Fin 205

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1.1)

Belinda’s 2010-11 taxable income:
Assessable Income
Gross Salary $67,500
Unfranked dividends $2,300
Total Assessable Income $69,800
Less Allowable deductions
PAYG tax instalments deducted($15,500)
Subscriptions($130)
Union fees($600)
Telephone expense ($280*30%)($84)
Total allowable deductions($16,314)
Taxable Income$53,486

Note:
Stationery is considered to be expenditure of a private nature thus is not tax deductable.

1.2)
Belinda’s 2010-11 net tax payable / refund including the Medicare levy: Taxable Income$53,486
Gross Tax Payable ($4,650+30% of the excess over $37,000)
[$4650+[($53,486-$37,000)*30%]]$9,595.80
Less: Tax Offset($312)
Add Medicare Levy (1.5%)$802.29
Net Tax Payable$10,086.09

2a)
The total initial investment amount made by Ricky in XLNT
= Share Units*Initial Share Price
= 3,000*$7.10
= $21,300

2b)
The exit fee if Ricky sells his total investment after 6 months
= Share Units*Current Share Price*5%
= (3,000*$8.86)*5%
= $1,329

2c)
The total pre-tax proceeds that Ricky will realise assuming the investment is sold after 6 months
= Sales Revenue+Income Distribution-Initial Investment Amount-Exit Fee
= (3,000*$8.86)+(3,000*$0.40)-$21,300-$1,329
= $26,580+$1,200-$21,300-$1,329
= $5151

2d)
The pre-tax annualised absolute return to Ricky assuming the investment is sold after 6 months = [(market value at the end of the evaluation period- market value at the beginning of the evaluation period+Income distribution)]/Purchase Price*100 = [(3,000*$8.86)-(3,000*$7.10)+(3,000*$0.40)]/(3,000*$7.10)*100 = [($26,580-$21,300+$1,200)/$21,300]*100

= 30.42%

2e)
Tax will Ricky be liable for upon the current sale of his total investment in XLNT = Share Units*Current Share Price*Tax Rate
= 3,000*$8.86*30%
= $26,580*30%
= $7,974

2f)
Total after-tax proceeds...
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