Study guide
10. Taxation
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 G K Powers 2013
Allowable deductions
Allowable deductions are approved by the Australian
Taxation Office as a tax deduction such as:
 Work-related expenses
 Self-education expenses
 Travel expenses
 Car expenses
 Clothing expenses
 Tools used for work
 Gifts and donations
HSC Hint – Car expenses are claimed according to the
engine capacity of the car.
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 G K Powers 2013
Taxable income

Taxable income is the gross income minus any allowable
deductions. It is the income used to calculate the tax to be
paid.

Gross income is the total amount of money earned.
Taxable income = Gross income ‒ allowable deductions
HSC Hint – Gross income is the sum of income from all
sources including interest from bank accounts.
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 G K Powers 2013
Medicare levy

Medicare levy is an additional charge to support
Australia’s universal health care system. It ensures that
all Australians have access to free or low-cost medical
and hospital care.

The Medicare levy is calculated at a rate of 1.5% of
taxable income.
HSC Hint – Medicare levy is added to tax payable to
determine amount owed to the ATO.
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 G K Powers 2013
Calculating tax

Personal income tax tables have an increasing rate of tax.
Tax refund = Tax paid – Tax payable
 Tax owing = Tax payable – Tax paid

HSC Hint – Find the correct tax bracket and calculate the tax
payable using dollars not cents.
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 G K Powers 2013
Calculating GST and VAT

To calculate the GST find 10% (or VAT rate) of the pretax price.

To calculate the total cost of an item add the GST (or
VAT) to the pre-tax price.

To calculate the pre-tax price given the total cost of an
item divide the total cost by 110% (or 100% + VAT rate).
HSC Hint – To calculate the pre-tax price divide the final
cost of the item by 1.10.
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 G K Powers 2013
Graphing tax rates
1.
2.
3.
Draw a number plane with the taxable income as the
horizontal axis and the tax payable as the vertical axis.
Use information in the tax rate table to determine the
points. Plot the points.
Join the points to make a straight line segment.
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 G K Powers 2013