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