facebook
 

Future Tax Return Articles -

Tax Deductions FACT v FICTION

Income Tax Deductions Real Facts

Today’s blog is all about tax deductions FACT vs FICTION or as we say ‘proper tax deductions vs ‘mate told me at the pub deductions’. These are the top 5!

Fact vs. Fiction in your Tax Deductions

1.  You can claim driving to and from work because you work night shift or you don’t work near any public transport

This is FICTION.  There are only certain situations where you can claim a tax deduction driving to and from your work place.  Working night shift or having no public transport near work does not count.  These circumstances are considered private as you do not start getting paid for work until you arrive at work.

2. You can claim the maximum $150 for laundry no matter what

This is a no no. To claim laundry you must satisfy a couple of criteria

  1. You are required to wear a logo uniform, protective clothing or work specific clothing such as those chef pants
  2. You actually wash the aforementioned clothing at home i.e. you don’t leave your uniform at work each day and they wash your work clothing for you
  3. The amount you claim as a tax deduction depends on how often you wash per week and if you wash your work clothes separately from your other washing

3. You can claim your coffee because your boss says you need to be alert and on the ball all day

Unfortunately, this is FICTION too.  Buying coffee might keep you awake and taste yummy too, however this is considered a personal expense in the eyes of the ATO.

4. You can’t see the computer screen properly so you can claim your glasses you bought at OPSM

This is FICTION.  Although it is good to be able to see your screen better, glasses are a personal expense and cannot be claimed.

Examples of other personal expenses that can’t be claimed are:

  • Gym memberships to keep you fit and firing
  • Make up and haircuts to make you presentable at work
  • Black leather shoes that look nice

5. You can claim your take away lunches because you work at a different work site each day

This is also FICTION.  Meals can only be claimed as Tax Deductions in certain situations:

  • You work overtime and receive an overtime meal allowance in your pay packet
  • You are required to travel away overnight for your job

That wraps up our Fact v Fiction tax deductions blog.  Remember don’t always get your tax advice from your mate at the pub!

P.S. don't forget to track all those expenses by using our fantastic, beautiful and sexy GoTax Deduction Grabber App.  Just scan the QR code and you're up and running.

Track your Tax Expenses

 

 

 

 

 

 

 

 

 

Covid-19 | Deductions | RAT Tests

What can I claim with Covid 19 costs?

If you had to spend some of your hard-earned money on buying RAT tests so you could keep working during Covid you can claim these costs in your income tax return.  This goes for cleaning supplies, masks and sanitiser too.  All those can be tax deductible.  So at least there is something good to get out of spending your own cash to shove something so far up your nose it touches your brain.

You can also claim working from home if you were lucky enough to have that option.  You can either claim the number of hours you worked at home (at the rate of 80 cents per hour) or you can claim the stuff that you had to pay for such as a percentage of internet and phone, computer equipment, stationery, office furniture and electricity.  If you go with the 80 cents per hour rate then you can’t claim tax deductions from other working from home costs. 

 

The 80 cent tax rate includes all costs associated with you working from home.  This rate is determined by the Australian Taxation office and includes all tax deductible expenses involved with you working from home.  With this ATO rate method you only require a tax log to determine the number of hours you worked from home.  You do not need to keep the tax receipts involved in the various expenses. 

If you intend to claim a tax deduction for the things you paid for (that is NOT using the Rate per hour method), then make sure you keep the tax receipts and tax logbooks.

And of course remember to pick up your Gotax Deduction Grabber to safely record your expenses throughout the year.  Use the QR code to take you to your store.

Deduction Grabber by GoTax

Keep smiling

 

 

 

 

 

Holding down two jobs?

I WANT TO GET A SECOND JOB, BUT I DON’T WANT TO PAY HALF TO THE TAX MAN!

We have heard this statement many times over the years, however it is not entirely true.  If you already earn over $180,000 per year then the statement is correct, as this level of income already puts you into the highest tax bracket.

It doesn’t matter how many jobs you are working at the same time, the total tax you pay depends on your total income.  So if your total income for the year is $80,000, you pay the same amount of tax whether it’s from 1 job or 4 jobs.

