The table shows the income tax rates for the 2020–2021 financial year. Taxable income Tax payable on this income 0 – $18 200 Nil $18 201 – $45 000 19 cents for each $1 over $18 200 $45 001 – $120 000 $5092 plus 32.5 cents for each $1 over $45 000 $120 001 – $180 000 $29 467 plus 37 cents for each $1 over $120 000 $180 001 and over $51 667 plus 45 cents for each $1 over $180 000 William has a gross annual salary of $84 000. He has allowable tax deductions of $900 for home-office equipment and $474 for union fees. William must also pay a Medicare Levy of 2% of his taxable income. Calculate the total tax payable by William including the Medicare Levy.

SSCE HSC Mathematics Standard Rates: The table shows the income tax r

The table shows the income tax rates for the 2020–2021 financial year - HSC - SSCE Mathematics Standard - Question 22 - 2021 - Paper 1

Question 22

The table shows the income tax rates for the 2020–2021 financial year. Taxable income Tax payable on this income 0 – $18 200 Nil $18 201 – $45 000 19 cents for ... show full transcript

Worked Solution & Example Answer:The table shows the income tax rates for the 2020–2021 financial year - HSC - SSCE Mathematics Standard - Question 22 - 2021 - Paper 1

Step 1

Taxable income

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Answer

To determine William's taxable income, we need to deduct his allowable tax deductions from his gross annual salary:

Taxable ext{ }income = 84,000 - 900 - 474 = 82,626

Step 2

Income tax payable

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Answer

William's taxable income of $82,626 falls within the range of$ 45,001 to $120,000. Therefore, we use the formula for calculating income tax:

Income ext{ }tax ext{ }payable = 5,092 + 0.325 imes (82,626 - 45,000)

Calculating this gives:

Income ext{ }tax ext{ }payable = 5,092 + 0.325 imes 37,626 = 5,092 + 12,248.05 = 17,340.05

Step 3

Medicare levy

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Answer

The Medicare Levy is calculated as 2% of William's taxable income:

Medicare ext{ }levy = 0.02 imes 82,626 = 1,652.52

Step 4

Total to be paid

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Answer

To find the total tax payable including the Medicare Levy, we add the income tax payable to the Medicare Levy:

Total ext{ }to ext{ }be ext{ }paid = 17,340.05 + 1,652.52 = 18,972.57

The table shows the income tax rates for the 2020–2021 financial year - HSC - SSCE Mathematics Standard - Question 22 - 2021 - Paper 1

Worked Solution & Example Answer:The table shows the income tax rates for the 2020–2021 financial year - HSC - SSCE Mathematics Standard - Question 22 - 2021 - Paper 1

Taxable income

Income tax payable

Medicare levy

Total to be paid

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