Chapter 12:
Tax Offsets
QUESTION 12.2
$
Gross Wages
1,350 + 150
1,500
Disability Support Pension
5,700
Interest
240
7,440
less: Expenses
Tax agents fee
70
ADJUSTED TAXABLE INCOME
7,370
QUESTION 12.4
$
Gross Wages - part-time job
1,800
Dividend
200
Part-time Wages - Army reserves
-
ADJUSTED TAXABLE INCOME
2,000
72
QUESTION 12.6
$
( a ) Eligible for Family Tax Benefit Part B
( b ) Spouse Tax Offset
2,286 - ((2,282-282)/4)
1,786
( c ) Not eligible for spouse tax offset (taxable income > $150,000)
( d ) Parent Tax Offset
1,676- ((3,200-282)/4)
( e ) Parent Tax Offset
1,676 - ((1,815-282)/4)
947
1,293
QUESTION 12.8
$
( a ) Zone Tax Offset - Zone A ordinary
338 + (50% x 2,286)
1,481
( b ) Zone Tax Offset - Zone B ordinary
57 + (20% x 1,676)
( c ) Zone Tax Offset - Zone A special
1,173 + (50% x 1,382*)
1,864
1,173 + (50% x 882*)
1,614
386
* 1,676 - ((1,460-282)/4) = 1382
( d ) Zone Tax Offset - Zone B special
* 2,286 - ((5,900-282)/4) = 882
73
QUESTION 12.10
(a)
Payment to doctor in respect of an illness
55
( b ) No payment made by Samantha
-
(c)
120
Payment to doctor
less: Medicare Refund Received
64
56
( d ) Payment to doctor
125
less: Medicare Refund Receivable
64
61
(even though refund not received until the following year, the eligible
medical expenses is net of amount received or receivable).
(e)
Only amounts paid are included. This differs from the recognition of refunds
and rebates.
(f)
Not an eligible medical expense as it relates to prevention of illnesses, not
treatment of an illness.
QUESTION 12.12
( a ) Payments to pharmacy in respect of illness
Medications do not have to be prescribed as long as they are
(b)
in respect of an illness.
Payments for medication must be to a hospital or medical
(c)
practitioner
( d ) Vitamins need to be prescribed by a medical practitioner.
Vitamins prescribed by a medical practitioner are included as
(e)
eligible medical expenses.
Even where prescribed, the vitamins must be purchased from
(f)
a pharmacy or medical practitioner.
74
$ 520
190
390
QUESTION 12.14
(a)
Not treating an illness and not a medically necessary operation, therefore not
eligible expenditure. Cosmetic procedures are ineligible.
(b)
Braces are used to correct teeth state and function. Therefore
expenditure is incurred in treating an illness.
5,200
(c)
Laser surgery used to correct impaired eyesight. Therefore
expenditure is incurred in treating an illness.
3,600
(d)
Not treating an illness and not a medically necessary operation, therefore not
eligible expenditure. The health fund rebate is therefore ignored also.
Not treating an illness and not a medically necessary operation, therefore not
( e ) eligible expenditure. May be entitled to tax offset for provate health
insurance.
Question 12.16
(a)
Yes
A spouse is specifically included IRRESPECTIVE of their
adjusted taxable income.
(b)
Yes
A child under 21 is included as a dependant.
(c)
Yes
Their domestic and relational circumstances are not relevant.
However, the expenditure must be paid by the taxpayer
claiming the tax offset.
(d)
No
Only dependants that are resident taxpayers are considered.
(e)
Yes
Mal is still entitled to claim a tax offset in respect of Freda.
Yes
Kyle is subject to a notional tax offset as a full-time student
aged under 25.
(f)
75
QUESTION 12.18
$
Doctor's Fees
920 - 425
495
Prescribed medication - pharmacy
330
Non-prescribed medication - pharmacy
95
Chiropractor's fees
210 - 135
Operation
4,780 - 3,190 - 270
75
1,320
2,315
less: Rebate - Medicare Safety Net
175
2,140
Medical Expenses Tax Offset
(2,140 - 2,000) x 20%
$
28
QUESTION 12.20
Eligible Medical Expenses
$
Robina
120 + (200 - 50)
270
Jed
400 + 600 + 100
1,100
Erica
200 + 300 + 120
620
Tori
70 + 350 + (220 - 40)
600
2,590
LESS: Health Fund Rebates
145
2,445
Medical Expenses Tax Offset
(2,445 - 2,000) x 20%
$
QUESTION 12.22
Eligible Medical Expenses
Carrick
$
1,680
430 + (750 - 80) + 580
Rosielee
Natalie
89
3,400
(4,700 - 1,300)
5,080
Medical Expenses Tax Offset
(5,080 - 2,000) x 20%
76
$
616
QUESTION 12.24
Income from working
$
Gross Wages
39,000
Clothing Allowance
4,000
Tips
1,200
$
44,200
Deductions relating to income from working
Work Deductions
300
Net Income From Working
43,900
Mature Age Worker Tax Offset
$
500
QUESTION 12.26
Income from working
$
Gross Business Income
97,000
Deductions relating to income from working
Business Deductions
36,000
Net Income From Working
61,000
Mature Age Worker Tax Offset
$
100
500 - (5% x (61,000 - 53,000))
QUESTION 12.28
$
Uniforms
ineligible expense
Textbooks
School fees
0
300
ineligible expense
Internet
0
120
420
Education offset
420 X 50%
210
Roy is not able to claim education expenses for Amy as she is not
under taking primary or secondary studies.
77
QUESTION 12.30
Taxpayer
Alan
$
2,230
Beth
> $48,708 taxable income
-
Cameron
under 65 - not eligible
-
Darelle
2,230 - (12.5% x (34,000 - 30,685))
1,816
Elise
under 64 - not eligible
-
QUESTION 12.32
Jack and Liz's average taxable income is $40,000.
This is above the cut-out threshold of $39,496.
Therefore, neither are eligible for the Senior Australian tax offset, even
though Liz has a taxable income below the lower threshold of $26,680.
QUESTION 12.34
$
Eligible Medical Expenses
Leo
800 - 240
560
Erica
120 + 140 - 60 + 420 - 100
520
Rick
700 - 200
500
Frank
550 - 300
250
Rikki
1,400 - 500
900
Helen
650 - 350
300
3,030
less: Outstanding health insurance rebate
100
2,930
Medical Expenses Tax Offset
(2,930 - 2,000) x 20%
Private Health Insurance
30% x 3,500
Parent Tax Offset
(1,676 x 9/12) - ((4,000 - 282)/4)
328
Mature Age Worker Tax Offset
500 - (5% x (56,000 -53,000))
350
TOTAL TAX OFFSETS
186
1,050
1,914
78
QUESTION 12.36
$
Gross Pension
Gross Wages
Dividends
Franking Credit
TAXABLE INCOME
Tax on $31,000
Medicare Levy
$
16,000
10,000
3,500
1,500
31,000
3,750.00
465.00
4,215.00
15% x (31,000 - 6,000))
1.5% x 31,000
Less: Non Refundable Tax Offsets
Low Income Tax Offset 1,500 - 4% x (31,000 - 30,000)
Mature Worker Tax Offset
Parent Tax Offset
Super Tax Offset
15% x 16,000
1,460.00
500.00
1,676.00
2,400.00
3,750.00
465.00
LIMITED TO
Less: Refundable Tax Offsets
Private Health Insurance Tax Offset
PAYG
Franking Tax Offset
TAX REFUNDABLE
79
600.00
1,500.00
1,500.00
3,600.00
3,135.00