Income and Taxation - Questions
$3000 is invested for 18 months compounded at the interest rate of 0.75% every month. Give answer correct to the nearest cent, wherever necessary.
a. Calculate the final value of this investment
b. What is the increase in value obtained in part (a) as against investing the same amount for same time at same rate but at simple interest.
(a)
$$\begin{aligned}
\text{Pricipal Amount} & =\$3000\\
\text{Compunding Rate of Interest} &= 0.75\%~\text{p.m.}\\
\text{Time Period}&=18~\text{month}\\
\text{Total Amount,}~A &=\$3000 \times 1.0075^{18}\\
&\approx \$3431.88 \end{aligned}$$ (b) $$\begin{aligned}
\text{If same amount is invested for same time} & \text{but at a simple rate..}\\
\text{Amount} A^{\prime} & =\$3000(1+0.0075\times 18)\\
&=\$3405\\
\text{Increase in value obtained}&=\$3431.88-\$3405\\
&=\$26.88
\end{aligned}$$
Choose which investment is the best of all in terms of total amount earned. All rates are applied based on compounding method.
$1200 for 5 years at 5.6% p.a.
$1350 for 4 years at 3.3% p.a.
$1100 for 3 years at 10.5% p.a.
$1400 for 2 years at 5% p.a.
How much more interest is earned on \(\$ 50,000\) if interest at \({\rm{8\% p}}{\rm{.a}}{\rm{. }}\) is compounded quarterly over \(5\) years, rather than simple interest of \(8\%\) over the same time?
\(\$ 4297.32\)
\(\$ 4097.32\)
\(\$ 4197.32\)
\(\$ 3997.32\)
Oliver is a casual gym trainer who earns \({\rm{\$ 20}}{\rm{.08}}\) per hour. He works \({\rm{18}}\) hours a week for \({\rm{34}}\) weeks of the year. How much should he pay in income tax?
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Luke had a yearly income of \({\rm{\$ 100,157}}\) and earned \({\rm{\$ 340}}\) in dividends from his shares. He also had allowable deductions of \({\rm{\$ 640}}\) for car expenses and \({\rm{\$ 432}}\) in the depreciation of his photocopier. Calculate,
a. Lukes taxable income
b. the amount of tax payable.
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
John is a swimming pool manager with a yearly income of \({\rm{\$ 55,958}}{\rm{.}}\) He also earned \({\rm{\$ 227}}{\rm{.50}}\) in interest from his bank savings account. John also had allowable deductions of \({\rm{\$ 234 }}\) and \({\rm{\$ 65}}\) in donations to charity. Calculate, rounding to the nearest dollar
a. John's taxable income
b. the amount of tax payable
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Mia earns \({\rm{\$ 2446}}{\rm{.87}}\) per fortnight and claims deductions of \({\rm{\$ 955}}{\rm{.30}}\) in travel expenses, \({\rm{\$ 572 }}\) depreciation of camera equipment, \({\rm{\$ 180}}{\rm{.20 }}\) membership to a professional association and \({\rm{\$ 150 }}\) donated to a charity. Calculate Mia's income tax payable.
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Use the tax table to calculate the tax on a taxable income of $80,000.
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Lucy's taxable income is $85,490. Her tax installments paid were $25,400.
(i) Lucy's calculated tax is?
(ii) Lucy's refund on tax owing is?
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
John's taxable income is $85,404.
(i) Find the tax payable on the amount
(ii) What percentage of his income is paid in tax?
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Anna's gross income is $151,000. Her allowable tax deductions are $9420. Anna pays $780 per week in tax. What amount will Anna receive or refund?
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Tong's taxable income is $52,480. His medicare levy is 2% of his taxable income. The total amount due to the taxation department including the medicare levy is?
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
Chloe earns an income of $86,400 she also has $80,200 in a bank account that earns a flat interest rate of 4%
(i) How much interest does chloe earn from her bank account each year?
(ii) Calculate Chloe's tax payable
\begin{array}{|l|l|}
\hline \text { Taxable Income } & \text { Tax Payable } \\
\hline 0-\$ 18200 & \text { Nil } \\
\hline \$ 18201-\$ 37000 & \text { Nil }+19 \text { cents for each } \$ 1 \text { over } \$ 18200 \\
\hline \$ 37001-\$ 87000 & \$ 3572+32.5 \text { cents for each } \$ 1 \text { over } \$ 37000 \\
\hline \$ 87001-\$ 180000 & \$ 19822+37 \text { cents for each } \$ 1 \text { over } \$ 87000 \\
\hline \$ 180001 \text { and over } & \$ 54232+45 \text { cents for each } \$ 1 \text { over } \$ 180000 \\
\hline
\end{array}
