PAYG Instalments; Tax Offsets

 

Question :

Victoria Jackson, self-employed interior decorator, 55 years old, single, not registered for GST. 

Lodged her 2015/16 income tax return, 2016/17 national taxable income $48,000 (including $2,000 donation and $500 tax agent’s fee); paid $1850 to a private health fund from 1, Dec 2016 and claimed $250 for TFN amounts withheld from interest. 

Please calculate 2016/17 PAYG instalments. 

 

Answer :

Under ITAA97 s 61-205, a rebate of 26.79% applies for her private health insurance from 1, Dec 2016 to 31, Mar 2017, and 25.93% from 1, Apr 2017 to 30, Jun 2017.  

Tax offset of private health insurance= $1,057*(121/365) *26.79%+$793*(91/365) *25.93%=$145.13 

Under ITAA36 s 159H, Victoria is entitled to a low income rebate. 

Low income rebate= Maximum rebate amount- reduction in rebate

                                     =$445- [($48,000-$37,000) *0.015] =$280 

Under taxable income rate 2016/17 

Tax payable on taxable income=$0(under $18,200) +($37,000-$18,200) *19%+($48,000-$37,000) *32.5%

                                    =$7,147 

Medicare Levy= $48,000*2% =$960 

So, PAYG tax instalment= $7,147-$145-$280+$960=$7,682 

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