Earning Money and Taxation

8/9/2019 Earning Money and Taxation

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EARNING MONEY AND

TAXATIONYear 11


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SALARY AND WAGES

Salaryis a payment for a years work which isthen divided into equal monthly, fortnightly orweekly payments. People who are paid a salaryinclude accountants, teachers and nurses.

AWageis a payment for work calculated on anhourly basis. People who are paid a wage includeshop assistants, tradespeople and factory workers

Remember

1 year = 52 weeks

= 26 fortnights

= 12 months


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ADVANTAGES AND DISADVANTAGES

Advantage Disadvantage

Salary

Wage


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EXAMPLES

1. Mitchell earns a salary of $65 208 p.a. He is paid

fortnightly. How much does he receive each fortnight?

2. Jasmine is paid at a rate of $1098 for a 40 hour week.

1. How much does she get paid per hour?

2. How much will Jasmine earn for working 38 hours the next week?

Mitchell received $2508 each fortnight

Jasmine earns $27.45 per hour.


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TO DO

Cambridge

Ex 1A pg 3

Q2, 4, 6, 8, 10, 12, 14, 15, 17, 19, 20, 22


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OVERTIME AND SPECIALALLOWANCES

Overtime rates apply when employees workbeyond the normal working day.

Employees receive an allowance if they work

under difficult or dangerous conditions such aswet weather, extreme temperatures etc.

Casual work involves a set amount paid for eachhours work. It can be paid fortnightly or weekly.

Overtime rates

Time and a half Hourly wage x 1.5

Double time Hourly wage x 2


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EXAMPLES1. Sam earns $16 an hour. Find Sams wage if he works 26hours at normal time, 4 hours at time and a half and 2

hours at double time.

2. Sam also gets an extra 45 cents per hour heightallowance for working at extreme heights. The nextweek Sam works 30 hours normal time of those he spent

20 hours on a tall building. Find Sams wage for thisweek?


8/37

TO DO

Cambridge

Ex 1B pg 8

Q2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 21

New Century

Ex 4-01 pg 152

Q1, 2, 3, 5, 6, 8, 9, 12, 14, 16, 17, 19, 20


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ANNUAL LEAVE LOADING

Payment that is calculated as a fixed percentageof the normal pay over a fixed number of weeks.

Usually at a rate of 17%.

Annual Leave Loading

Holiday loading = 17 % x normal weekly pay x number of weeks leave


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EXAMPLE 1

Tristan earns $850 per week. When he takes 4 weeks

annual holiday, he receives and extra 17% of 4 weeks payas a holiday loading in addition to his 4 weeks pay.

a) Calculate Tristans holiday loading

b) What is the total value of Tristans holiday pay (beforetax)?

OR


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EXAMPLE 2

1. Thomas works a 40 hour week at a rate of $18.50 per

hour. He receives 17% of 4 weeks normal pay asholiday loading. What is Thomas's pay for the holiday?

holiday loading

Thomas receives $3478 holiday pay


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TO DO

Cambridge

Ex 1C pg 8

Q2, 4, 6, 9, 10, 11

New Century

Ex 4-03 pg 159

Q2, 3, 4, 8, 10, 14,15


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EXAMPLE 11. Darius is a car salesman. He is paid a retainer of$150 plus commission of his weekly sales over

$50 000.

(note: a retainer is an amount of money a

salesperson is paid without selling anything)

Calculate Darius weekly pay if he is paid a commissionof 5% and sells $120 000 worth of cars

Darius receives $3650 for the week


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EXAMPLE 21. Zoe is a real estate agent who earns a 5% commissionon the first $150 000 and 2% commission on amounts

thereafter. If Zoe sells a house for $240 000 what isher commission?

Zoe receives $9 300 commission


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TO DO

Cambridge

Ex 1D pg 16

Q2, 4, 6, 8, 10, 11, 12


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PIECEWORK, ROYALTIES ANDINCOME FROM GOVERNMENT

Piecework is a fixed payment for work completed.

A royalty is a payment for the use of intellectualproperty such as a book or song. It is calculatedas a percentage of the profit received from its use.

There are many types of benefits that you canreceive from the government. These includeyouth allowance, pension, austudy etc.


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EXAMPLES1. Robert is a tiler and charges $47 per square metre tolay tiles. How much will he earn for laying tiles in aroom whose area is 14 square metres?

2.Andrew is an author and is paid a royalty of 12% ofbooks sold. Find his royalties if there were 2480 bookssold at $38.90 each.

Robert will earn $658

Y h ll hl l d d k


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3.Youth allowance helps people studying, undertakingtraining or in an apprenticeship.

How much youth allowance does Ryan receive in a year ifhe is over 18 and living at home while studying?


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TO DO

Cambridge

Ex 1E pg 20

Q2, 4, 6, 8, 10, 12, 13

New Century

Ex 4-02 pg 156

Q2, 6, 8, 12, 14, 20

Ex 4-04 pg 164

Q1, 5


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GROSS PAY, NET PAY ANDDEDUCTIONS

Gross pay is the total of an employees pay beforeany deductions are made.

