FNSACC601 Prepare and administer compliant tax returns for legal entities Assess
ID: 2583902 • Letter: F
Question
FNSACC601 Prepare and administer compliant tax returns for legal entities Assessment 1 Self-Study Tasks 1. Income of Minors -Apportionment of deductions Doug Bogus is a 16 year-old full-time student. During the 2015/2016 tax year, Doug had the following assessable income and deductions: Assessable Income Wages from part-time employment at Coles (no PAYG tax withheld) Interest from term deposit given by parents 8,000 2.000 10,000 Deductions Uniform relating to part-time employment at Coles Tax Agents Fee Taxable Income 500 100 600 9,400 Required: a) b) c) Calculate Doug's excepted assessable income Calculate Doug's eligible assessable income. Calculate net tax payable by DougExplanation / Answer
As Doug is less than 18 year old and full time student, kiddies tax rule applies; As per this, he is taxable if; - Unearned income exceeds $1050 - Earned income exceeds $6350 -If has both earned & unearned income, the total income is greater than higher of (a. $1050 b.$6350) Doug's earned income is $8000 which is more than $6350, and hence taxable. Computation of tax: 1 Excepted assessible income: (it includes income earned from wages/salary/business income of a minor etc.,) $ $ wages from part time employment 8000 Less: Expenses: Uniform expense 500 Tax agents fee 100 ----------- 600 Excepted assessible income: 7400 (8000-600) 2 Eligible assessible income: (all income other than excepted incomes) Interest from term deposits 2000 3 Calculation of net tax payable by Doug: Total income (Excepted income + Eligible income) 9400 (7400+2000) Less: Standard deduction for 2017 6350 Taxable income 3050 Taxable income of minor is taxed at child's rate, which is 10% Hence, tax payable = $3050*10% = $305 Note: If Unearned income (which is the interest & dividend income) exceeds $2100, then the excess will be charged at parent's maximum rate, which could be 35%. In this case, the interest income is less than $2100.
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