Question: Victoria Jackson is a 55-year-old interior decorator who works for herself and isn't registered for GST. She submitted her income tax return for 2015/16. In 2016/17, her national taxable income was $48,000, which includes a $2,000 donation and a $500 fee to a tax agent. She also paid $1,850 to a private health fund starting from December 1, 2016. Can you figure out her PAYG instalments for 2016/17?
Answer: According to a certain tax law, Victoria gets a discount of 26.79% for her private health insurance from December 1, 2016, to March 31, 2017, and 25.93% from April 1, 2017, to June 30, 2017. This discount equals $145.13.
Another tax law says Victoria is eligible for a low income rebate. This rebate amounts to $445 minus a certain reduction, which is calculated as ($48,000 - $37,000) multiplied by 0.015, giving $280.
Based on the tax rates for 2016/17, the tax she owes on her income is calculated as follows: $0 (for income under $18,200) plus 19% of the amount between $18,200 and $37,000, plus 32.5% of the amount between $37,000 and $48,000. This equals $7,147.
Additionally, she owes 2% of her taxable income as Medicare Levy, which amounts to $960.
So, her estimated PAYG tax instalment for 2016/17 is calculated as $7,147 (tax payable) minus $145.13 (health insurance discount) minus $280 (low income rebate), plus $960 (Medicare Levy), totaling $7,682.
