Taxable Income Frequently Asked Questions
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If you believe this is incorrect, you should contact your bank to verify the income details for your accounts. The bank should notify the ATO in writing if this information is not correct.
You have 28 days to correct this information. However, if you have omitted the taxable income, you will not need to contact the ATO. They will amend your return and send you a new assessment requesting payment of the additional tax, a general interest charge and, in some cases, penalties. If you require assistance with your communication with the ATO, H&R Block can help.
A Living Away From Home allowance is paid by employers when they require an employee to work in an area that is different to their normal workplace and the employer pays the costs to the employee for living away from home.
For example, I work and live in Melbourne and after a few months the company requires me to go to Regional NSW for a few months to do some work there. They pay me an allowance for the costs of living in regional NSW because they have requested me to work there for a time.
This is not taxable income, so I do not need to declare it in a tax return. It is an allowance paid by an employer to an employee and is not subject to tax by the employee, provided it is paid in accordance with the tax office guidelines. No expenses can be claimed against this allowance.
From 1 October 2012, the LAFHA continued to be taxed to the employer under the Fringe Benefits Tax system. However, the employer is able to reduce the Fringe Benefits Tax payable on the amount paid to the employee, for a maximum period of 12 months, provided the employee meets the following conditions:
- maintains a home in Australia for their own personal use and enjoyment at all times whilst required to live away from home for their work; and
- provides a declaration relating to living away from home.
If these rules are satisfied, the employer is able to reduce the taxable value of the LAFHA by:
- the amount of the employee's actual substantiated accommodation expenditure while living away from home; and
- the amounts incurred by the employee for food or drink costs while living away from home, less a statutory amount if applicable.
An inheritance is not taxable unless you are advised by the executor that a part is taxable. However, if you invest the income from the estate, then any earnings will be taxable.
You are wise to be cautious. Not all schemes are genuine and often promise large tax deductions that they say will be allowed by the tax office. It is wise to check out any investment scheme before putting your money into them.
If you invest in a risky tax scheme, you could lose some or all of your money, and you may have to pay back any refunds due to over-claimed deductions as well as interest and penalties.
Before investing in any tax scheme it is advisable to seek independent advice from a professional advisor and/or the tax office. Information and warnings about investment schemes and scams can be found on the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission SCAMwatch website.
All income must be declared by each recipient on the same basis as the accounts are held. Interest from a joint account must be split 50/50. You cannot declare it all on your wife’s tax return and doing so could lead to an ATO audit.
Yes she will have to lodge a return. Prior to the 2012 income year, a minor could have earned up to $3,333 from investments before any income tax would be payable. However, from 1 July 2011, the Government removed the ability of minors to access the low income rebate for unearned income (such as interest, dividends, rent, royalties, trust distributions etc.). This means that a minor who earns over $416 in unearned income must lodge an income tax return.
Personal exertion income (such as salary & wages) will still have tax payable on it, but that tax payable can be reduced by the low income tax offset. All unearned income will not attract the low income rebate and be taxed at minors’ rates.
You do not have to lodge a full tax return. You can complete the Refund of Franking Credits for Individuals form which can be lodged by telephone or mailed to the ATO.
In most cases overseas pensions are taxable and, if you are an Australian resident, you will need to include the amount in your tax return. There are a few exceptions to this rule. Please call H&R Block on 13 23 25 if you are not sure.
All income must be declared. This is because the tax office needs to determine what tax rate applies to your other earnings for the year. You may be entitled to an offset to ensure that no tax is payable on your benefit.
You can access the information required from Centrelink online services, Express plus mobile apps and at self-service terminals at Dept. Human Services Service Centres. H&R Block can also look up the required information for you.
The income will be taxable unless you have worked overseas continuously for more than 90 days and are working on a specific Australian government project or deployed overseas as a member of an Australian government agency. In these cases the income will be tax exempt.
If your overseas income is not exempt, you will need to declare the income on your Australian tax return and may be entitled to a foreign income tax offset for any foreign tax you paid on that income.
We can assist you with any number of tax questions. Find an office near you and book an appointment online or call 13 23 25.