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LODGING TAX RETURNS FAQs
You should lodge your outstanding tax returns as soon as possible and before the Australian Taxation Office takes any action to have you lodge these tax returns. Once they have begun any action, it could result in a court conviction. The ATO may charge a penalty of $170 for every 28 days that the return is outstanding. The maximum penalty is $850 even if you are due a refund. In addition, the ATO will charge interest. This is called the general interest charge and is levied on any outstanding monies. H&R Block can assist you to lodge your late prior year returns.
Your return can be completed using the details from a copy of the PAYG Payment Summary, a letter from your employer detailing the information on the PAYG Payment Summary or by reviewing your pay slips for that period. If you are unable to obtain the payment summary details from an employer a Statutory Declaration would need to be completed. The detail from your PAYG Payment Summary may also be accessible by your tax consultant on the ATO Portal. Call 13 23 25 and ask to speak with a tax consultant in your local H&R Block office.
No, you cannot do that. A PAYG Payment Summary from a past year cannot be included with the current year tax return as the income on it was not earned in the current year. It can only be included in the return for the year to which it relates. You will need to submit an amendment to last year's tax return. H&R Block can assist you to lodge an amendment.
It is necessary to complete a tax return to date of death if a return has been lodged in past years. This return, marked final, must show all income received to the date of death.
If you owe tax and lodge your return late, any amount owing will be payable on 21 November this year and a general interest charge will be calculated from then until payment is made. The ATO may charge a penalty of $170 for every 28 days that the return is outstanding. Unless you use a registered tax agent, you have from 1 July until 31 October to lodge your return. If you need an extension of time either contact the ATO or your local H&R Block for assistance on 13 23 25.
It isn't necessary to complete a return before leaving Australia unless you will not be back before the due date for lodgement of your return (31 October). If you won't be back until after that date contact the Australian Taxation Office or a registered H&R Block tax agent to apply for an extension of time to lodge.
TEMPORARY WORKING VISAS FAQs
Since 1 July 2006 there has been a separate category for people who are temporarily living in Australia. A permanent resident is generally taxed on all income in and out of Australia but a temporary resident is exempt from paying tax on certain classes of income. People who exhibit the behaviour of a 'resident' and hold a temporary visa granted under the Migration Act of 1958 will be taxed at resident rates. Temporary residents may also be liable to pay the Medicare levy unless they are eligible to apply for an exemption.
You would be considered to be a non-resident for tax purposes because you have not settled in any one place and established a home during your stay in Australia. You may not get all your tax back when you lodge a tax return because you will be charged non-resident tax rates. This means that you have to pay tax on every dollar of your taxable income. You will not have to pay the Medicare levy though.
Non-residents pay tax on Australian source income. They pay tax on every dollar of taxable income as declared on their tax return but do not pay Medicare. Residents have to declare all income earned in and out of Australia. A tax free threshold of $18,200 (for the 2014 year) is available to them and a resident may be entitled to claim some tax offsets (rebates) that are not available to non-residents. Depending on their income, a resident may also have to pay the Medicare levy and Medicare levy surcharge.
REDUCING TAX BILL FAQs
One of the ways you can reduce the tax you pay is by salary sacrificing in return for employment related benefits. The advantage of salary sacrificing is that your benefit is purchased with pre-tax dollars. Find out more information and tips on salary sacrificing.
If you salary sacrifice into superannuation this will attract a contributions tax of 15%. If your contributions exceed the threshold for that year, you will be taxed at a higher rate. With the new tax free threshold, as you are paying 19 cents in the dollar (plus Medicare) for any amount you earn over $18,200 this is greater than the 15% payable in contributions tax.
However, any amounts that are sacrificed into superannuation will now also be taken into account for the new income tests that determine liability to pay the Medicare levy surcharge and the entitlement to claim dependent tax rebates and pensioner tax offsets.
From 1 July 2012, if you have gone over your concessional (before-tax) contributions cap by $10,000 or less, you may receive a once-only offer to have the excess concessional (before-tax) contributions refunded to you and assessed at your marginal tax rate, rather than pay excess contributions tax.
From 1 July 2014, the concessional (before-tax) contributions cap will be indexed in line with average weekly ordinary time earnings (AWOTE), in increments of $5,000. For answers to more superannuation questions, click here.
