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Income Tax is money paid to the government from the money you earn. You usually pay it throughout the financial year as you earn the income. For example, if you work for an employer, your employer will deduct tax from each pay and send it to the Australian Tax Office on your behalf. You used to get this info in a PAYG Summary however from 01 July 19 due to STP Reporting, you need to access it on MyGov or through us.

Australia uses a sliding scale of tax. This means that the amount of tax you pay will depend on how much your taxable income is in a financial year.

Financial Year

The Financial Year is different to the Annual Year and goes from 1st July to 30th June. Therefore, the Tax Return covers a financial year and can be lodged for the previous year after 30th June till the due date.

 

Tax Rates Table

You can find out the Tax Rate applicable to you here (HYPERLINK).

Your Pay-As-You-Go (PAYG) Tax is based upon a set calculation of your Total Income. However, your Taxable Income is calculated at the end of the Financial Year through:

Taxable Income = Total Declarable Income – Deductions

If your PAYG Tax amount is less than the Tax liability on the Taxable Income, you will have to pay additional tax. If your PAYG Tax amount is higher, you will receive a Tax Refund. There are many factors that can affect this including but not limited to:

  • Having 2 or more employers where you have claimed the Tax-Free Threshold incorrectly;
  • Authorised deductions from your Total Income; and
  • Significant change in Salary such as only earning for a part of the year.

You must declare the following types of income on your Tax Return:

To find out more, please click each type to learn more through the ATO’s website. Some of this may be pre-filled through  ATO however you must ensure all details regarding your income are correct regardless of whether it is pre-filled or manually provided.

You can claim certain deductions from your Total Income to reduce your Taxable Income. These may include deductions for:

  • Work Related Expenses;
  • Gifts and Donations;
  • Interest charged by the ATO;
  • Interest, dividend and other investment income deductions; and/or
  • Personal super contributions;

Work Related Expenses

You may claim the work-related portion of certain expenses as a deduction including but not limited to:

To find out more, please click each type to learn more through the ATO’s website. However, in order to claim a deduction for work-related expenses:

  • You must have spent the money;
  • The expense must be directly related to earning your income; and
  • You must have a record to prove it. There are various ways to achieve this depending upon the deduction, please contact us for more information.

Auditax Accountants are experts in maximising your legal deductions for expenses during the Financial Year and also helping you plan for the future to reduce your Taxable Income.

Working from Home during COVID-19

Working from Home may allow you to claim work-related expenses as a deduction on your Tax Return. In order to claim a deduction for work-related expenses:

  • You must have spent the money;
  • The expense must be directly related to earning your income; and
  • You must have a record to prove it. There are various ways to achieve this depending upon the deduction, please contact us for more information.

Claim expenses for Working from Home

If you work from home, you may claim deductions for your Tax Return including but not limited to:

  • Electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
  • Cleaning costs for a dedicated work area
  • Phone and internet expenses
  • Computer consumables (for example, printer paper and ink) and stationery
  • Home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the
    • Full cost of items up to $300
    • Decline in value for items over $300.

You are generally not able to claim for expenses such as interest, rent and rates or the cost of general household items such as coffee, tea and milk etc.

Calculating Expenses

As tracking these expenses may be tough, the ATO has created a temporary ‘shortcut’ method for calculating these expenses incurred between 01 Mar 20 to 30 Jun 20 (this may be expanded by the ATO depending upon future circumstances). There are three ways for calculating these expenses:

  • Temporary Shortcut Method: 80 cents per work hour for all additional running expenses. Please note, if you use this method, you cannot claim a further deduction on your work-related expenses. For this method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes.

 

If you use the following methods, you must also keep a record of the number of hours you worked from home along with records of your expenses:

 

  • Fixed Rate Method
    • A rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture;
    • The work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery; and
    • The work-related portion of the decline in value of a computer, laptop or similar device.
  • The actual cost of the work-related portion of all your expenses which you need to calculate on a reasonable basis.

 

Tax Return Due Dates

The due date for your Tax Return is 31st October. Auditax Accountants may have special lodgement schedules available for our clients for later than 31st October, please contact us before that date if you would like to find out more.

Tracking your Tax Return

You can track the status of your Tax Return and its outcome (Tax Refund or Payable amount) through myGov. Auditax Accountants also provide regular updates for our clients and can check the progress of their return on their behalf. The following steps may be used to show the progress and/or outcome of your Tax Return. Please note that your return may not go through all these steps:

  • In progress – Processing: ATO has received the return and processing has started.
  • In progress – Information Pending: ATO are obtaining further information necessary to complete processing. They may contact you or us for more information/data as required.
  • In progress – Under review: ATO are reviewing your tax affairs. They may contact you or us for more information/data if necessary (This may include prior-year assessments).
  • Cancelled: ATO are reviewing your lodged return. This may include ensuring you have included all the required information. During this stage, you should not attempt to lodge your return again – ATO will likely contact you shortly.
  • In progress – Balancing account: ATO are balancing the result of processing your return with your tax accounts and calculating the amount they need to refund or you need to pay.
  • In progress – Processing: ATO are generating the notice of assessment and any associated refund where an estimated issue date is shown.
  • Issued – $ Amount: ATO have issued your notice of assessment. The result of this notice of assessment and the issue date will be shown in their online services.
    • Tax Refund: If you provided a valid details from an Australian Financial Institution account details on your return, they will pay any refund directly to your account.
    • Tax Payable: Your notice of assessment will have a biller code and reference number for you to pay to.

 

The time taken for your Return to be processed will vary for everyone. However, in general:

  • Electronic Tax Returns should take around 2 weeks; and
  • Paper Tax Returns can take up to 10 weeks.

 Auditax Accountants will process your Tax Returns electronically to ensure shortest possible time for your Tax Return. However, some common reasons for delay include but are not limited to:

  • You have an outstanding debt with the ATO;
  • You are currently under an insolvency administration;
  • The Bank Account details you provided are incorrect;
  • ATO needs to cross-check the information you have provided with you or other Government agencies such as Centrelink etc.;
  • You also lodged other Tax Returns recently for previous years.

You normally do not need to contact the ATO if your return is delayed, they may contact you as required. Auditax Accountants also provide tracking services with every Tax Return.

Specialist Services

Overdue Tax Returns

If you fail to submit your Tax Return by the Due Date, you may be penalised by the Australian Tax Office (ATO). If for any reason you are unable to meet the 31st October deadline, Auditax Accountants may be able to contact the ATO on your behalf and potentially negotiate alternate lodgement arrangements including a payment plan tailored to your circumstances.

We also have considerable experience in helping clients with Overdue Tax Returns and minimising their penalties including negotiating with ATO for special circumstances. Please contact us in case you have Overdue Tax Returns. We encourage everyone to get on top of their Tax Affairs as soon as possible to reduce future penalties.

Amending Tax Returns

 You will be issued a Notice of Assessment when you lodge a Tax Return which shows whether you have a Tax Refund or Payable Debt to the ATO. Auditax Accountants provides specialist Tax Return Amendment services for clients who may have:

  • Made mistakes in a past tax return; or
  • Forgot to include something in a past tax return;

You should wait until your original return or any previously lodged amendments have been processed by the ATO and you have received a notice of assessment. This will prevent processing errors or confusion.

Amending Tax Return Processing Time: With Auditax, your amendments are generally processed within 4-10 weeks.

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