The problem arises when you work 2 jobs at the same time and claim the tax-free threshold for both jobs.  This means that you are not paying enough tax during the year, and you will end up with a tax bill when you lodge your tax return.

So, you claim the tax free threshold on your main job and don’t claim it for your second, or third, or fourth jobs.  This will help you avoid a tax bill at the end of the year.  However sometimes you can do this and still get a tax bill, the trick is to see what tax bracket your main job puts you in and then make sure your second job is taxed at that rate.

For example, if you earn $50,000 from your first job, this puts you in the 32.5% bracket (plus 2% for the Medicare Levy), so you need to make sure your second job is taxing you at 34.5%.  The tax brackets are as follows:

Taxable Income

Tax On This Income

 $0 to $18,200

 Nil

 $18,201 to $45,000

 19c for each $1 over $18,200

 $45,001 to $120,000

 $5,092 plus 32.5c for each $1 over $45,000

 $120,001 to $180,000

 $29,467 plus 37c for each $1 over $120,000

 $180,001 and over

 $51,667 plus 45c for each $1 over $180,000

 

So you can see if that if your total income stays under $120,000, then the maximum tax rate will only ever be 34.5%.

Tax File Number Scam Warning

 

Attention all Tax Virgins!!

The ATO has issued a warning to millions of Australians that will be lodging their first ever tax return this year. 

The ATO said it had seen an increase in scams involving fake tax file number (TFN) applications.

These scammers are telling people they can help them get a TFN for a fee but instead of delivering this service, these fraudulent websites steal the person's money and personal information.

Keep your eyes peeled on social media platforms like Facebook, Twitter and Instagram. This is where they are targeting our freshies.

Applying for a tax file number is FREE, so do not be fooled! 

If you're applying for a TFN through a tax agent, like Gotax, always check they are registered. 

The same goes for Australian business number (ABN) applications – never give out your personal information unless you're sure of who you're dealing with

What to do if you have been targeted by a scam

If you think a phone call, SMS, voicemail or email claiming to be from the ATO is not genuine, do not reply to it. Instead phone the ATO on 1800 008 540 or let your Gotax Agent know so we can help. 

Scams are on the rise, always stay vigilant!

 

 

Do I have to pay Medicare?

If you are not eligible for Medicare benefits in Australia, for a variety of reasons, you may be exempt from paying the Medicare levy or you may be eligible for a Medicare levy reduction.

A Medicare levy reduction is based on your taxable income. A Medicare levy exemption is based on specific categories. You need to consider your eligibility for a reduction or an exemption separately.

If you fall into any of the 3 categories, you may qualify for an exemption;

  • You are classed as a foreign resident for tax purposes
  • You aren’t eligible for medicare benefits
  • You have certain medical requirements

 

 

Disclaimer; this is general information only, subject to change and not to be taken as advice. Please discuss your individual circumstances with your accountant.

Can I claim money I put into my Super?

In short, the answer is yes, you can claim a deduction on your personal super contributions. However, let’s dive in a little deeper so we can understand this better.

Tax-deductible super contributions are contributions you make from your after-tax income for which you claim a tax deduction. This income may be from a variety of sources such as your take-home pay, savings, an inheritance or from the sale of assets.

Whatever the source, you can make a payment to your super fund from your bank account either as a one-off payment or a periodic direct debit.

For contributions made prior to 1 July 2017 you can't claim a deduction if, during the income year, you obtained 10% or more of the total of the following as an employee:

  • assessable income
  • reportable fringe benefits
  • total reportable employer super contributions.

 

From 1 July 2017 the requirement that you obtain less than 10% of your income from employment has been scrapped and regardless of your employment arrangement you may be able to claim a tax deduction.

For 2020-21 and 2021-22 years, you are required to meet the work test or the work test exemption criteria if you are 67 to 75 years old to be eligible to make a contribution and claim a tax deduction.

 

Disclaimer; this is general information only, subject to change and not to be taken as advice. Please discuss your individual circumstances with your accountant.

Reportable Fringe Benefit Amount

RFBA, another abbreviation for you!

