If you also work in Melbourne, Australia, then each year, lodging a tax return in Melbourne is also requisite for you. According to ATO (Australian Tax Office), your tax return reveals the income you have generated from your business throughout the financial year.
However, this is mainly done to figure out the correct tax amount that you have paid. Moreover, if any refund for Tax is entitled to you, then your money is returned even if you have already submitted your annual tax return.
Although, it’s understandable that with lodging a tax return in Melbourne, loads of burden hits you strongly. Hence you’re likely looking for some tips in the financial year 2020, so you could pay less Tax.
If you have multiple sources of income, various investments, possibly your own business or have lots of deductible work-related expenses, using an accountant (who’ll need to be a registered tax agent1) to prepare and lodge your tax return may be useful.
However, if the only income you earn is from your employer and you don’t have many deductions to claim or investments you’re making money on, you might choose to lodge your tax return online yourself via my Tax, which is accessible through the Australian Government’s myGov website.
If you’re not sure which way to go, here are a few pointers that might help you with your decision.
Tax tips and tax return hints
The End of Financial Year is almost upon us. To help you complete your tax return, we’ve provided an overview of the types of tax offsets and deductions you may be entitled to claim plus some handy tax tips and hints.
Private health insurance offset
Depending on your income and age, you may be eligible for a tax offset of up to 35 per cent on your health insurance.
If you haven’t claimed a reduced premium from your health fund, then you can claim an offset in your tax return.
Spouse super contribution offset
If you made personal superannuation contributions on behalf of a spouse, there is a tax offset of up to $540 per year. This is available for spouse contributions of up to $3,000 per year, where your spouse earns less than $37,000 per year, and a partial tax offset for spousal income up to $40,000 per year.
Net medical expenses tax offset
You may be eligible for this tax offset until June 30 2019, if you have out-of-pocket medical expenses relating to disability aids, attendant care or aged care.
Child care subsidy
From July 2 2018, the Child Care Subsidy (CCS) replaces the Child Care Benefit and the Child Care Rebate. If you currently receive assistance with child care fees, you need to complete an online Child Care Subsidy assessment using your Centrelink online account through myGov. If you don’t need assistance with child care fees until after July 2 2018, you can start claiming the CCS using your Centrelink online account through myGov after that date.
The CCS is calculated based on your family income. If your family earns $186,958 or less, you won’t have an annual cap on your CCS. If your family earns more than $186,958 and under $351,248, your CCS will be subsidized up to the annual cap of $10,190 per child each financial year. The CCS is not payable if your family income is $351,248 or more.
To be eligible, your child must meet immunization requirements and be 13 or under and not attending secondary school unless an exemption applies.
Senior Australians pensioner tax offset
If you are eligible for the senior Australians pensioner tax offset (SAPTO), you are able to earn more income before you have to pay Tax and the Medicare levy. In the 2017/18 financial year, you will pay no tax on an annual income less than:
- singles – $32,279 (a reduced offset applies to incomes up to $50,119)
- couples (each) – $28,974 (a reduced offset applies to incomes up to $41,790).
Super tax hints
Superannuation is a very tax-effective vehicle to save for retirement. Following are some tips to help you maximize your super.
For the 2017/18 financial year, non-concessional (or after Tax) super contributions are capped at $100,000 per person per year or $300,000 over three years using the bring-forward provisions, subject to your total super balance at June 30 the previous financial year. Concessional contributions, or those made with pre-tax money, are limited to $25,000 per person per year.
A salary sacrifice strategy allows you to make contributions to super from your pre-tax salary. Your salary is then reduced by the amount you choose to sacrifice. The benefits of this are two-fold: not only does your super balance increase, but this strategy could also reduce your taxable income and therefore the amount of Tax you pay. Also, super contributions are concessionally taxed at just 15 per cent (up to 30 per cent for individuals with income over $250,000) instead of your marginal tax rate, which could be as high as 47 per cent.
Personal deductible contributions
From July 1 2017, if you are eligible to contribute to super, you may make voluntary personal contributions and claim a tax deduction up to your concessional contribution cap.
