Do now Calculate the income tax payable on a salary of $67,500.
Use the tax table from last lesson.
Marginal Tax Rates 2024-25:
| Taxable Income | Marginal Tax Rate | Tax Payable |
|---|---|---|
| $0 - $18,200 | 0% | $0 |
| $18,201 - $45,000 | 19% | $0 + 19¢ for each $1 over $18,200 |
| $45,001 - $120,000 | 32.5% | $5,092 + 32.5¢ for each $1 over $45,000 |
| $120,001 - $180,000 | 37% | $29,467 + 37¢ for each $1 over $120,000 |
| $180,001+ | 45% | $51,667 + 45¢ for each $1 over $180,000 |
Step 1: Which tax bracket? Find the correct row: $45,001 - $120,000
Step 2: Use the formula: $5,092 + 32.5¢ for each $1 over $45,000
Step 3: Calculate:
Calculate the income tax payable for:
Work these out. You have a copy of the income tax table in your textbook so you don’t need me to go back slides
PAYG = Pay As You Go
The Problem: If you earn $60,000, you owe about $11,000 in tax. That’s a huge lump sum to pay at once!
The Solution: Your employer takes tax out of each pay and sends it to the ATO for you.
The ATO provides tables showing how much tax to take from each pay.
Different tables for:
Why different tables? The tax calculated depends on your annual income (which is estimated from your income that pay period). What would be some limitations of that?
Copy these notes
Net Pay = Gross Pay - Tax - Other Deductions
Common deductions:
Error in textbook: Compulsory superannuation contributions are NOT considered ‘taxable income’ as they are taxed using different rules (that effectively give superannuation a tax-advantage).
Copy this formula and note about super. Early finishers start Ex 8.05 in textbook
Answer the following questions. Early finishers continue with Ex 8.05
A Jake earns $1,250 per week. Using a weekly PAYG table, $287 tax is deducted. He also pays $15 weekly union fees and $32 for health insurance.
Calculate Jake’s weekly net pay.
B Maria’s fortnightly gross pay is $2,180. Tax deducted is $436. She has deductions of $28 health insurance, and $12 union fees.
Calculate her fortnightly net pay.
C Sam earns $5,200 monthly. Monthly deductions: tax $1,089, health insurance $185, professional fees $45.
Term Payments: buying an expensive item when you don’t have enough money right now
Key idea: Take the item home immediately, pay over time
The cost: You pay more than the cash price
Formula: Total Cost = Deposit + Total of all Term Payments
Copy these definitions
| Deposit | initial payment made before taking the item |
| Term payments | regular payments made over time (e.g. per month) |
| Cash price | price if paid in full immediately |
| Interest | extra amount paid for the privilege of paying over time |
Copy these terms
Tameika buys a TV marked at $500.
Option 1: Pay $500 cash
Option 2: Terms of $200 deposit + 12 monthly payments of $35
If she chooses terms:
Total Cost = $200 + (12 × $35) = $200 + $420 = $620
Extra paid = $620 - $500 = $120
Question 1: Nathan buys a mountain bike for $850 cash OR 20% deposit plus $40 monthly for 2 years.
If he chooses terms, calculate:
a) The deposit amount
b) Total cost on terms
c) Extra amount paid
Question 2:
A car costs $12,500 cash OR 15% deposit plus $120 weekly for 3 years.
Calculate:
a) Deposit amount
b) Total (the sum of) weekly payments
c) Total cost on terms
Sometimes additional costs are included in the finance:
Key principle: All these costs are added to the amount being financed, increasing the total you’ll pay.
Complete the following, then move to the worksheet
Problem: Anthony puts a $1,000 deposit on a $6,000 motorbike.
Extra costs: $400 registration, $520 insurance, $60 stamp duty. He finances the remaining amount at $75 weekly for 2 years.
Calculate:
Term Payments: Work through the problem sheet provided
then
Tax & PAYG: Complete Ex 3.05 (subquestions a,c,e,…)
Work quietly - ask for help if needed