Updates / Tax Tips on Income Tax 2016-17

TAX RATES FOR RESIDENTS OF AUSTRALIA 2016 - 2017:

Taxable income

Tax on this income

0 - $18,200

Nil

$18,201 - $37,000

19c for each $1 over $18,200

$37,001 - $87,000

$3,572 plus 32.5c for each $1 over $37,000

$87,001 - $180,000

$19,822 plus 37c for each $1 over $87,000

$180,001 and over

$54,232 plus 45c for each $1 over $180,000

Plus 2.0% Medicare Levy on the Taxable Income above.  Temporary Budget Repair Levy; this levy is payable at a rate of 2% for taxable incomes over $180,000 plus Medicare Levy Surcharge may be applicable if an eligible Private Health Insurance cover is not maintained. There are low income, full or partial Medicare exemptions available. A Medicare Levy Surcharge [ MLS ] may also be applicable as applicable below.

Medicare Levy Surcharge:

The Medicare levy surcharge (MLS) is in addition to the Medicare levy. 

  • your taxable income
  • your total reportable fringe benefits, and
  • any amount on which family trust distribution tax has been paid

 

Unchanged

Tier 1

Tier 2`

Tier 3

Singles

90,000 or less

$90,001 - $105,000

$105,001 - $140,000

$140,001 or more

Families

$180,000 or less

$180,001 - $210,000

$210,001 - $280,000

$280,001 or more

Medicare Levy Surcharge

0%

1%

1.25%

1.5%

Previous Year Tax Rates could be looked by clicking this link

http://www.ato.gov.au/Rates/Individual-income-tax-for-prior-years/

TAX RATES FOR NON RESIDENTS OF AUSTRALIA:

$0 - $87,000

32.5c for each $1

$87,001 - $180,000

$28,275 + 37c for each $1 over $87,000

$180,001 and over

$62,685 + 45c for each $1 over $180,000

ATO LIKELY TO AUDIT !!

This year we will be focused on:

  • High overall expense claim
  • Poor record keeping or non-compliance of records

UPDATES ON PERSONAL INCOME TAX 2016-17

The government has made some significant changes:

Low Income Tax Offset (LITO)

The LITO has been reduced to $445 as a full entitlement, with a withdrawal rate of 1.5 cents per dollar of income over $37,000. With LITO, the effective tax-free threshold is $20,542

Education Tax Refund (ETR): Taxpayers can no longer claim ETR. ETR is replaced by a new payment called the Schoolkids Bonus.

Living Away From Home Allowance (LAFHA):

Tighter rules commence 1 October 2012. The tax concession only to be available to employees who maintain a home for their own use in Australia, that they live away from for work, and for a maximum period of 12 months for an employee at each work location

Spouse Offset: You CANNOT claim this tax offset if:

  • your spouse was born on or before 1 July 1952
  • your adjusted taxable income (ATI) for 2013-14 was more than $150,000, or
  • you had a spouse for the whole year and their ATI for 2011-12 was $9,973 or less.

Medical Offset:

Regarding Medical Expense / offset:  From 01 July 2013 but, taxpayers are restricted to net eligible expenses for disability aids, attendant care or aged care.

Pl click the link to find out on the same: https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Medical-expenses/

Changes to Family Tax Benefit Part A:

  • From 1 January 2013, FTB Part A will be limited to young people under 18 years or for secondary school students, the end of the calendar year in which they turn 19. Individuals no longer eligible for FTB Part A may be eligible for the Youth Allowance.
  • Absences from Australia from 1 January 2013: The FTB Part A payments above the base rate will be reduced to the base rate after 6 weeks of temporary absence from Australia (down from 13 weeks). In addition, the current portability reset period will be reduced to 6 weeks (from 13 weeks).

Removal of capital gains tax discount for non-residents

The 50% capital gains tax discount for non-resident individuals on taxable Australian real property or mining assets capital gains accrued after 7.30 pm (AEST) on 8 May 2012 will no longer be available. Non-residents will be subjected to tax on 100% of such gains.

SUPERANNUATION CONTRIBUTION CAP :

CONCESSIONAL CONTRIBUTION:

  • employer contributions (including contributions made under a salary sacrifice arrangement)
  • personal contributions claimed as a tax deduction by a self-employed person.
Income yearUnder 49

Aged 48 years or younger on 30 June of previous financial year

49 years to 59 years*

Aged 49 years or older on 30 June of previous financial year

59 years and over**
2017/2018** $25,000 $25,000 $25,000
2016/2017 $30,000 $35,000 $35,000
2015/2016 $30.000 $35,000 $35,000
2014/2015 $30,000 $35,000 $35,000
2013/2014 $25,000 $25,000 $35,000
2012/2013 $25,000 $25,000 $25,000

**Reduced general concessional cap of $25,000 applies for all ages, from 1 July 2017

NON-CONCESSIONAL CONTRIBUTIONAL CAP:

Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.

