TAX
Taxable Income = income – tax deductions
Tax deductions: business related expenses subtracted from total income to get taxable income

Tax deducted from pay: tax taken out of your PAYE

i.e \$25,000 taxable income

3060 + 0.34 (25000 – 20700)

= \$4522

To calculate Tax Payable you need to find:

Total income – tax deductions = taxable income

Use taxable income and tax payable sheet plus Medicare levy

Medicare levy = 1.5% of taxable income

Total Tax Payable = tax payable + Medicare levy

Wage Deductions:

GROSS PAY = a person’s weekly wage or salary without deductions

NET PAY = weekly wage or salary after deductions

Eg – Alan received a salary of \$47542 and a total from other income of \$496. His total tax deductions were \$1150. During the year he had already paid tax instalments amounting to \$13210.75. Find:

Refund or bill after Medicare levy is added:

13210.75 + 703.32

= \$13914.07

13914.07 – 13210.75

Bill = \$703

How much would his wage rise if he received an extra \$10 per week:

10 x 0.015 + 10 x 0.43

\$4.45

His Total Income:

47542 + 496

= \$48038

Taxable income:

48038 – 1150

= \$46888

Medicare levy:

46888 x 0.015

= \$703.32

Tax payable on taxable income;

3000 + 0.43 x (46888 – 30000)

EXAMPLE