David lives in the country of Snowland. He has: a part-time job with one employer earning a gross salary of $26,000 per year; a casual job with a different employer earning a gross salary of $5,000 per year; $14,000 in a 1 year term deposit that will earn interest at the rate of 4% per year; and work-related expenses of $3,000 per year that are an allowable deduction. What is his assessable income (to the nearest dollar)? Please do not include dollar signs or commas in your answer.

Question

BlackTom AI · Accepted Answer

We start by identifying all components of David's income.

- Part-time Salary: 26,000 per year. This is gross employment income and is included in assessable income.
- Casual Salary: 5,000 per year. This is additional gross employment income and is included.
- Interest from deposit: 14,000 at 4% per year. The interest earned is also included in assessable income. 14,000 × 0.04 = 560, which should be added as interest income.
- Work-related expenses: 3,000 per year. These are described as an allowable deduction. In many tax systems, deductions reduce taxable income (the amount on which tax is calculated), not the gross assessable income itself.

Now, combine the items that contribute to assessable income itself (gross income components): 26,000 + 5,000 + 560 = 31,560.

The 3,000 work-related expenses would reduce taxable income, not the initial assessable income amount, so they are not subtracted when calculating assessable income. Therefore, the assessable income, to the nearest dollar, is 31560.

A quick check:
- If you were asked for taxable income, you would likely subtract 3,000 from 31,560 to get 28,560 (assuming no other deductions or adjustments apply). However, the question specifically asks for assessable income, not taxable income, so the deduction is not applied here.

Thus, the final figure for assessable income is 31560.

Dashboard Quiz 7: Taxation Planning (Week 7)

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