CCH Income Tax Calculator Help
Individuals
Year of income 1 July 2004 to 30
June 2005
July 2004 Release
The Income Tax Calculator 2004/05 estimates the Australian income tax liability of resident and non-resident individuals for the year of income 1 July 2004 to 30 June 2005, based on the rules which apply to most tax payers. The calculator also estimates resident taxpayers' liability for Medicare levy, Medicare levy surcharge and HEC debt repayment obligations, which are collected through the tax system.
The information to be entered into the calculator is explained below, in the order in which it appears on the calculator.
Taxpayer's taxable
income 2004/05
This is the taxpayer's estimated taxable income for the income year 1 July 2004 to 30 June 2005.
Hospital insurance
status
Select "Taxpayer or a dependant is not covered by private patient hospital insurance" if that statement applies. This is not relevant for single taxpayers with taxable income and reportable fringe benefits below $50,000 and for married taxpayers (or single with dependants) whose combined family income and reportable fringe benefits are below $100,000. Taxpayers with incomes above this range may be liable to a Medicare levy surcharge (1% of taxable income and reportable fringe benefits, in addition to the normal 1.5% levy on taxable income) if they or their dependants do not have adequate private patient hospital insurance. Health insurance coverage is not relevant to non-residents.
HEC debt
Select the relevant box if the taxpayer has an outstanding HEC debt under the Higher Education Contribution Scheme. Taxpayers with a "HEC repayment income" below $35,001 will not be affected. HEC debt is not relevant to non-residents.
Residency status
Select the relevant box if the taxpayer is not a resident of Australia for tax purposes. Where in doubt, taxpayers should clarify their residency status with their tax adviser.
Tax Offsets
Enter the total amount of tax offsets (formerly rebates and tax credits) to which the taxpayer is entitled, ignoring the low income tax offset. The calculator will work out the low income tax offset, if appropriate. A tax offset of $100 reduces a taxpayer’s tax liability by $100. Typical tax offset include dependant tax offsets, medical expenses tax offset, private health insurance tax offset (where not obtained directly from the fund), zone tax offsets for remote locations, tax offsets on franked distributions and various superannuation-related tax offsets. See your TaxPack, CCH Australian Master Tax Guide or tax adviser for additional information.
Users should note that unlike most tax offsets, an excess tax offset attributable to franked distributions is refundable (for individuals and certain other taxpayers). This means that where an individual taxpayer's tax offset from franked distributions is greater than their tax liability, they can apply for a refund of the excess. This calculator does not distinguish between different types of rebates and credits, and therefore does not calculate refunds.
Taxpayer's family status
Family status affects the payment thresholds for Medicare levy, Medicare levy surcharge and HEC debt repayment. Family status is not relevant to non-residents. A single taxpayer should select "Single and has at least one dependant" if the taxpayer is eligible for a child-housekeeper or housekeeper rebate, or is notionally eligible for a sole parent rebate.
Number of dependent
children
Number of dependent children affects the family income threshold for Medicare levy and the family surcharge threshold for Medicare levy surcharge. Number of dependent children is not relevant to non-residents.
Spouse taxable income
The taxable income of the spouse is included in "family income" to determine liability to Medicare levy, Medicare levy surcharge and HEC repayment obligations. This information is not relevant to non-residents.
Taxpayer's reportable
fringe benefits total
The "reportable fringe benefits total" affects "HEC repayment income" and Medicare levy surcharge. Reportable fringe benefits total is not relevant to non-residents.
Spouse's reportable
fringe benefits
The reportable fringe benefits of the spouse are relevant in determining liability to Medicare levy surcharge.
Taxpayer's HEC debt
Enter the amount of the taxpayer's outstanding HEC debt. This amount is only needed to insure that the calculated HEC repayment obligation (based on percentage of HEC repayment income) does not exceed the taxpayer's outstanding HEC debt. HEC debt is not relevant to non-residents.
Net rental loss on
rental property investments
If deducted from taxable income, this amount is added back in determining HEC repayment income. The purpose is to prevent taxpayers from avoiding HEC repayments by negatively gearing property investments. This information is relevant only if you have a HEC debt.
Child-housekeeper rebate. A tax offset available to a taxpayer whose child is wholly engaged in keeping house for the taxpayer. The child may be a natural, step- or adopted child. The child's separate net income cannot exceed $6,422 (2003/04), or $7,646 where the taxpayer qualifies for a notional dependants rebate (in relation to a different child or student).
Deduction. Allowable deductions such as work-related expenses and interest on loans used to acquire income-producing investments are deducted from assessable income, to arrive at taxable income. A deduction of $100 will save up to $47 of income tax, depending on your marginal tax rate. This contrasts to a tax offset (ie rebate or credit) of $100, which saves $100 of tax. The CCH Australian Master Tax Guide contains over 100 pages of information on allowable deductions, including a handy checklist of which expenses are allowable and which are not.
Dependent children. In the context of this calculator, a dependent child is a child under 16 or a student for whom the taxpayer or taxpayer's spouse qualifies for a notional dependants rebate. The number of dependent children affects income thresholds for Medicare levy, Medicare levy surcharge and HEC debt repayments.
Family income. The combined taxable incomes of the taxpayer and his/her spouse.
Family surcharge threshold. $100,000 plus $1500 for each dependant child after the first. The threshold is used to determine liability to Medicare levy surcharge if you are married or have dependants.
Invalid relative rebate. A rebate in respect of a person aged 16 or more who is a brother or sister or (natural, adopted or step-) child of the taxpayer and who receives a disability support pension or equivalent rehabilitation allowance, or is appropriately certified as having a continuing inability to work. The relative's separate net income cannot exceed $3,046 (2003/04).
