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Abel lives in Australia - NSC Mathematical Literacy - Question 4 - 2017 - Paper 2
Question 4
Abel lives in Australia. He earned an annual taxable income of $289,303.26 in the 2015/2016 tax year and $311,001 in the 2016/2017 tax year. He studied the revised A... show full transcript
Worked Solution & Example Answer:Abel lives in Australia - NSC Mathematical Literacy - Question 4 - 2017 - Paper 2
Step 1
4.1.1 Identify the taxable income bracket(s) affected by the tax rate changes introduced from 1 July 2016.
Answer
The taxable income brackets affected by the tax rate changes introduced from 1 July 2016 are:
- 87,000
- 180,000
- $180,001 and over
These brackets apply to individuals earning different ranges of income.
Step 2
4.1.2 Explain the tax implications of the medical levy on individual tax payers.
Answer
The medical levy generally imposes an additional charge of 2% on the taxable income of individuals. This levy is especially aimed at higher-income earners, where those with incomes above a certain threshold may face increased costs due to this additional tax. The medical levy is meant to contribute to funding Australia's public health system.
Step 3
4.1.3 Verify, showing ALL calculations, whether Abel's statement is CORRECT.
Answer
To verify Abel's statement:
-
Calculate Tax Due for 2016:
- Taxable Income: $289,303.26
- Tax Calculation: of }(289,303.26 - 180,000)$$ - Calculate: $$= 54,547 + 0.45 imes 109,303.26 = 103,733.47$$
- Medical Levy: ext{Medical levy} = 2 ext{% of }289,303.26 = 5,786.07
- Total Amount Due:
-
Calculate Tax Due for 2017:
- Taxable Income: $311,001
- Tax Calculation: of }(311,001 - 180,000)$$ - Calculate: $$= 54,232 + 0.45 imes 131,001 = 119,402.47$$
- Medical Levy: ext{Medical levy} = 2 ext{% of }311,001 = 6,220.02
- Total Amount Due:
-
Difference in Tax and Levy Amounts:
- Difference:
Since the calculations confirm that the difference is indeed $9,882.94, Abel's statement is CORRECT.