This gives you greater flexibility to top up your concessional contributions made by your employer, especially if your employer does not offer salary sacrifice. For instance, you can time your final contributions leading up to June 30 each year and make the most of your concessional contribution limits and the resulting tax benefits.
Receive at least 10 per cent of your income from employment or self-employment, and you earn less than $36,813. You may be eligible for the maximum super co-contribution of $500 from the Government for an after-tax contribution to super of $1,000. The co-contribution phases out once you earn $51,813 or more.
The ATO uses information on your income tax return and contribution information from your super fund to determine your eligibility.
If you want to split your super contributions with your spouse, don’t forget this usually can only be done in the year after the contributions were made. Therefore, from July 1 2018, you may be able to split up to 85 per cent of any concessional (or pre-tax) contributions you made during the 2017/18 financial year with your spouse.
Apart from making the most of your super, there are other ways you can minimize your tax liability.
Capital gains and losses
A capital gain arising from the sale of an investment property or shares and capital losses can be used to offset the capital gains. For example, you may have sold investments that were no longer appropriate for your circumstances, and any capital losses realized as a result can be offset against any capital gains you have realized throughout the year. Unused losses can be carried forward to offset capital gains in future years.
Specialist advice should be sought before making changes to your investments.
If you have an investment loan, you can arrange to prepay the interest on that loan up to 12 months and claim a tax deduction in the same year the interest was prepaid.
Negative gearing is another strategy used to manage tax liabilities. Geared investments use borrowed funds to enable a higher level of investment than would otherwise be possible. Negative gearing refers to the cost of borrowing, exceeding the income generated by the investment. This difference is an allowable tax deduction. If you invest in shares, you may obtain imputation credits which can be used to reduce further the amount of Tax you pay.
Income protection insurance
If you hold an income protection policy in your name, then any premium payments you make are tax-deductible.
Individual Tax Returns: Tax Tips FY20
Keep good Tax Records.
Every year, a vast number of people overlook deductions from Tax, which they could easily claim. Resulting in, most of the people among you might be unaware that in this way, ATO holds millions of dollars. Simultaneously, people miss the opportunity of tax refunds. Therefore, if you also want to claim your tax deduction, then keep a track record of every deduction. Point out everything that you can claim, and ask for deduction from ATO.
Charitable donation for a Tax deduction
If you also want to save yourself from the tax return in Melbourne, then no wonder, a charitable donation has always been the best option. The amount you donate can claim at the time of tax return. In short, it’s a kind of win-win situation. Don’t forget to take a receipt after donation and keep it with you. At the time for Tax, show the receipt to the tax office, and you’ll get the tax deduction.
Claim work-related expenses
You can even claim your work-related expenses during your tax return in Melbourne. However, this step can also put you in danger if you aren’t eligible to claim. There are several expenses that you can claim in your tax return, such as tools, work-specific clothing, laptops, mobile phones, safety items, and many more.
Get tax agent advice.
In Australia, the maximum percentage of people takes the help of agents to lodge a tax return in Melbourne. Hence, if you also want to save money on tax-return, then don’t forget to take the assistance of tax agents or accountants. They can provide you with an instant way for ‘how to improve tax refund.’
Claim tax deduction for working at home
You can also claim a tax deduction if your business is operational at home or work from home. For instance, if you are running a business, you’re surely using your phones, computer, and electric devices, and hence, they are also deriving your business expenses. Similarly, in this way, you become eligible to claim the tax deduction. Under your expenses, it must include anyone from- cleaning cost, office furniture, repair or purchase cost, phone bills, electricity bill, home internet bill, etc.
First Home Super Saver Scheme
There have been recent law changes that affect the First home super saver (FHSS) scheme.
The changes come into effect from July 1, 2019, but apply from July 1, 2018, to valid FHSS release requests and contracts.
First home super saver scheme
Important changes to the first home super saver scheme
FHSS payment summaries
If you have had money released by your super fund, you will receive a payment summary at the end of the financial year. It will show Tax withheld and your assessable FHSS released amount.
