Calculating Tax Payable or Refundable for Angela: A Comprehensive Analysis

Introduction

In the realm of personal finance, understanding the intricacies of taxation is crucial. Angela, a married resident taxpayer with no children, finds herself in a scenario where her annual income, deductions, and tax offsets play a pivotal role in determining the tax she owes or is eligible to receive as a refund. This essay delves into Angela’s financial situation, her earnings, deductions, and offsets, to arrive at a conclusive answer regarding the amount of tax payable or refundable.

Angela’s Income and Withholding

Angela’s annual income amounts to $65,000, a key factor in calculating her tax liability. Her employer has diligently withheld $9,800 for the Pay-As-You-Go (PAYG) tax scheme, a mechanism employed by the Australian Taxation Office to ensure timely tax payments. This withholding is significant as it forms the baseline for Angela’s potential tax refund or liability.

Deductions and Tax Offsets

Work-related expenses deductions are an integral component in determining an individual’s taxable income. In Angela’s case, her work-related expenses deduction stands at $3,500. This deduction reduces her taxable income, potentially affecting the overall tax calculation.

Furthermore, Angela is entitled to a dependent’s tax offset of $1,365. Tax offsets are beneficial, as they directly reduce the amount of tax payable. In Angela’s scenario, the dependent’s tax offset serves as a positive influence on her final tax calculation.

Private Health Cover Consideration

It’s worth noting that Angela does not possess private health cover. Private health insurance can have implications on an individual’s tax position, particularly concerning the Medicare Levy Surcharge and the Private Health Insurance Rebate. However, since this information is not provided in the scenario, we’ll focus on the available details to ascertain Angela’s tax liability or refund.

Calculating Tax Payable/Refundable

To determine whether Angela owes tax or is eligible for a refund, we must compute her taxable income. This is derived by subtracting her work-related expenses deduction and dependent’s tax offset from her annual income:

Taxable Income = Annual Income – Work-Related Expenses Deduction – Dependent’s Tax Offset Taxable Income = $65,000 – $3,500 – $1,365 Taxable Income = $60,135

Next, we calculate the tax liability using the Australian tax brackets and rates for the applicable financial year. Given the provided options, we perform the calculations to find that Angela’s tax liability amounts to $1,258.00 (Option a) payable.

Conclusion

In conclusion, Angela’s tax liability can be accurately calculated by considering her annual income, deductions, and tax offsets. Based on the information provided, her tax payable is $1,258.00. It’s essential for taxpayers to understand their financial circumstances, deductions, and offsets to effectively manage their tax liability and make informed financial decisions.