Housekeeper rebate. A tax offset available to a taxpayer in respect of a housekeeper wholly engaged in keeping house for the taxpayer in Australia and in caring for a (natural, adopted or step-) child of the taxpayer under age 16; any child under 16 for whom the taxpayer qualifies for a notional dependants rebate; an invalid relative for whom the taxpayer is entitled to a rebate; or a (legal or defacto) spouse in receipt of a disability support pension or equivalent rehabilitation allowance.
Income tax rates. The 2004/05 income tax rates for individuals (before Medicare levy, rebates and credits are as follows:
Resident
individuals
|
2004/05 taxable income $ |
Tax on column 1 $ |
% on excess (marginal rate) |
|
6,000 |
Nil |
17 |
|
21,600 |
2,652 |
30 |
|
58,000 |
13,572 |
42 |
|
70,000 |
18,612 |
47 |
Non-resident
individuals
|
2004/05 taxable income $ |
Tax on column 1 $ |
% on excess (marginal rate) |
|
Nil |
Nil |
29 |
|
21,600 |
6,264 |
30 |
|
58,000 |
17,184 |
42 |
|
70,000 |
22,224 |
47 |
HEC repayment income. Your taxable income plus reportable fringe benefits plus net rental loss on rental property investments. If you are single (without dependants) and have a HEC debt, your HEC debt repayments for 2004/05 will be:
|
2004/05 HEC repayment income |
Repayment* (% of HEC repayment income) |
|
Less than $35,001 |
Nil |
|
$35,001 - $38,987 |
4% |
|
$38,988 - $42,972 |
4.5% |
|
$42,973 - $45,232 |
5% |
|
$45,233 - $48,621 |
5.5% |
|
$48,622 - $52,657 |
6% |
|
$52,658 - $55,429 |
6.5% |
|
$55,430 - $60,971 |
7% |
|
$60,972 – 64,999 |
7.5% |
|
$65,000 and over |
8% |
* Not to exceed the amount of the outstanding debt.
If you are married or have one or more dependants, the same table applies except that you will not have to make any repayments if your family income does not exceed $28,329 plus $2,601 for each dependant child (for 2003/04 – 2004/05 values not yet legislated).
Medicare levy. The Medicare levy is assessed by the Tax Commissioner (in addition to income tax) at the rate of 1.5% of taxable income. Some taxpayers such as military personnel who are entitled to Government-provided medical care are wholly or partly exempt, depending on whether their dependants are also entitled to Government-provided medical care. Taxpayers whose income is below certain limits are wholly or partially exempt. The calculator provides for low income earners' exemptions (based on the 2003/04 values as 2004/05 values not yet legislated), but does not deal with employment-related exemptions.
Medicare levy surcharge. The Medicare levy surcharge was introduced to encourage high income earners to purchase private patient hospital insurance rather than exploit the free hospital treatment which is available to uninsured patients. The surcharge is assessed by the Tax Commissioner at the rate of 1% of taxable income and reportable fringe benefits. It does not apply to:
Notional dependants rebate. A rebate that is no longer available but for which the eligibility rules are maintained to determine eligibility for certain other tax concessions. To qualify, the taxpayer must have contributed to the maintenance of a child under 16 or a student and the child's or student's separate net income must not exceed $1,785 for the year (2003/04) or $282 plus $28.92 for each week the child or student was maintained.
Notional sole parent rebate. A rebate which before 2000/01 could be claimed by a taxpayer who had the sole care of a dependent child under 16 or a student. The rebate has been replaced by family tax benefit B. A person who would have been eligible for the rebate (if it had not been replaced) is eligible for the Medicare levy family income threshold. The child's or student's separate net income must not exceed $1,785 for the year (2003/04) or $282 plus $28.92 for each week the child or student was maintained.
Reportable fringe benefits. The grossed-up value of the fringe benefits provided to an employee and the employee's associates must be shown on the employee's group certificate for the income year ending on the subsequent 30 June. It is not necessary to report employee totals that do not exceed $1000. Some fringe benefits, including car parking and meal entertainment benefits are not reportable fringe benefits. These are referred to as "excluded benefits". Reportable fringe benefits can affect the employee's Medicare levy surcharge liability and HEC repayments, as well as eligibility for income-tested rebates and government benefits.
Resident or non-resident. For a person who has always lived in Australia or always lived outside Australia, residency status is quite clear. However, for people who have recently moved or whose location is or has recently been temporary, the question of residency can be quite complex. Residency is discussed in Taxation Ruling TR 98/17 and in the CCH Australian Master Tax Guide.
Separate net income. The gross income of a dependant, less any expenses which are direct costs of acquiring that income.
Taxable income. Taxable income is comprised of the taxpayer's assessable income, less allowable deductions. Assessable income includes any income which must be included on the tax return, including salary and wages, dividends, interest income and net capital gains. There are many special rules dealing with specific amounts to be included in taxable income, such as imputation credits attached to franked dividends. Consult your TaxPack, CCH Australian Master Tax Guide or tax adviser for detailed information regarding special transactions such as dividends, termination payments and capital gains.
This calculator and related information are for general guidance only. For more information, contact your Tax Agent. Taxation professionals may wish to refer to the following CCH print or electronic publications:
This calculator is made available by CCH for use subject to the following:
• the calculator (including its help file) provides general information without taking account of the particular circumstances of any individual;
• it is not, and should not be relied on as, a substitute for appropriate professional advice;
• CCH gives no assurance that the calculator is free of errors or suitable for any user's intended purposes;
• to the extent permitted by law, CCH will not be liable for any damages or loss suffered by the user or anyone else from use of the calculator.
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