H & R Block Basic Course Chapter 10

 

HINTS

 

·          SNI does not require formal substantiation. Other things to note about SNI: 1] Exempt income is included, but not non-assessable income such as lottery winnings 2] All of lump sums A and B are included but lump sums C and D are excluded 3] Franking credits are excluded – be careful with trust income! 4] Car expenses: the set rate method can be used without limit on distance 5] Self education: there is no threshold 6] The non-commercial business loss rules to not apply (see later) 7] Prior year losses are not considered.

·          Essentially SNI is much simpler than taxable income. It is money received less the expenses of getting the money.

·          The medical expenses offset excludes vanity procedures, medications not bought from a pharmacist’s, travel, and structural changes such as pools, ramps and railings.

  • Assessable income for superannuation calculations is another kind of income you should be clear about. Did you remember to add it to your list of incomes?
 
 

 

 

 

 

 

 

 

 

 

 

 

 


Question 4

 

a)

i) A transfer of child care rebate agreement will have to be signed by both partners.

ii) Thomas retains a copy of this agreement.

iii) Denise lodges a transfer advice form with the ATO.

iv) Once this is lodged, Thomas can lodge his tax return. He does not have to write the 1260 figure at T6 – the ATO will credit him with the amount.

 

If Denise were lodging a tax return then a figure would be written at T6, depending upon her basic tax payable and other tax offsets. If there was any child care rebate unused then the steps i) to iv) will have to be followed.

 

If child care rebate is being transferred, then the last step should be the transferee lodging their tax return.

 

b)

 

TAXABLE INCOME

SNI

Salary

54,897

54,897

Assessable capital gains

239

239

Defence Force Reserve pay

-

847

GROSS INCOME

55,136

55,983

Travel to work

-

1890

Union fees

398

398

Tax agent fee

98

-

Donations

50

-

TOTAL DEDUCTIONS

546

398

 

54,590

53,695

 

c) The co-contribution made by Commonwealth govt. = 3S – (A.I. – 28000)

         2             20

where S is the taxpayer’s own contribution up to $1000.

 

Her assessable income is below $28,000 so the co-contribution will be 980 x 3/2 = $1470.

If she had contributed 1200 the co-contribution would be 1000 x 3/2 = $1500.

 

d) 3 x 1000/2  -  (57990 – 28000)/20 = 50 cents. However, provided the taxpayer qualifies for some co-contribution, $20 is the minimum payment.   

 

Since Alma’s assessable income is below the 10,800 threshold the 18% of contributions calculation will give the correct result.

 
e) Lesser of:

 

i)                    18% of contributions = 216

ii)                  540 – 18% (A.I. – 10,800) = 540

 

f) Lesser of:

 

i)                    18% of contributions = 216

ii)                  540 – 18% (A.I. – 10,800) = 403