TABL2751 – BUSINESS TAXATION

Tax Rates and Example Calculation

TAX RATES (2017-18)

The Tax Rate Schedule for Australian Resident Individuals for the Income Year 2017-18

TAXABLE INCOME TAX ON INCOME

Less than $18,200 NIL
$18,201 to $37,000 19c for each dollar over $18,200
$37,001 to $87,000 $3,572 + 32.5c for each dollar over $37,000
$87,001 to $180,000 $19,822 + 37c for each dollar over $87,000
$180,001 + $54,232 + 45c for each dollar over $180,000

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The Medicare Levy Schedule: Australian Resident Individuals for the Income Year 2017-
18.

TAXABLE INCOME Medicare Levy

Less than $21,655 Nil
Between $21,656 and $27,068 10c for each dollar over $21,656
$27,068 2c for each dollar of your taxable income

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The Medicare Levy Surcharge Schedule applicable to some taxpayers (broadly, individuals
without private patient hospital health insurance, and who have taxable income above
$90,000) who are Australian Resident Individuals for the Income Year 2017-18

TAXABLE INCOME Medicare Levy Surcharge

$90,001 to $105,000 1c for each dollar of your taxable income
$105,001 to $140,000 1.25c for each dollar of your taxable income
$140,001 + 1.5c for each dollar of your taxable income

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Tax Offset for Individuals that are Australian Residents (and “Low-Income Earners”) for
the Income Year 2017-18

TAXABLE INCOME (TI) TAX OFFSET

$0 - $37,000 $445
$37,001 - $66,666 $445 - ([Taxable Income - $37,000] x 1.5%)
$66,667 or more NIL

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The Tax Rate Schedule for Non-Resident Individuals for the Income Year 2017-18

TAXABLE INCOME TAX ON INCOME

Less than $87,000 32.5c for each dollar over nil
$87,001 to $180,000 $28,275 + 37c for each dollar over $87,000
$180,001 + $62,685 + 45c for each dollar over $180,000

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Higher Education Loan Programme (HELP) Repayment Rate Schedule for Taxpayers
(Individuals) with an outstanding HELP Debt for the Income Year 2017-18

2015-16 REPAYMENT INCOME RATE OF REPAYMENT

(BROADLY, TAXABLE INCOME) (PERCENTAGE OF TAXABLE INCOME)
Below $55,874 Nil
$55,874 - $62,238 4.0%
$62,239 - $68,602 4.5%
$68,603 - $72,207 5.0%
$72,208 - $77,618 5.5%
$77,619 - $84,062 6.0%
$81,063 - $88,486 6.5%
$88,487 - $97,377 7.0%
$97,378 - $103,765 7.5%
$103,766 and above 8.0%

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The Tax Rate for Companies (Private or Public) for the Income Year 2017-18

Base rate entities: (broadly < $25 million annual turnover)

flat rate of 27.5% on their taxable income

All other companies: flat rate of 30% on their taxable income

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Fringe Benefits Tax

FBT Year Gross-up rate for Gross-up rate for FBT rate
(ends 31 March) Type 1 Type 2
Fringe Benefit Fringe Benefits
2017-2018 2.0802 1.8868 47.0%
 EXAMPLE TAX CALCULATION

Cheryl, aged 32 and single, has a taxable income of $95,000 for the 2017-18 income year.
Cheryl does not have private patient hospital health insurance. Cheryl has a FEE-HELP debt
of $9,500 as at 30 June 2018. Cheryl has a tax offset of $2,300 for the 2017-18 income year.

Tax

Tax on $87,000 = $19,822

Tax on $8,000 ($95,000 - $87,000) at 37% = $2,960 = $22,782

Subtract Tax Offsets ($2,300)

$20,482

Add Medicare Levy (2.0%) = $1,900

Add Medicare Levy Surcharge (1.0%) = $950 $2,850

Add HELP Repayment

Repayment on $95,000 at 7.0% * = $6,650

Liability to ATO ($20,482 + $2,850 + $6,650) = $29,982

* Note that the HELP repayment income schedule is not a progressive rate schedule; it is
different to the income tax rate schedule for individuals.

Variation on Example

If Cheryl’s FEE-HELP debt as at 30 June 2018 were only $5,000, she would only be liable
for $5,000 (and not $6,650).

This is because a FEE-HELP debt is a debt – it is an amount the taxpayer owes the
government. A taxpayer will never have to pay back more than the debt amount.

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Activities (Self-study)

1. What would be Cheryl’s liability to the ATO if her taxable income was $110,000?
(Apart from this change, you can assume the same facts as the first calculation).
2. What would be Cheryl’s liability to the ATO if her taxable income was $110,000 and
she did have private health hospital cover? (All other facts remain the same).

(Answers will be made available at the beginning of the Week 2 lecture – these will be for
you to check your answers, they will not include the full workings).