The short answer is NO. This is a common question we get from clients. You will never get 100% of what you spend on tax deductions back as a tax refund. The reason is that the ATO doesn’t tax you 100% so they won’t give you 100% back.
You will only ever get a % of what you spend back in your tax refund. The % depends on what tax bracket your taxable income puts you in.
For example, if your income is $65,000 for the year, this puts you in the 34.5% bracket (including the Medicare Levy). So, if you spent $1,000 on small tools all costing less than $300, you will get $345 back in your tax refund. Alternatively, if you’re in the highest tax bracket you would get back $495 and if your tax rate is NIL (Zero) then that’s what you get back.
So next time the sales assistant at the Hardware Shop tells you that you will get all the money you spent on tools that Sunday morning back at tax time, you can set them straight!
Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.
Stay informed and Subscribe
Don't miss out and be the first to know about the latest news in Taxation
You have successfully subscribed to our Blog - happy reading!