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7.07 Tax deductions and taxable income

Worksheet
Tax deductions and taxable income
1

Emma's total allowable deductions for the year are \$493. If her gross annual income is \$25\,000, calculate her taxable income for the year.

2

Hannah earns a salary of \$86\,220 and claims \$1293 for work-related expenses. She also contributes \$190 to charities throughout the year. Calculate her taxable income.

3

Consider the list of allowable deductions below:

List of Allowable Deductions

  • Work travel expenses

  • Charity donations

  • Home office expenses

  • Work clothing and laundry expenses

  • Investment expenses

  • Self-education expenses

  • Tools and equipment expenses

  • Personal superannuation contributions

  • Union fees

a

Noah is an employee of a company, and travels to their office for work. State whether the following are items that he can claim as tax deductions:

i

The cost of catching public transport to work.

ii

The cost of coffee he drinks before work.

iii

His monthly union fees.

iv

The cost of travelling to a work meeting that is located away from his office building.

b

Deborah is self-employed, and runs a catering business from home. State whether the following are items that she can claim as tax deductions:

i

The cost of her personal phone.

ii

The cost of making her own lunch.

iii

The cost of driving to the shops to buy stock for an order.

iv

The cost of renting the oven she uses for her business.

4

Using the List of Allowable Deductions in the previous question, calculate the following for each scenario:

i

The total allowable deductions for the last financial year.

ii

The taxable income for the last financial year.

a

Dave earned a gross income of \$60\,500 last financial year. He gave \$160 to various charities, contributed \$700 to his super account, contributed \$137 to the nurse union which he is a member of, and spent \$119 in total on cleaning expenses for his uniform.

b

Last financial year, Maximilian earned a gross monthly income of \$3503. Each month, he contributed \$200 to his superannuation account and \$17 in union fees, and spent \$30 each month making work calls from his personal mobile phone.

c

Kate runs her own chiropractic clinic and during the last financial year, her gross annual salary was \$127\,857. During the year, she donated \$22 each month to a charity, attended 3 work seminars each costing \$600, spent \$112 each month getting to and from work, paid \$2420 each month renting a home, and purchased \$168 worth of stationery equipment for the clinic.

5

This year, Victoria had a taxable income of \$71\,250. Her gross income is \$74\,000.

a

State how much she claimed in allowable tax deductions.

b

What percentage of Victoria's gross income were these tax deductions? Round your answer to one decimal place.

6

Yuri's gross annual income is \$51\,120, but he wants to make superannuation contributions throughout the year so that his taxable income reduces to \$50\,820 (assuming no other deductions). Calculate the monthly superannuation contribution he will need to make.

7

Dylan has a gross income of \$92\,749 and can claim \$877 in allowable tax deductions. Dylan wants to reduce his taxable income to \$90\,000 by making voluntary weekly contributions to his superannuation. Calculate how much he must contribute each week.

8

Luigi has a \$49 per month mobile phone plan. He regularly uses his phone for work purposes and can claim his work-related phone expenses as an allowable tax deduction. Using his itemised bill each month, Luigi calculates that his work-related phone usage is consistently around 20\% of his total phone usage.

Luigi works for 48 weeks (11.1 months) of the year. Calculate the amount he can claim as a tax deduction for his mobile phone.

9

State how many months are in each of the following time periods, correct to one decimal place. Assume that there are 52 weeks in a year.

a

48 weeks

b

46 weeks

c

38 weeks

10

Katrina can claim laundry expenses of \$28 per month as an allowable tax deduction. How much can she claim as an allowable tax deduction if she only works for 42 weeks in the year? Assume that there are 52 weeks in a year.

11

Ray works as a personal trainer and operates his business from home. He uses his own car to travel to meet clients and can claim his car usage for business as a tax deduction.

a

Ray estimates that 60\% of his car usage is for business. Find his business-use kilometres if he travels a total of 16\,550 \text{ km} in his car over the year.

b

Ray uses the cents per kilometre method for calculating his travel expenses. It allows him to claim 68 cents for every business kilometre he travels. Use this method to calculate Ray's tax deduction.

