Length: 3,500 Simon works as a chiropractorfor asmall partnershipof threeotherprofessionalswho employhim to workin the office four days each week. Simonearns over $90,000 per year.Each practitioner in...

Tax
Australian taxation and law
Tax
Table of contents
 Introduction
 Background
 Analysis of transactions
 Conclusion
 References
Tax
 Introduction
Law forms an essential element of all countries as it helps maintain peace and justice. Hence
there are several laws formed in each of the nations for several purposes. Taxes are also an
important set of laws formed by the government. Tax is an essential element of all governments
and economies. The Australian taxation laws, with regard to income tax are the most significant
ones and are collected by the Federal government. In case of individual taxation, the annual
income of the individual is considered and then as per the regulations deductions are given
ased on the regulations and exemptions. The Australian tax system is a progressive taxation
system where in the higher the income, higher the tax rates. In this way the individual payable
taxes are calculated.
Industrial regulation has been defined as the rules and regulations that have been imposed on
industries as a law or the framework within which a business or an industry is bound to operate
in order to ensure that they fulfill the norms set by the government for just and smooth
operations of industries and businesses. Individuals as well as industries are to comply with
taxation laws and pay their taxes promptly (taxcalc.com.au, 2012).
There are several government regulations and industrial regulations that impact the formation of
market structures in a competitive environment. The main focus is to protect the interests of the
consumer as well as the economy at large. In this way government regulations play an important
ole not only for businesses but for several stakeholders, which may include internal as well as
external stakeholders of a firm. In this way regulations and competition laws become extremely
essential in case of the survival of an economy. Hence each of the nations has formed their own
set of laws which have to be followed by the international players as well as all of the domestic
players that participate in a particular market or even a particular sector or industry. The
Australian government requires each of the professionals to pay their taxes.
 Background
The given taxation problem consists of information for a professional, who is assumed to be a
esident and has an income above $90,000. Based on this as well as the information given in the
case, there has been a calculation done rates applicable firstly without deductions and then with
deductions thus highlighting the importance of deductions.
Tax rates applicable: for income above $80,000 = $17,547 plus 37c for each $1 over $80,000 (as
per rates for FY 2012-2013) (taxcalc.com.au, 2012).
Tax
Basic salary $90,000
Tax on income $ 21247
Medical tax levy @1.5% $ 1350
Low income tax offset -
Total $ 22597
Basic salary $90,000
Deductions
a) Interest on loan (60,000*8/100 = 4800)
) Travelling expense 4000
c) Rent of the staff lounge (120*3*4*12) 17280
d) Uniform dry cleaning 3500
e) Injuries compensation (lump sum) $ 200000 20,000
Total deductions 49,580
Net taxable income 40,420
Total tax
Tax on income $ 4683
Medical tax levy @1.5% $ 606.3
Low income tax offset ($393.70)
Total tax $ 4896.10
 Analysis of transactions
Tax
The transactions for taxation is based on the fact that deductions are allowed in the Australian
taxation system. There are several allowances as well. In case of the given situation the taxation
for an individual professional would be the most suitable. The tax rates that we consider are
ased on the cu
ent tax rates for the year 2012-2013 (as we assume that the income is earned in
the cu
ent year).
As Simon is a chiropractor, he can be considered to be a professional, we first need to consider
his residential status. The residential status needs to be considered as it is essential for the
purpose of determination of the tax position of an individual. It is not possible to assess the taxes
for an individual without knowing the residential position. In this case we assume that Simon is
an Australian resident.
As we assume him to be a resident, then we need to consider the element of tax slab. The tax
slabs in Australian taxation, for the financial year 2012- 2013 is as follows:
Tax Rates 2012-2013
TAXABLE INCOME TAX ON THIS INCOME
$0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 $17,547 plus 37c for each $1 over $80,000
Over $180,000 $54,547 plus 45c for each $1 over $180,000
Based on these tax slabs we need to calculate the tax for Simon. Considering that there are no
deductions we have the information that Simon has a salary of $90,000. Then we consider him to
e in the fourth tax slab where in $17547 + $ 3700 = $ 21247. This is the basic application of
tax based on the tax slabs given by the Federal government as per the taxation legislations.
But the total tax rates are calculated based on an inclusion of Medicare levy as well. The
Medicare levy is nothing but a fund created by the government in order to provide for medical
expenses. In this way we consider that as well while calculating net tax payment. The cu
ent
ate of Medicare levy is 1.5% on taxable income. It comes up to $ 1350. In this way the second
phase of tax is calculated.
Tax
After that the next calculation is of flood levy. Flood levy is a tax levied for the purpose of
infrastructural development and repair of damages that had occu
ed due to floods....