Foundation Numeracy
WAGES and INCOME TAX
A common form of overtime payment is:
Normal hours: 38 hours per week
Overtime:
Time-and-a-half for the first 2 hours.
Double time after that.
Example – “l normally get paid $14.35 per hour. How much should l be paid if l work 45 hours in one week?
Normal hours
Overtime hours
No. of overtime hours = 45 -38 = 7
First 2 hours at time-and-a-half:
Other 5 hours at double-time:
$14.35 X 38 (no. of hours) =
$545.30
1.5 x $14.35 x 2 =
2 x $14.35 x 5 =
$43.05
$143.50
$731.85
Total Pay:
Questions
Use the following details to answer Questions 1-2.
Normal hours:
38 per week
Normal rate of pay: $11.30 per hour
Overtime:
Time-and-a-half for the first 2 hours.
Double time after that.
1.
2.
How much would you be paid if you worked:
a. 38 hours
$___________
b. 40 hours
$___________
c. 43 hours
$___________
d. 49 hours
$___________
e. 50.5 hours $___________
f. 42 hours
$___________
Complete your payslip for hours and pay. After completing the next section about income tax, come
back and complete what you can of the payslip.
Hours worked
Week 1
Week 2
Gross pay
Tax payable
Tax as a % of
gross pay
42
46
Total:
Net pay
Income Tax
Each payday, a worker pays income tax instalments. At the end of June (the end of the financial year), you
receive a Group Certificate from anyone you have worked for during the year. This shows your gross
earnings for the year, and the amount of tax that has been paid from these earnings. If you have paid more
tax than you had to, you are entitled to a refund. If you have not paid enough tax, you will have to pay
extra.
The amount of tax you paid depends on your income. However, you do not have to pay tax on money you
spent on items which are tax deductible. The cost of these items is subtracted from your income to
calculate your taxable income. The lower your taxable income, the less tax you pay.
Taxable income = Gross income – Deductions
Your total income
$
$
$
$
Gross Income
Wages
Commission
Bonuses
Bank interest
$ Dividends from shares
$ Austudy payments
$ Pensions
Tax Deductions
$ Donations to charities
$ Union subscriptions
$ Materials you need for your job
$ Work-related car expenses
(not including driving to and from work)
$ Dry cleaning/laundry of uniform
Questions
1.
Michael has a gross income of $56 870 and has $1487 worth of deductions.
What is his taxable income? $ _________
2.
Lisa earned $49 876 (gross) last financial year. She paid $374 for union fees, spent $92 dry cleaning
her uniform and made donations of $475 to charities.
What is her taxable income? $ _________
3.
David’s gross income last financial year was $38 654. He spent $429 on union fees and $327 on
equipment for his work. He also gave $273 in donations to charities.
What is his taxable income? $ _________
How much tax do l have to pay?
Once you know your taxable income, you can calculate the amount of tax you are supposed to pay from a
tax table:
Tax Table
Taxable Income
Tax on Taxable Income
$0 - $6000
0
$6001 - $20 000
17% of taxable income over $6000
$20 001 - $50 000
$2380 + 30% of taxable income over $20 000
$50 001 - $60 000
$11 380 + 42% of taxable income over $50 000
$60 000 +
$15 580 + 47% of taxable income over $60 000
Plus Medicare Levy (without private health insurance):
1.5% of taxable income for (single) incomes less than $50 000
2.5% for incomes over $50 000
Example – “My taxable income was $35 382. How much tax do l have to pay?
$20 001-$50 000
$35 382 is between these
$2380 + 30% of taxable income over $20 000
This is the tax on
the first $20 000
Start by calculating how much
more than $20 000 you earned
$35 382 - $20 000 = $15 382
Therefore tax on $35 382 = $2380 + 30% of $15 382
= $6994.60
(Calculator for % - 15 382 / 30%)
Add Medicare Levy
1.5% of $35 382 = $540.73
Therefore total tax payable = $6994.60 + $530.73
= $7525.33
If your Group Certificate shows
you have already paid more than
this, you will get a tax refund.
Questions
1.
How much tax has to be paid on a taxable income of:
a. $31 932
b. $24 922
2.
c. $47 922
d. 58 799 (Medicare Levy changes)
e. $72 850
f.
$119 873
a. For each of the taxable incomes in Question 1, work out the percentage paid in tax. Write them
under each calculation above.
b. Why do you think the percentage is not the same for every taxable income? Do you think this is
fair? Give your reasons.
3.
Lucy earned a total of $53 875 last year, and had $1386 worth of tax deductions. Her group
certificates show that she paid $15 095.68 in tax.
Calculate her refund for the extra amount of tax she has to pay.
4.
George has a gross income of $34 628. He has deductions totalling $635. His group certificates show
that he has paid $7287.82 in tax.
Calculate his refund for the extra amount of tax he has to pay.