Reportable Fringe Benefits Amounts are reported on your Income Statement if you have been provided a benefit by your boss or your work lets you salary package.  These types of benefits include use of a company car, salary packaging a car, use of a corporate box at the footy (entertainment), or your boss pays your private health insurance, school fees or mortgage/rent payments. The total of all benefits provided must be over $2,000 to be reported on your Income Statement.

If your Income Statement includes an amount of Reportable Fringe Benefits this amount is declared in your tax return.  It is not included in your income for the year, so you don’t pay tax or Medicare on it.  However, this amount is added to your income for working out if you have to pay the Medicare Levy Surcharge, your HELP/HECS repayment amount, your private health rebate and various other tax offsets.  Centrelink also use this Reportable Fringe Benefits amount when working out your entitlement to Family Tax Benefit and other Government Benefits.

 

Disclaimer; this is general information only, subject to change and not to be taken as advice. Please discuss your individual circumstances with your accountant.

Capital Gains Tax on my home

 

So, you have seen everyone selling their homes for record prices and making a bucket load and thought I need to get my piece. You hopefully have also done well and sold the house for more than you paid for it. If you are now thinking, how much will the taxation office want from me, then you are in the right place.

If the house you sold was where you lived from the time you purchased it to the time you sold it and you did not own another house during this period, then the sale is tax free, yippee! Even if you sold for more than you purchased for and made a capital gain, if the house meets the above then you apply a main residence exemption and disregard this gain. So, you can tell the tax office hands off.

This blog is for those wondering about tax on their own home, so will not get into great detail. If you sold a house other than the home where you lived, then there is definitely capital gains tax considerations. The gain and the overall tax payable in this situation can be influenced by such things as;

  • if you lived there part of the time,
  • if you owned another house at this same time
  • if you rented the house.

Our tax experts can guide you through these capital gains tax calculations if required.

When should I get my payment summary?

In the past couple of years employers have been required to change how they report employee wages to the Taxation office. All employers should now be reporting wages each pay period. Your employer is then required to submit a payroll finalisation declaration by the 14th of July. Once your employer has submitted this declaration your wage information will be ready to complete your tax return.

Employers reporting through this system no longer need to provide you with a payment summary. The details required for your tax return are now included in what is known as an income statement. If your employer has finalised your income statement your wage details will be prefilled into your tax return when using our online system. If the employer has not finalised the income statement it will not prefill. If you have the details, you can enter these amounts manually. Please note if the employer picks up errors and makes changes before finalising and you have already lodged your tax return, you may need to amend your tax return.  

In most cases you will not be handed or emailed a payment summary from your employer. The income statement will be with the taxation office and should be ready to go in early July. So, no need to hang out waiting for the payment summary. You can access this information through your MYGOV account in the ATO sections tab.

 

Tax deductions for Contractors

So, you’ve been working hard as a Contractor and now it is tax time and you want to claim as many tax deductions as you can to reduce any tax bills. As with anything to do with tax this can be confusing and knowing what you can and can’t claim can send you crazy. Read on as we attempt to clear this tax minefield for you.

As with working as an employee, tax deductions for contractors vary by industry and the job that you are actually being paid to do. Therefore, instead of listing all of the possible tax deductions, lets first look at what makes an expense tax deductible. In order to claim an expense, it has to be directly related to the income you are declaring on your tax return. In other words, you spent money on something to help you earn your taxable income. If it was something that is used for work as well as personally then the cost will need to be apportioned. And probably most important of all you need to have kept the receipt or record of the expense.  

Now, some of the expenses you may be able to claim, again these will depend on what it is you are doing to earn a crust;

  • Car expenses – 2 options logbook and cents/km methods

  • Protective work clothes & boots

  • Tools & equipment

  • Home office – keep a logbook of the hours worked at home

  • Stationery

  • Training – must be related to your current work

  • Phone/internet – keep a track of cost and work use %

  • Super contributions – make sure you fill in the intent to claim form with your superfund

  • Income protection

Remember this list is not exhaustive and there may be other deductions for your particular circumstances. When you use our easy to follow e-tax return system which includes a contractor specific section, we will walk you through and claim everything you are entitled to. Most importantly remember to keep your receipts and records so you can claim as much as you can and give them as little tax as possible.