Mary, a web designer, earned the following amounts during the 2017/18-tax year.
ID: 2328166 • Letter: M
Question
Mary, a web designer, earned the following amounts during the 2017/18-tax year. • $10,000 per month, paid directly into his Westpac bank account. • $ 800 interest on his Westpac bank account. • $8,500 winnings as ‘Queensland Designer of the Year’. • After winning ‘Queensland Designer of the Year’, his employer asked Mary to sign a restrictive covenant saying that he would not start up in business on his own for one year, should his employment with them terminate. He received $20,000 upon signing the restrictive covenant. • Mary took out private health insurance for the last 60 days of the income tax year, costing him $550. Assume Mary is classified as an Australian resident for tax purposes. Discuss the assessability of the above amounts with specific reference to legislation and case law where applicable. (8 marks) Calculate Mary’s net amount of income tax payable for the tax year ending 30 June 2018.
Explanation / Answer
salary for the year(10000*12) 120000
interest 800
winnings as:queensland designer of the year" 8500
signing a restrictive letter 20000
_______
total income of mary 149300
mary got a rebate for her private health insurance for the last 60 days of the year amounting to $550
amount of tax payable on $149300
$87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000
now, mary have to pay $19822+$23051
=$42873