Non-concessional contributions cap for 2017/2018 year, for 2016/2017 year and previous years

Income yearCapBring-forward cap*
2017/2018** $100,000 $300,000
2016/2017 $180,000 $540,00
2015/2016 $180,000 $540,000
2014/2015 $180,000 $540,000
2013/2014 $150,000 $450,000
2012/2013 $150,000 $450,000
2011/2012 $150,000 $450,000
2010/2011 $150,000 $450,000
2009/2010 $150,000 $450,000
2008/2009 $150,000 $450,000
Work Related Expenses:

If clients are claiming a work-related expense deduction, they need to satisfy the following:

  • they must have spent the money
  • it must be related to their job
  • they must have a record to prove it.
  • Claim all work related deductions to minimize your tax bill and hopefully get yourself a tax refund. Think of everything you've had to buy to carry out your job this financial year.
  • If you work from home you can even claim part of your rent, internet connection and electricity bills. Don't forget your charity donations!
  • If you can't find receipts, go back and see if they can give you a copy of the receipt or invoice. Bank and credit card statements showing details of purchases can also be used.  (Source: www.ato.gov.au)

TAX TIPS FOR DECLARING YOUR TAXABLE INCOME

Last day of filing your tax return is 31st every October or 15th May (through Reg. Tax Agents) following the closure of that financial year on June 30th. You may receive a fine or interest penalty charge from the ATO if you lodge your return beyond this date.

  • A Tax File Number (TFN) is required in order to work and be properly recognised for tax purposes in Australia.
  • For tax returns, you should bring with you any PAYG Payment Summaries you have received from employers, dividend statements, bank interest records, income distribution statements, etc. Any receipts, log book, diary records, to substantiate your claims for deductions.
  • If you are missing one of your payment summaries, then you need to contact that employer to obtain it or will have to make a statutory declaration with the accountant or take relevant advise.
  • Include all your payment summaries, even if you've only worked in a job for a couple of weeks.
  • Include all dividends and any other interest earned on bank accounts as income.
  • Income from Centrelink (Newstart, Austudy, Youth Allowance) must be declared.
  • The money you bring with you from another country prior to permanently residing in Australia is not taxable. However, the money earned in Australia is taxable.
  • All Australian residents for tax purposes are required to declare their worldwide income accruing from interest dividends, rental income in their Australian tax return.  The tax paid on such overseas income to the Overseas Authorities will be offset against the Foreign Income to be reported in the Australian Tax Return provided Australia has a Double Tax Treaty with the relevant Country.

TAX TIPS FOR DECLARING YOUR EXPENSE

A work related deduction is available for the following, provided you have receipts/documentations to substantiate the expenditure.

A deduction is allowable if the client can show that an expense was:

  • Actually incurred
  • Meets the deductibility tests, and
  • Satisfies the substantiation rules.
  • Outdoor workers who buy sunscreen lotion, sunglasses and hats for use at work
  • Scientific books, trade books, or journals necessary to fulfil your job function or related books to your work.
  • Travel expenses/cost of transport which is incidental to your job (mere travel between home and office will not be allowed). Travel from office to meet clients and/or authorized and travel that is described in your work duties can be claimable, provided necessary documentation is available.
  • If home is a place of business, deductions can be claimed on rent, house insurance, electricity, maintenance, pest control, depreciation, repairs, decoration, cleaning, internet & telephone on a prorate basis with respect to your business usage.
  • Expenses towards mobile phones and telephone used for making business calls, provided you keep receipts
  • Uniforms in the course of employment and if the work uniform is specific and identifiable to your organisation (such as chef's checked pants) or protects you from injury, whilst you are at work and can even claim the maintenance costs such as laundry & dry cleaning.
  • Fees paid to a registered tax agent for preparation of your return from the previous year, amendments and all your tax matters are all deductible.
  • Donations to registered charities.

For claiming work related motor vehicle expense (log book method):

  • Maintain a log book recording the petrol expenses
  • Receipts for expenses such as services, repairs, tyres maintenance etc.,
  • Home to work and return travel is generally not claimable except in certain circumstances. Travel between jobs on the same day and travel for work (i.e. visiting clients, doing pick-ups or deliveries) would be claimable. While using public transport, keep all receipts and/or diary records/log book. If you use your own car then you need to keep a record of all business mileage travel. You should also record expenses of the car including petrol, repairs, registration, insurance and interest on a car loan.
  • Credit card slip /Bpay/ email receipts having information like date, supplier, nature of the goods and the amount is accepted as a receipt.
  • Documentary evidence should be kept for five years from the date of lodgement of the tax return in which the claims are made.
  • Maintain records/receipts with regard to the expenses incurred in replacing, insuring and repairing tools and equipment of trade that are used as your main income for claiming expenditure
  • Only study directly related to your current job may be claimed as a self-education expense. (however, an education expense that gets you a New Role / Job is cannot be treated as Self Education Expense).

USEFUL TIPS ON CAPITAL GAINS / LOSSES

Offset capitals gains with capital losses:

Profits from selling shares or investment properties bought after 1985 will be charged capital gains tax at your marginal tax rate. Capital Losses can be offset only against Capital Gains and reduce your capital gains tax bill. For instance, if you made a big profit on the sale of one investment this financial year, consider selling some of your bad ones.

Carefully choose to be a "Share Trader" or to be a "Investor". Investment is categorized as Capital in nature and the above point applies. "Trader" will be treated as a business-like venture and any losses from such business transactions could offset your PAYG Income.

COMPANY TAX LOSS CARRY-BACK SCHEME:

Under this proposal, a one year loss carry-back is to apply from 2012-13, where tax losses incurred in that year can be carried back and offset against tax paid in 2011-12.

For 2013-14 and later income years, tax losses can be carried back and offset against tax paid up to two yearsearlier.

Losses of up to $1 million can be carried back for each year, providing a cash benefit of up to $300,000 (based on the company tax rate of 30%)

It will be only be available for revenue losses of companies and entities that are taxed like companies and limited to the franking account balance.

 
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