Fin 205
1.1)
Belinda’s 2010-11 taxable income:
Assessable Income
Gross Salary $67,500
Unfranked dividends $2,300
Total Assessable Income $69,800
Less Allowable deductions
PAYG tax instalments deducted ($15,500)
Subscriptions ($130)
Union fees ($600)
Telephone expense ($280*30%) ($84)
Total allowable deductions ($16,314)
Taxable Income $53,486
Note:
Stationery is considered to be expenditure of a private nature thus is not tax deductable.
1.2)
Belinda’s 2010-11 net tax payable / refund including the Medicare levy:
Taxable Income $53,486
Gross Tax Payable ($4,650+30% of the excess over $37,000)
[$4650+[($53,486-$37,000)*30%]] $9,595.80
Less: Tax Offset ($312)
Add Medicare Levy (1.5%) $802.29
Net Tax Payable $10,086.09
2a)
The total initial investment amount made by Ricky in XLNT
= Share Units*Initial Share Price
= 3,000*$7.10
= $21,300
2b) The exit fee if Ricky sells his total investment after 6 months = Share Units*Current Share Price*5% = (3,000*$8.86)*5% = $1,329 2c) The total pre-tax proceeds that Ricky will realise assuming the investment is sold after 6 months = Sales Revenue+Income Distribution-Initial Investment Amount-Exit Fee = (3,000*$8.86)+(3,000*$0.40)-$21,300-$1,329 = $26,580+$1,200-$21,300-$1,329 = $5151 2d)
The pre-tax annualised absolute return to Ricky assuming the investment is sold after 6 months
= [(market value at the end of the evaluation period- market value at the beginning of the evaluation period+Income distribution)]/Purchase Price*100
= [(3,000*$8.86)-(3,000*$7.10)+(3,000*$0.40)]/(3,000*$7.10)*100
= [($26,580-$21,300+$1,200)/$21,300]*100
= 30.42%
2e) Tax will Ricky be liable for upon the current sale of his total investment in XLNT
= Share Units*Current Share Price*Tax Rate
= 3,000*$8.86*30%
= $26,580*30%
= $7,974
2f)
Total after-tax
Belinda’s 2010-11 taxable income:
Assessable Income
Gross Salary $67,500
Unfranked dividends $2,300
Total Assessable Income $69,800
Less Allowable deductions
PAYG tax instalments deducted ($15,500)
Subscriptions ($130)
Union fees ($600)
Telephone expense ($280*30%) ($84)
Total allowable deductions ($16,314)
Taxable Income $53,486
Note:
Stationery is considered to be expenditure of a private nature thus is not tax deductable.
1.2)
Belinda’s 2010-11 net tax payable / refund including the Medicare levy:
Taxable Income $53,486
Gross Tax Payable ($4,650+30% of the excess over $37,000)
[$4650+[($53,486-$37,000)*30%]] $9,595.80
Less: Tax Offset ($312)
Add Medicare Levy (1.5%) $802.29
Net Tax Payable $10,086.09
2a)
The total initial investment amount made by Ricky in XLNT
= Share Units*Initial Share Price
= 3,000*$7.10
= $21,300
2b) The exit fee if Ricky sells his total investment after 6 months = Share Units*Current Share Price*5% = (3,000*$8.86)*5% = $1,329 2c) The total pre-tax proceeds that Ricky will realise assuming the investment is sold after 6 months = Sales Revenue+Income Distribution-Initial Investment Amount-Exit Fee = (3,000*$8.86)+(3,000*$0.40)-$21,300-$1,329 = $26,580+$1,200-$21,300-$1,329 = $5151 2d)
The pre-tax annualised absolute return to Ricky assuming the investment is sold after 6 months
= [(market value at the end of the evaluation period- market value at the beginning of the evaluation period+Income distribution)]/Purchase Price*100
= [(3,000*$8.86)-(3,000*$7.10)+(3,000*$0.40)]/(3,000*$7.10)*100
= [($26,580-$21,300+$1,200)/$21,300]*100
= 30.42%
2e) Tax will Ricky be liable for upon the current sale of his total investment in XLNT
= Share Units*Current Share Price*Tax Rate
= 3,000*$8.86*30%
= $26,580*30%
= $7,974
2f)
Total after-tax