, people are able to pay 30% above the income of $87,001. As concerning of thus Jane will pay 30% tax

Amount of tax = 39862.5

Task 2: Calculation of the net tax payable/ refundable situation for Green Pty Ltd

According the Australia taxation office, the small organisations are liable to pay 27.5% tax in Australia. But the companies that are not small organisation are liable to pay 30%.

Income Statement
Particular Amount
Sales 3,45,000
Cost of sales 60,000
Gross profit 285000
Exempt income 10,000
Dividends (fully franked) 10,260
Interest received 900
Compensation from a client 4,000
Net capital gain 4,000
Total operating profit 314160
Less: operating expenses  
Advertising (print, net, signage, flyers) 1,000
Bad debts 900
Bank Charges 150
Capital expenditure (qualifies for immediate deduction) 3,000
Cost of sales 60,000
Sub-contractor expenses 23,000
Depreciation expenses 2,000
Electricity 800
Entertainment 2,000
Environmental protection (disposal of chemicals) 600
Fines (speeding and parking tickets) 500
Insurance 600
Interest expenses within Australia 1,200
Lease expenses within Australia 4,000
Motor Vehicle 3rd Party insurance 550
Motor Vehicle expenses (petrol & maintenance) 4,000
Motor Vehicle Registration 1,200
Rent expenses 11,800
Stationery & Office supplies 200
Tea, coffee, sugar & milk for staff use 100
Telstra (Phones & Internet) 2,000
Wages 45,000
Total Operating expense 1,64,600
Net income before tax 1,49,560


Particular Amount
Income end of year 149560
Income from other resources –  – – – –
Depreciation expenses 500
Taxable income of year 149060
Corporation income tax according Australia government 30% 44718
Income after tax 104342


Guner, N., Kaygusuz, R. and Ventura, G. (2014) Income taxation of US households: Facts and parametric estimates. Review of Economic Dynamics, 17(4), pp.559-581.

Kabatek, J., Van Soest, A. and Stancanelli, E. (2014) Income taxation, labour supply and housework: a discrete choice model for French couples. Labour Economics, 27, pp.30-43.

Stantcheva, S. (2014) Optimal income taxation with adverse selection in the labour market. The Review of Economic Studies, 81(3), pp.1296-1329.

Tanzi, V. (2014) Inflation, indexation and interest income taxation. PSL Quarterly Review, 29(116).


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