Numeracy Foundation November 2018 Unit 2 Q9
9. Zara is paid in dollars.
Last year, Zara’s total income before tax was $25 000.
The tax bands, taxable income and tax rates last year were as follows:
| Band | Taxable income | Tax rate |
|---|---|---|
| Personal Allowance | Up to $10 000 | 0% |
| Basic rate | $10 000 to $22 000 | 20% |
| Higher rate | over $22 000 | 25% |
(a) Show that Zara should have paid $2400 tax at the basic rate. [2]
(b) Zara’s total tax bill last year was $4000.
She thinks an error has been made.
Calculate how much tax should be refunded to Zara.
You must show all your working. [5]
She thinks an error has been made.
Calculate how much tax should be refunded to Zara.
You must show all your working. [5]
Zara’s tax refund is $ ……………………
| Scheme | Marks | Comments |
|---|---|---|
| Sight of ($) 12000 | B1 | Ignore £ for $ |
| (Tax at 20%) 0.20× 12000 (=$ 2400) | B1 |
| Scheme | Marks | Comments |
|---|---|---|
| (Tax at 25%) 0.25 × 3000 or 0.25 × (25000 – 22000) or equivalent | M2 | Ignore £ for $ M1 for 25000 – 22000(= $3000) |
| ($) 750 | A1 | CAO, not FT |
| Total tax due ($) 3150 | B1 | Allow for the correct sum of 2 amounts of tax derived from use of 20% and 25% rates |
| Refund due (4000 – 3150 =) ($) 850 | B1 | FT 4000 - 'their derived 3150' provided ‘their derived 3150’ < 4000 and ‘their derived 3150’ ≠ 2400 |
9(b) Alternative method:
| Scheme | Marks | Comments |
|---|---|---|
| Sight of 25000 – 22000 (=$3000) | B1 | |
| 25000 - (0.80 × 12000 + 0.75 × 3000 + 10000) | M2 | M1 for sight of 0.80 × 12000 + 0.75 × 3000 + 10000 |
| Tax due ($) 3150 Refund due ($) 850 | A1 B1 | FT 4000 – 'their derived 3150' provided ‘their derived 3150’ < 4000 and ‘their derived 3150’ ≠ 2400 |