Some people with two or more jobs or other tax income may be caught in an unintentional tax trap as a result of the new increased tax free threshold. The problem occurs even if the taxpayer and the employers do the right thing – as determined by ATO tax PAYG scales. The first job attracts the tax-free threshold while second and subsequent jobs are taxed in line with the progressive tax tables supplied by the ATO. It causes taxpayers to be, in effect, under-taxed on their ordinary earnings, which can result in a tax bill at the end of the financial year. Click for more information regarding multiple income sources or contact H&R Block and one of our Tax Consultants can assist you with this.
TAX FILE NUMBER FAQs
If you are an Australian resident for tax purposes, 16 years old or older and able to attend an interview at one of the participating Australia Post retail outlets, you can apply for a TFN on the web. Otherwise, you will need to complete a paper Tax file number – application or enquiry for individuals (NAT 1432) form. You can get a copy of this form by phoning the ATO on 1300 720 092, from online ordering or from one of the ATO shopfronts or selected newsagents.
Provided you have applied for a tax file number, you have 28 days to quote your tax file number to your employer.
If you are an overseas student living in Australia and have had your visa amended to allow you to work, you can apply for a tax file number (TFN) on the internet. You will not need to provide documentation as proof of identity because the ATO will compare your personal and travel document details with those held on the Department of Immigration and Citizenship (DIAC) system. Provided the matching process is successful a TFN will be mailed to the Australian address that you provided on the application. This internet service is also available to working holidaymakers, New Zealanders who get a visa on arrival, and permanent migrants.
MEDICARE LEVY FAQs
The Medicare levy surcharge is payable where your income is over a threshold amount and you do not have adequate private hospital insurance. The threshold amount for a single taxpayer is currently $90,000 and for families with up to one dependent child it is $180,000. If your income for surcharge purposes exceeds the relevant amount and you do not have private hospital cover, you will pay the surcharge.
Income for surcharge purposes includes your taxable income, exempt foreign employment income, investment losses as well as reportable fringe benefits and reportable superannuation contributions. The private health insurance rebate and the Medicare levy surcharge are income tested against three income tier thresholds. Higher income earners will receive less private health insurance rebate or, if they do not have the appropriate level of private patient hospital cover, the Medicare levy surcharge may increase.
If you are unsure whether or not you will be liable to pay the surcharge, you should contact your H&R Block Tax Consultant on 13 23 25.
You are a temporary resident and, if your income for surcharge purposes is over the relevant threshold amount, you will be liable to pay the Medicare levy surcharge. The policy that you have is not sufficient to provide you with an exemption from the levy.
Generally payers are required to supply a payment summary within 14 days of the end of the financial year – i.e. 14 July. If an employee ceases employment part-way through the year, one must be supplied within 14 days of receiving a written request from the former employee and the request must not be made any later than 21 days before the end of the financial year. If a former employee has been receiving reportable fringe benefits (RFB) and leaves before the end of March then the 14 day limit may need to be extended.
You probably heard about the Mature Age Workers Offset which gave an additional offset of up to $500 if you were born before 1 July 1957 and your income from working did not exceed $63,000.
Unfortunately, the government has abolished this offset and it ceased to be available as of 30 June 2014.
Taxpayers who take out private health insurance are entitled to claim a percentage of the premium as a tax offset. This can be taken as a reduced premium, a cash refund from Medicare or claimed through the tax return at the end of the income year. From 1 April 2005 premiums for health insurance policies covering people over 64 years of age have attracted a higher tax offset. If the eldest person covered by the policy is aged 65 or above the offset increases to 35%. Where the eldest person covered by the policy is 70 years or over the offset increases to 40%.
However, from 1 July 2012 the ATO introduced income testing against three income tier thresholds. Depending on your income you may receive a lesser percentage of tax offset.
At H&R Block nothing is too complicated. We can assist you with any number of tax questions. To find an office near you just call 13 23 25 or click here.
You must keep all the records, receipts and other documentation you have used to prepare your tax return. If you are claiming deductions, you must keep written evidence to verify your claims for those deductions.
If you are an individual, you must keep proper records relating to your tax affairs for at least five years from the date you lodged your tax return.
If you are a small business, you must keep proper records relating to your tax affairs for at least five years from when the business record is prepared or the transaction is completed, whichever occurs later.
If at the end of the five year period, you are involved in a dispute with the Commissioner (an audit, for example), the five year period is extended.
If you use information from your records in a later tax return, you may have to keep records for longer. So, if you carry forward a tax loss, you must keep the records until the end of any period of review for the income tax return in which the loss is fully deducted.
If you own an asset which will be subject to capital gains tax on disposal, you will need to keep records covering the entire period of ownership until 5 years after lodgment of the tax return recording the disposal of the asset.