Jenny, aged 45, is an Australian resident taxpayer. Jenny does have an outstanding HELP debt of $6,500 on 30 June 2024 but she does not have private patient hospital health insurance. Jenny has a tax offset of $14,600. Aside from the above, Jenny’s tax position for the last four-years is: [table]
Income Year | Assessable Income, Aside from Capital Gains | Current Year Capital Gains (*) | Current Year Capital Losses | Current Year Deductions 2020-21 | $35,000 | $5,600 | $1,600 | $1,500 2021-22 | $60,000 | $15,000 | $19,000 | $100,000 2022-23 | $100,000 | $10,000 | $29,000 | $60,000 2023-24 | $140,000 | $37,000 | $21,000 | $95,000
[/table] * none of the capital gains are discount capital gains Jenny has no losses before 2020-21. From the above, which of the following is most correct in respect to Jenny for the 2023-24 income year (note, the 2023-24 income year)?

Question

BlackTom AI · Accepted Answer

Let me restate the scenario and the options to begin with, so we’re talking about the same data set.
Jenny: assessable income (aside from capital gains) for 2023-24 is $140,000; current year capital gains are $37,000 with current year capital losses of $21,000; current year deductions total $95,000. Her table shows no prior capital losses carried forward, so the net capital gain for the year is $37,000 − $21,000 = $16,000. For Australian individual tax, taxable income is generally calculated as: assessable income plus net capital gains minus allowable deductions. Medicare-related considerations and HELP debt repayments affect tax payable but do not reduce the taxable income figure themselves.
Now, evaluating each answer option:

Option a. Taxable income of $5,000.
- Why this might be tempting: it’s a modest figure that could reflect a large deduction offset. 
- Why it’s incorrect based on the data: starting from $140,000 of assessable income and adding $16,000 net capital gains yields $156,000. Subtracting the stated deductions of $95,000 gives taxable income of $156,000 − $95,000 = $61,000. There is no mechanism here shown that would reduce $61,000 down to $5,000 within the given data. The HELP debt balance and the lack of private hospital cover influence other tax mechanics (like the repayment of HELP and the Medicare Levy Surcharge) but do not on their face convert $61,000 to $5,000 in taxable income.

Option b. Tax loss of $2,000.
- Why it might seem plausible: if the deductions or losses offset the income in some way, the year could yield a loss.
- Why it’s incorrect given the figures: capital losses for the year are $21,000, but capital gains are $37,000, so there’s a net capital gain of $16,000, not a net capital loss. When you combine $140,000 of assessable income with a $16,000 net capital gain and subtract $95,000 in deductions, you don’t arrive at a net loss; you arrive at a positive taxable income, specifically around $61,000 before any other non-deduction items. So a year-end tax loss of $2,000 is inconsistent with the capital gains cell and the deduction total provided.

Option c. Taxable income of $45,000.
- Why it might look reasonable: it’s a round number in the mid-range and could reflect partial offsetting effects.
- Why it’s not correct with the given data: the direct arithmetic using the data (140,000 + 16,000 − 95,000) yields $61,000, not $45,000. The presence of outstanding HELP debt or lack of private patient hospital cover does not alter the basic arithmetic for taxable income; they affect other tax components, not the gross-to-taxable-income calculation shown here.

Option d. Taxable income of $38,000.
- Why someone might select this: it sometimes appears as the result in questions where large deductions or specific offset rules are assumed, or where an alternative calculation path is intended.
- Why it’s not supported by the explicit data: as noted, the straightforward calculation with the numbers provided leads to $61,000. There is no line item in the data that reduces $61,000 to $38,000 under standard Australian tax rules—the HELP repayment and the absence of private health insurance influence the amount of tax payable (not the taxable income figure itself) and would not alone cut $61k down to $38k in taxable income.

Overall assessment: when applying the standard rule—Taxable income = Assessable income (excluding capital gains) + Net capital gains − Deductions—the computed figure is $61,000 for 2023-24. None of the options exactly matches that result. The options present several incorrect or inconsistent figures based on the data as provided. In other words, the table and numbers given do not align with any of the listed taxable-income outcomes without additional adjustments or assumptions outside what’s stated.

Note: If we were to consider tax payable implications (such as the HELP repayment, the Medicare Levy, or the Medicare Levy Surcharge due to lack of private health insurance), those would change the net tax payable but would not change the taxable income figure itself. The problem as stated focuses on taxable income, and the arithmetic points to 61,000, which is not among the offered choices.

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