The amount remaining after deductions havebeen subtracted is called net pay or take-homepay.

Deductions are a regular amount of moneysubtracted from a persons wage or salary. Thesecan include income tax, superannuation, health

insurance and union fees.

Net pay = Gross pay - Deductions


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EXAMPLES1. Laura is a nurse who receives a gross weekly wage of$2945. She has the following deductions taken from her

pay:Income tax - $861Health fund payments - $48.25Superannuation - $67.95

What is Lauras net pay?

Laura's net pay is $1967.80


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2. Oscar received the following pay slip What amount is received thispay for:

a. Gross pay?

b. Net pay?

c. Superannuation?d. PAYG tax?


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TO DO

Cambridge

Ex 1F pg 24

Q2, 4, 6, 8, 10, 12, 13

New Century

Ex 4-05 pg 167

All Questions


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BUDGETING

Budgeting involves balancing of income and theexpenses. They are created for a specified timesuch as weekly, monthly or yearly.

Creating a budget

1. List all the income categories.

2. List all the expense categories.

3. Calculate the total of the income and expensescategories.

4. Balance the budget by modifying the categories or by

entering a balance category.

EXAMPLE


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EXAMPLE

1. Balance the following weekly budget.


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TO DO

Cambridge

Ex 1G pg 29

Q2, 4, 5, 6

New Century

Ex 4-06 pg 169

All Questions


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INCOME TAXIf we use some of our income for work related expenses or to

donate money to charities, these amounts are called allowable(tax) deductions

Taxable Income = Gross income allowable (tax) deductions

Income tax is calculated on our taxable income (rounded down to

the nearest dollar) for a financial year and operates on a slidingscale so that the more we earn, the higher the rate of tax we pay.


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EXAMPLE1. Cyndi, earned $56 375 and claimed $326.20 inwork related expenses and $125 in donations tocharities. Find the amount of income tax Cyndishould pay, using the table.

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 $3572 plus 32.5c for each $1 over $37 000

$80 0001 - $180 000 $17 547 plus 37c for each $1 over $80 000

$180 001 and over $54 547 plus 45c for each $1 over $180 000

taxable income

The amount of income tax Cyndi should pay is $9 722.24


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TO DO

Cambridge

Ex 10A pg 295

Q2, 4, 6, 8, 9, 10

Ex 10B pg 299Q2, 4, 6, 8, 9


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MEDICARE LEVY TAXThe Medicare Levy is a tax used by the

government to fund Medicare.The standardMedicare levy for Australian residents is

1.5% of taxable income.

Example 1Calculate the Medicare levy for Susie, who has ataxable income of $62 379.

Example 2Calculate Stevens Medicare Levy if his taxable incomewas $85 690


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TO DO

Cambridge

Ex 10C pg 302

Q2, 4, 6, 7, 8, 9

New Century

Ex 4-07 pg 173

All Questions


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PAYG TAX AND TAX RETURNS

PAYG (pay as you go) is where tax is deducted from apersons gross pay every payday, so they avoid havingto pay a huge sum at the end of the year.

Each year every income earner must submit a taxreturn. The Australian Tax Office (ATO) calculates theincome tax and Medicare levy payable.

You will get a tax refund if you paid more thannecessary or you have a tax debt if you have not paidenough tax throughout the year.

Tax refund = PAYG tax (income tax + Medicare levy)

Tax Debt = (income tax + Medicare Levy) PAYG tax

TaxableIncome Taxonthisincome


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EXAMPLEMia earns a salary of $115 412.70 and claims a taxdeductions of $1743. Last year she paid a total of $37 412

PAYG tax. Calculate her:Taxable incomeIncome tax payable

Medicare Levy

Tax refund or tax debt

total tax

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 $3572 plus 32.5c for each $1 over $37 000

$80 0001 - $180 000 $17 547 plus 37c for each $1 over $80 000

$180 001 and over $54 547 plus 45c for each $1 over $180 000


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TO DO

Cambridge

Ex 10D pg 306

Q2, 4, 6, 8, 10, 12, 13, 14

New CenturyEx 4-08 pg 176

All Questions


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GST AND VATThe goods and services tax (GST) in Australia is 10% of thecost. In other countries, it is called the value-added tax (VAT).

Prices in Australia are usually printed with the GSTincluded.

Example

A camera cost $568 plus 10% GST. What is the selling price?

A television costs $1995, inclusive of GST. What is theoriginal price of the tv, to the nearest 5c, before GST wasadded?

$56.8


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TO DO

Cambridge

Ex 10E pg 311

Q2, 4, 6, 8, 9, 10,

Ex 10F pg 315Q2, 4, 5, 6

New Century

Ex 4-09 pg 179Every 2ndQuestion

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Earning Money and Taxation