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Answer:
Part A
Scenario 1:  No private health insurance
If a reportable fringe benefit is more than $2000, the full amount is treated as a part of income (Ato.gov.au, 2022) 1.
Franked credit is offset with tax liability (Young, 2022).
If there is no private health insurance then Tom is required to pay [email protected] of total taxable income as a Medicare levy surcharge.
Scenario 2: Private Health Insurance
If they have taken private health insurance, then a Medicare levy surcharge is not required to pay.
Rental income is calculated on the basis of your % of interest and all expenses are also allowed for deduction as per % of interest (Ato.gov.au, 2022) 2.
Winning from lottery income is fully exempted income. If any interest of income generated from the lottery income is subject to tax (TROY, 2022).
Scenario 3

Computation of total taxable income and tax liability of Tom

 

Amount $

Amount $

Salary

 

55000

Superannuation Guarantee charges

5000

0

Fringe benefit

 

2500

Interest income from saving

 

160

Income earned from the investment

 

1246

Fully franked dividend

400

 

Franked credit

171.42

571.42

Rental income

 

1920

lotto lottery winning (fully exempt)

600

0

Total assessable income

 

61397.42

 professional conference fees

600

 

fees charged by a registered tax agent

375

 

Donation to Perth Children’s Hospital
Foundation.

100

 

Total deduction

 

1075

Total taxable income

 

60322.42

Tax

 

 

$0-$18200, 0

0

 

$18201-$45000, 19%

5091.81

 

$45001- $120000, 32.5%

4979.7865

 

$120001 – $180000, 37%

0

 

Gross tax

10071.597

 

Medicare levy @ 2%

1206.4484

 

LESS: LMITO

1080

 

Less: LITO

95.16

 

Less: TFN withholding tax

75.2

 

Less: offset

171.42

 

Less: PAYG withholding

14222

 

Net tax liability

 

-4365.735

Note:

Professional conference fees are allowable for the deduction(Ato.gov.au, 2022) 3.
Fees charged by a registered tax agent for an income tax return are allowable to claim the deduction in the next year (Ato.gov.au, 2022) 4.
If income is not more than $90000 for a single taxpayer, then there is a requirement to pay a Medicare levy surcharge (Ato.gov.au, 2022) 5.
If your taxable income is below $66667, then you are eligible for LITO (SuperGuide, 2022)
Part B

Treatment of HELP loan for Tom as per the scenarios provided in part A

You must make loan repayments through the Australian tax system after your salary reaches a certain amount of $47,014 in the financial year 2021-22. Repayments can be made at any time, regardless of income (Ato.gov.au, 2022) 6. Depending on your yearly income, different charges apply. Tom must pay 8.5% of his total taxable income in the current financial year since his taxable income is $117822.42. Tom is eligible for a maximum HELP loan repayment of $10014.91 ($117822.42*8.5%). As a result, Tom repaid the entire $6476 HELP loan.

In both scenarios, scenario 1 and scenario 2, the taxable income of Tom is the same because there is no change in income and expenses. Therefore, allowable to pay the whole amount of the HELP loan $6476.

In scenario 3, Tom only worked half of the year, therefore the total amount of income such as salary, PAYG withholding, reportable superannuation contributions, and reportable fringe benefits is halved. Depending on their annual income, different charges apply to calculate the repayment amount of the HELP loan. Tom must pay 3% of his total taxable income in the current fiscal year since his taxable income is $60322.42. Tom’s maximum HELP loan payback amount is $1809.67 ($60322.42*3%). As a result, Tom paid the $1809.67 HELP loan in full, and the remaining HELP loan amount is shifting to the next year.

Reference

Ato.gov.au. (2022) 1. Reportable fringe benefits – facts for employees. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/General/Fringe-benefits-tax-(fbt)/In-detail/Employees/Reportable-fringe-benefits—facts-for-employees/.

Ato.gov.au. (2022) 2. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Rental-properties-2021.pdf.

Ato.gov.au. (2022) 3. Seminars, conferences and training courses. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Seminars,-conferences-and-training-courses/.

Ato.gov.au. (2022) 4. Cost of managing tax affairs. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/other-deductions/cost-of-managing-tax-affairs/.

Ato.gov.au. (2022) 5. Medicare levy surcharge. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/Individuals/Medicare-and-private-health-insurance/Medicare-levy-surcharge/.

Ato.gov.au. (2022). HELP, TSL and SFSS repayment thresholds and rates. Ato.gov.au. Retrieved 28 March 2022, from https://www.ato.gov.au/Rates/HELP,-TSL-and-SFSS-repayment-thresholds-and-rates/.

SuperGuide. (2022). Guide to the Low Income Tax Offset (LITO). SuperGuide. Retrieved 28 March 2022, from https://www.superguide.com.au/how-super-works/low-income-tax-offset-lito.

TROY. (2022). Taxed On Lotto Winnings In Australia. https://www.ictsd.org/. Retrieved 28 March 2022, from https://www.ictsd.org/do-you-get-taxed-on-lotto-winnings-in-australia/.

Young, S. (2022). Taxation of Dividends. https://www.tved.net.au/. Retrieved 28 March 2022, from https://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=https://www.tved.net.au/PublicPapers/October_2006,_Tax_Basics,_Tax_Basics___Program_11___Private_Companies___Taxation_of_Dividends.html.

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