Taxation Chapter 10
Lesson 1 - Taxable Income – Intro – Read ALL of the information from p334 (below)
Definition
 Total Income = All incomes that you earn added together (including wages, bonuses, interest,
commissions, allowances etc…)
 Deductions are things like union fees, donations, car travel expenses, uniforms, tools…
 Taxable Income = Total income  Allowable Deductions
 An extra tax added to all taxable incomes is the Medicare Levy, so that Australians can access the
public hospital Medicare system. It is currently calculated at 1.5% of taxable income.
Example 1
Gary uses the following information to work out his taxable income: Wages $42 322, Interest $224
(Joint account), Holiday Loading $620, Cost of union fees $154, Travel Expenses $80. Calculate his
taxable income.
Example 2
Calculate the Medicare levy payable on a taxable income of $43 000.
(Note: Medicare levy is 15% of taxable income)
Example 3
Find the Medicare levy on a salary of $53 100.
Class Work
Example 10A (p334)
Q1,2,3,4,7(a,c)
FM3 - Taxation
Page 1 of 7
Document1
Lesson 2 - Calculating Tax
 Refer to Tax Table from p328 below.
Easy - Example 1a
Use the tax table on p328 to find the tax payable on incomes of:
(a)
$51 300
(b)
$28 730
(c)
$8344
**Hard - Example 1b
Trevor works two jobs. In his main job he receives a salary of $33 500. He also receives $5400 for a
part time job. His total tax deductions are $1250. Over the year he has paid tax fortnightly to a total
of $7200. Find:
(a)
his total income for the year
(b)
his taxable income (i.e. take off deductions)
(c)
the tax payable on his taxable income (refer to Tax Table)
(d)
his tax refund / bill
Class Work - Exercise 10B (p347) Q1(optional), 2, 3, 5, 7, 8*,9*(similar to above), Extension Q12,13
FM3 - Taxation
Page 2 of 7
Document1
Good and Services Tax – GST
Definitions
 GST stands for Goods & Services Tax - The GST is a tax on goods and services of 10%.
 To find the GST on a pre GST item, divide by 10 (i.e. find 10%)
 To find the GST on an item where GST has already been included, divide by 11 (i.e. this is
equivalent to realising that item + 10 GST = 110%, hence to find the 10% you divide by
11%)
 Most unprepared food items (meat, vegetables, bread) are GST free.
Example 1
Calculate the GST on:
(a)
a restaurant meal of $45.00
(b)
a bill from a plumber of $340.
Example 2
Jenni buys a TV for $462 which includes GST. Find:
(a)
the GST paid on the TV,
(b)
the original cost of the TV before GST was added (i.e. pre-GST cost).
Class Work
Exercise 10C (p341)
Q1 (a,c,e), 2,4,6(a,c,e), 8, 10
GST in Other Countries
Optional Extension - http://en.wikipedia.org/wiki/Sales_tax
Most countries in the world have sales taxes or value-added taxes at all or several of the national,
state, county or city government levels. Countries in Western Europe, especially in Scandinavia have
some of the world's highest valued-added taxes. Norway, Denmark and Sweden have higher VATs at
25%, Hungary has the highest at 27%,[17][18] although reduced rates are used in some cases, as for
groceries, art, books and newspapers.[19]
In some jurisdictions of the United States, there are multiple levels of government which each impose
a sales tax. For example, sales tax in Chicago (Cook County), IL is 10.25%—consisting of 6.25%
state, 1.25% city, 1.75% county and 1% regional transportation authority. Chicago also has the
Metropolitan Pier and Exposition Authority tax on food and beverage of 1% (which means eating out
is taxed at 11.25%).[20]
For Baton Rouge, Louisiana, the tax is 9%, consisting of 4% state and 5% local rate.[21]
In California, sales taxes are made up of various state, county and city taxes. The state tax is
"imposed upon all retailers" for the "privilege of selling tangible personal property at retail." [22]
Strictly speaking, only the retailer is responsible for the payment of the tax; when a retailer adds this
tax to the purchase price, the consumer is merely reimbursing the retailer by contractual agreement.
FM3 - Taxation
Page 3 of 7
Document1
Heading “Graphing Tax Rates”
Go to the PowerPoint on Tax Graphs…
HINTS - for hints on how to do these qns, they should refer to Examples in text
 Q1-3, refer to Example 1 (p343)
 Q4 refer to Example 2 (p344)
 Q6 refer to Example 3 (p345)
If finished complete the following activities,
 Diagnostic Test 10 Q1-14 (p350)
 Then if time, Review Set 10A (p350) Q1-9
 Exam-style Questions (p354)
FM3 - Taxation
Page 4 of 7
Document1
FM3 - Taxation
Page 5 of 7
Document1
FM3 - Taxation
Page 6 of 7
Document1
FM3 - Taxation
Page 7 of 7
Document1