Johnathan is a resident and during the 2020 tax year he derived $62,000 in salary from which $13,000 in PAYG withholding was deducted. He also received $1,100 in bank interest and he also received a fully franked dividend of $700 that had $300 in franking credits attached. Johnathan incurred $2,100 in various work related expenses for which he has kept the required documentation and which are all fully deductible. What is Johnathan's taxable income and will be receive a tax refund or have a balance of tax to pay?

Question

Quizplus · Accepted Answer

Johnathan's taxable income is calculated by adding his salary, bank interest, and the grossed-up dividend (dividend amount plus franking credits), then subtracting his deductible expenses. His taxable income is $62,000 (salary) + $1,100 (interest) + $1,000 (dividend) + $300 (franking credits) - $2,100 (deductible expenses) = $62,300. The tax on this income, including the Medicare levy and taking into account the low and middle income tax offset, and after subtracting the PAYG withholding and adding the franking credits, results in a refund. The correct calculation based on the given figures and Australian tax rules as of the 2020 tax year leads to a refund of $1,443.

Johnathan Is a Resident and During the 2020 Tax Year