12

Patricia is a self-employed electrician and uses her car to travel between jobs each day. She decides to use the logbook method for calculating her work travel expenses and keeps a logbook for 12 weeks.

a

Patricia uses her vehicle logbook to determine that in 12 weeks she travelled a total of 3150 \text{ km}, of which 756 \text{ km} were for business use. Calculate her business-use percentage.

b

Use the given table to calculate Patricia’s total annual car expenses.

c

Calculate Patricia’s allowable tax deduction for work travel expenses.

Vehicle expenseAmount
\text{Vehicle registration}\$371
\text{CTP insurance}\$450
\text{Comprehensive insurance}\$1255
\text{Service/maintenance}\$486
\text{Depreciation}\$4300
\text{Fuel}\$1480
13

Tom is a plumber. For two nights each fortnight, he travels to a technical college to undertake a specialist course related to his work. The course costs \$31 per night and his travel expenses to and from the course are \$16.10 per night, both of which Tom can claim in full as allowable tax deductions (self-education expenses).

Calculate his total self-education expenses for the year. Assume that there are 52 weeks in a year.

14

Maria is a member of the cabin crew for an airline, and receives a gross pay of \$826.70 per week. Because she is required to wear a uniform at work, she can claim laundry and dry cleaning expenses as an allowable tax deduction. She claims \$2 per week in laundry expenses and \$21.60 per fortnight in dry cleaning expenses.

a

Calculate her total annual deductions for laundry and dry cleaning. Assume that there are 52 weeks in a year.

b

If she has no other allowable tax deductions, calculate Maria's taxable income for the year.

15

Kathleen is a website developer in Wollongong and travels to Sydney for a two-day web design conference. The conference tickets, and her two nights' accommodation, travel and meal expenses are all allowable tax deductions because she paid for them herself. The conference tickets cost Kathleen \$85 per day and her hotel was \$110 per night. She also ate 6 meals averaging \$19 per meal and spent \$40 on travel.

Calculate her total allowable tax deduction for work travel expenses.

16

Using the cents per kilometre method, an individual who uses their car for work-related activities can claim 68 cents per kilometre as an allowable tax deduction. Rochelle travels 6 \text{ km} each day while carrying out work-related activities. She works from Monday to Friday for 45 weeks of the year. Her gross income for the year is \$72\,240.

a

Find how many work-related kilometres did Rochelle travel during the year.

b

Calculate how much she can claim as an allowable tax deduction for travel.

c

If Rochelle has no other allowable tax deductions to claim, calculate her taxable income for the year.

17

Tobias works as a chef. Because he wears a uniform for his job, he is able to claim the cost and cleaning of his uniform as an allowable tax deduction. Tobias’s work-specific uniform expenses are shown in the table below:

a

For his uniform, Tobias's total cleaning expenses for the year come to \$52. Calculate Tobias’s total clothing and cleaning expenses for the year.

b

Tobias also spent \$295 on a set of knives and \$17.25 on a knife pouch. He can claim these as a tools and equipment expense because he uses them only for work. Calculate his total tools and equipment expenses.

c

Calculate Tobias's total allowable tax deductions.

d

Tobias earns \$19.50 per hour and works 40 hours per week. Calculate his annual gross income if he works 48 weeks in a year.

e

Calculate Tobias's taxable income.

Uniform itemNumber of itemsPrice per item (dollars)
\text{Chef's checked} \\ \text{trousers}221.50
\text{Chef's jacket}226.00
\text{Chef's hat}17.85
\text{Apron}223.50
\text{Pair of} \\ \text{protective shoes}160.00
18

Peter is a tradesperson. He can claim the actual cost of tools and equipment for any item he buys for work that costs \$300 or less. For any items over \$300, he can claim the depreciation of that item over a number of years. Over the course of a year, Peter buys a hammer for \$94, a power tool for \$260, and a portable generator for \$1200.

If the generator depreciates by 13\% in the first year, calculate Peter’s allowable tax deductions for tools and equipment.

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MS11-5

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