Mathematics Standard • Year 11 • Module 3 • Lesson 7
Taxable Income and Allowable Deductions
Practise HSC Mathematics Standard 2-style writing on Taxable Income — multi-mark short answers and one structured extended response.
1. Short-answer questions
1.1 A worker earns $66,400 in salary and $380 in bank interest. Their allowable deductions total $2,160. Calculate the worker's taxable income. 2 marks Band 3
1.2 A worker's taxable income is $74,150. Their gross salary is $76,200, they received $290 in bank interest and $1,840 in rental income from a granny flat. Calculate their total allowable deductions. 3 marks Band 3-4
1.3 Lucas, an apprentice electrician, earned $52,400 salary and $140 in bank interest. His expense list includes: $620 work tools, $180 safety boots, $240 conventional shirts and jeans worn at TAFE, $720 daily train fare home-to-workshop, $90 donation to a friend's online medical fundraiser (not a registered charity), and $160 work-related textbooks.
(a) State which items are NOT allowable and briefly justify each.
(b) Calculate Lucas's taxable income. 4 marks Band 4
2. Extended response
2.1 Sienna is a registered nurse. For the 2024–25 financial year she earned a salary of $84,600, received $620 in bank interest, and $1,840 in rental income from a granny flat she rents to a long-term tenant.
Her expense receipts for the year are:
$580 union fees • $720 nursing professional development course • $420 conventional clothing worn to and from work • $1,160 home-to-hospital train travel • $260 donation to a registered DGR • $180 textbooks for a postgraduate unit she is studying.
(a) Calculate Sienna's gross income.
(b) Identify which expenses are allowable deductions and briefly justify any you exclude. Calculate her total allowable deductions.
(c) Calculate Sienna's taxable income, then state the percentage reduction (to 1 d.p.) from gross income to taxable income. 7 marks Band 5-6
Explicit marking criteria
Part (a) — 1 mark
• 1 mark — correct gross income summing salary + bank interest + rental income.
Part (b) — 3 marks
• 1 mark — correctly identifies the allowable items (union fees, PD course, DGR donation, textbooks).
• 1 mark — correctly excludes conventional clothing AND home-to-work travel with a brief reason for each.
• 1 mark — correct total allowable deductions.
Part (c) — 3 marks
• 1 mark — correct taxable income using the formula.
• 1 mark — correct percentage calculation: (gross − taxable) ÷ gross × 100.
• 1 mark — explicit conclusion sentence stating the taxable income AND the percentage reduction, rounded to 1 d.p.
Your response:
Stuck on (c)? Percentage reduction = (allowable deductions ÷ gross income) × 100, since the reduction in income equals the deductions. Round only the final answer.How did this worksheet feel?
What I'll revisit before next class:
1.1 — Taxable income with bank interest (2 marks)
Sample response.
Gross income = $66,400 + $380 = $66,780.
Taxable income = $66,780 − $2,160 = $64,620.
Marking notes. 1 mark — correct gross income with bank interest added. 1 mark — correct taxable income with units. A bare "$64,620" with no working scores 1/2 even if numerically correct.
1.2 — Reverse the formula with rental income (3 marks)
Sample response.
Gross income = $76,200 + $290 + $1,840 = $78,330.
Deductions = Gross income − Taxable income = $78,330 − $74,150 = $4,180.
Marking notes. 1 mark — correctly includes all three income sources in gross income. 1 mark — correct rearrangement (Deductions = Gross − Taxable). 1 mark — correct numerical answer with units. Common error: using salary only ($76,200 − $74,150 = $2,050) — wrong because rental income and interest are assessable.
1.3 — Apprentice electrician (4 marks)
(a) Sample response.
Three items are NOT allowable:
- Conventional shirts and jeans $240 — not protective clothing or a uniform; ordinary private clothing is not deductible.
- Home-to-workshop train fare $720 — ordinary commuting to a regular workplace is not deductible.
- Donation to friend's fundraiser $90 — only donations to a registered DGR qualify.
(b) Sample response. Gross income = $52,400 + $140 = $52,540. Allowable: tools $620 + safety boots $180 + textbooks $160 = $960. Taxable income = $52,540 − $960 = $51,580.
Marking notes. (a) 1 mark — identifies all three non-allowable items. 1 mark — gives a brief, accurate justification for each. (b) 1 mark — correct total allowable deductions ($960). 1 mark — correct taxable income with units. Partial credit: if a student includes conventional clothing or commuting as allowable, taxable income will be too low — but ECF will still earn the formula mark.
2.1 — Sienna's taxable income (7 marks): sample Band-6 response with annotations
Sample Band-6 response.
(a) Gross income.
Gross income = $84,600 + $620 + $1,840 = $87,060. [1 mark — sums all three assessable income sources.]
(b) Allowable deductions.
Allowable items: union fees $580, PD course $720, DGR donation $260, postgraduate textbooks $180.
Excluded items: conventional clothing $420 (private clothing, not deductible); home-to-hospital train travel $1,160 (ordinary commuting to a regular workplace, not deductible). [1 mark — identifies the four allowable items correctly. 1 mark — excludes both conventional clothing and commuting with brief reasons.]
Total allowable deductions = $580 + $720 + $260 + $180 = $1,740. [1 mark — correct total.]
(c) Taxable income and percentage reduction.
Taxable income = $87,060 − $1,740 = $85,320. [1 mark — correct taxable income.]
Percentage reduction = $1,740 ÷ $87,060 × 100 ≈ 1.999…% ≈ 2.0%. [1 mark — correct percentage calculation; uses gross income as the denominator.]
Conclusion: Sienna's taxable income is $85,320 — a 2.0% reduction from her gross income of $87,060. [1 mark — explicit conclusion sentence naming both the dollar figure and the percentage reduction.]
Total: 7/7.
Band descriptors for marker.
Band 3: Calculates gross income correctly and attempts the deductions list, but includes a non-allowable item OR omits an allowable item. Taxable income partially correct. ≈ 3-4 marks.
Band 4: Gross income and deductions both correct, but does not justify exclusions OR omits the percentage calculation. Taxable income correct. ≈ 5 marks.
Band 5: Full calculation including percentage, but bare numerical conclusion without a sentence linking taxable income and the reduction. ≈ 6 marks.
Band 6: Complete: gross + correctly justified deductions + taxable income + percentage AND a clear conclusion sentence naming both figures with correct rounding. 7/7.