We will only issue payment summaries once all of the FHSS amounts have been paid to you. This could be several weeks after the end of the financial year. We will write to you if you receive your payment summary after July 14.
You need to include the FHSS assessable released amount in your tax return for the financial year you request the release, not the year the FHSS amount was received.
The Tax payable on this assessable amount will have received the FHSS 30% tax offset.
Prefill – where the FHSS amounts need to be shown
If you lodge your tax return online with myTax or a registered tax agent, your FHSS payment amount and any tax withheld will be pre-filled in your tax return. If these amounts are not pre-filled, or you lodge your tax return on paper, you can use the payment summary issued by us to enter the required information manually.
FHSS tax assessment notices and methods of payment
If you are liable to pay FHSS tax, you will be sent an FHSS tax assessment that will state the reason you need to pay FHSS Tax.
You can pay your FHSS tax assessment by the usual payment methods, such as BPAY, credit card or by entering into a payment plan.
Personal Income Tax Plan
The Government’s Personal Income Tax Plan, as announced in the 2018–19 Budget, has been passed by parliament.
The changes introduced taking effect from the 2018–19 income year include:
- an increase to the top threshold for the 32.5% bracket from $87,000 to $90,000
- delivering a new low and middle-income tax offset (LMITO) for those who are eligible
- you don’t have to do anything to receive this offset – when you lodge your income tax return, it will be calculated and applied on your income tax assessment
- it won’t reduce the amount of Tax withheld from your pay
- if you are eligible for the existing low-income tax offset, you will also receive this new LMITO.
There has been a further expansion to the Personal Income Tax Plan, announced in the 2019–20 Budget and it is now law. This means the LMITO has increased from a maximum amount of $530 to $1,080 per year, and the base amount has increased from $200 to $255.
The amount of the offset you may be entitled to and the amount of any refund will differ for everyone depending on your circumstances, such as your income level and how much Tax you have paid throughout the year.
When lodging your tax return, there’s nothing you need to do. The new offset amounts will be factored into your assessment even if you have already lodged your return.
Do I need an accountant to do my tax return?
Lodging Your Tax Return Yourself
If your finances are relatively simple, you might consider lodging your tax return (which you’ll need to do by October 31, for the previous financial year), while saving money on what a registered tax agent might charge you.
According to the Australian Taxation Office (ATO), the benefits of lodging your tax return online via the myTax system is it’s safe, secure and most of the information from your employer, bank and Government agencies will be pre-filled for you by around late August 2.
Meanwhile, even if your situation is a little more complex, you can still use myTax if you have investments, rental properties, capital gains or are a sole trader3.
On top of that, the service is available all day, every day so you can lodge your return at any time and you’ll generally get your refund within two weeks, which may be faster than doing it another way4.
Engaging A Registered Tax Agent
If you do want to use a registered tax agent to prepare and lodge your tax return, it’s important to note you will pay a fee for their service, but it’ll typically be deductible in next financial year.
Note, tax agents must be registered with the Tax Practitioners Board (TPB), and you can find a registered tax agent or check whether a person is registered by visiting the TPB website5.
If your finances are more complex, going down this path may provide you with peace of mind, as it could save you time, highlight deductible work-related expenses you didn’t know about while ensuring all your claims are legitimate.
On top of that, most registered tax agents have a special lodgement program, which means they can usually lodge returns for their clients after the usual October 31 deadline. Still, you’ll need to contact them beforehand to ensure that’s something you can take advantage of.
Other Things To Note
Whether you plan to lodge your tax return yourself or use a professional, you can use the deductions tool in the ATO app to save a record of your deductions throughout the financial year, which you can upload at lodgement time.
To ensure you’ve got all the relevant information you need ahead of filing your tax return, check out the ATO’s tax time checklist.
If you also want some relief from Melbourne‘s tax return. These were some of the best tips you must bear in mind for the financial year 2020. To some extent, these tips may prove to be an elixir for you, which can provide you claim or bring deductible tax amount in your portion.