FAQs
Taxable Income
If you think there has been a mistake in declaring your taxable income, contact your bank to verify the income details for your accounts.
If there is indeed a mistake, the bank should notify the ATO about this in writing.
You have 28 days to correct this information.
If you have in fact omitted the taxable income, the ATO will amend your return and send you a new assessment requesting payment of the additional tax, a general interest charge, and in some cases, a penalty.
Should you need any assistance with communicating with the ATO, you may contact us.
A Living Away From Home allowance is paid by an employer when an employee is required to work in a place that is different from their usual workplace.
The allowance is paid to cover the cost of living.
This allowance is not taxable, so it does not need to be declared in your tax return, provided it is paid in accordance with the tax office guidelines.
Expenses cannot be claimed against this allowance.
The Living Away From Home allowance is taxed to the employer under the Fringe Benefits Tax system. However, the employer is able to reduce the tax payable on the allowance amount for a maximum period of 12 months if the employee meets the following conditions:
- Maintains a home in Australia for personal use at all times throughout the duration spent working away from home; and
- Provides a declaration regarding them living away from home.
If the conditions are met, the employer is able to reduce the taxable value of the allowance by:
- The amount of the employee’s actual accommodation expenditure while living away from home; and
- The amounts incurred by the employee for food and drink costs while living away from home, less a statutory amount if applicable.
An inheritance is not taxable unless you have been advised by the executor that it is taxable.
However, if you invest the inheritance, then any earnings from the investment will be taxable.
You should definitely be cautious when approaching new investment opportunities.
Some of these schemes will promise large tax deductions that are said to be allowed by the tax office, but they may not be genuine.
An investment in a risky tax scheme may cost you some or all of your money, and you may need to pay back any refunds due to over-claimed deductions as well as interest and penalties.
Before making a decision to invest in any tax schemes, it is advisable to seek out a professional tax advisor. Information and warnings about investment schemes and scams are also available on the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission SCAMwatch websites.
You cannot declare all of the interest under your spouse’s tax return because that could lead to an ATO audit.
Each recipient must declare all income on the same basis as the accounts are held. Interest from a joint account should be split equally.
Tax Deductions
You can claim expenditure incurred in replacing, insuring and repairing tools of trade that you use for earning your income.
The amount you can claim depends on what receipts you have kept and to what extent you use the tools or equipment for earning your income.
If the cost of your tools or equipment exceeds $300, it will have to be depreciated. You can claim expenditure on items costing less than $300 without receipts.
If travel is relevant to your job function and you have the appropriate documentation, you will be eligible to claim a deduction for the cost of transport and incidentals.
If your travel involved an overnight stay, you would be able to claim the cost of your meals.
If you were required to travel overseas, you need to keep a travel diary.
If you have a room set aside to do activities for earning income from your home, some of the expenses incurred in running this home office can be deducted.
You should keep a diary for a minimum of 4 weeks stating the hours that the room was used for work-related purposes.
You will then be able to claim the Commissioner’s rate of 52 cents per hour for the hours the home office is used.
If you are only using a portion of your home for work-related purposes, only running expenses such as electricity, heating and depreciation of office equipment can be claimed.
If your home is a place of business, deductions can be claimed on occupancy and running expenses, including rent, insurance, mortgage interest, repairs, cleaning, decorating, and maintenance.
For your home to be considered a place of business, it should be easily identified as such. For example, having a separate entrance, signage, and customers or clients coming to your home.
Expenses incurred on child care cannot be claimed as a tax deduction.
However, you may be able to claim the Child Care Tax Rebate (CCTR) through the Family Assistance Office.
There is no limit on the amount claimable each year if the expenditure is work-related and necessarily incurred in earning your income.
You may need receipts to substantiate the expenditure, otherwise your ability to claim deductions may be limited.
You can obtain advice on tax deductions from a registered tax agent at Aero Group.
Tax & Education
If your education expenses have a clear connection to your current income, then it can be claimed as a self-education deduction.
In order to be claimable, the self-education needs to help you in relation to your current job and not for new job opportunities.
Full-time students who are in receipt of Youth Allowance, Austudy or Abstudy are no longer able to claim deductions for study expenses as of March 2012.
If you make an advance payment of $500 or more, or enough to pay off the full debt amount, you can receive a 5% discount on that payment.
It would be best to make the payment before 1 June when the annual indexation is calculated.
You should be aware that you may be required to make a compulsory payment when you lodge your tax return depending on your HELP repayment income threshold.
Expenses incurred while job seeking are not deductible as there is no income to offset the expenses against.
Yes, the costs associated with seminars can be claimed as a tax deduction as long as they relate to your current income producing activities.
Tax & Your Family
You may be eligible to claim a reduction in Medicare depending on your income if you have gotten married during the year.
If your spouse has earned income during the year, they will also have to lodge their own tax return.
On both your tax returns, you will be required to disclose information about your spouse so that any entitlements you may have to family tax benefits can be calculated accurately.
As of 1 July 2014, the dependent spouse tax offset rebate has been abolished. However, some taxpayers may be eligible for the Invalid and Invalid Carer Tax Offset. If your spouse is unable to work due to a disability or they care for someone with a disability, you may be eligible for this tax offset. The person with a disability must be receiving a government disability payment to qualify.
As of 1 July 2019, the definition of ‘spouse’ has changed to include same-sex partners. If you are in a relationship and are living in a domestic situation with your same-sex partner, you will be entitled to claim the same family tax benefits as partners in an opposite-sex relationship.
You may be eligible to claim an Invalid and Invalid Carer Tax Offset or a reduction in the amount of Medicare levy you pay. Any tax benefits you may be entitled to will be determined on your income, not your gender.
You must lodge your tax return within 12 months after the end of the year so that the authorities can check that you have been receiving the correct amount.
If you declared the wrong amount for your income, you will either receive a top-up payment or be required to return the excess payment.
No, maintenance payments are not tax deductible.
The Family Tax Benefit helps with the cost of raising children, so it is available for those who:
- Have a dependent child or secondary student younger than 20 years of age who is not a recipient of a government benefit;
- Provide care for a child at least 35% of the time; and
- Satisfy an income test.
Other FAQs
Your outstanding tax returns should be lodged as soon as possible before the Australian Taxation Office takes any action against you as this may lead to a court conviction.
The ATO may also charge you a penalty for every 28 days that you do not lodge your tax return.
Aero Group can assist you with lodging your late prior year tax returns. Simply contact us through our website.
There are separate tax categories for people who are permanent and temporary residents of Australia.
Permanent residents are generally taxed on all income in and out of the country while temporary residents are exempt from paying tax on certain income classes.
In cases where people exhibit characteristics of a permanent resident despite holding a temporary visa, they will be taxed at permanent resident rates.
Temporary residents may also be required to pay the Medicare levy unless they are eligible to apply for an exemption.
Salary sacrifice is an arrangement between an employee and an employer in which the employee agrees to forgo part of their future entitlement to salary or wages in return for other employment-related benefits of a similar value.
Find out more about salary sacrifice arrangements for employees on the ATO website.
Employers are usually required to issue payment summaries within 14 days of the end of the financial year.
If an employee ceases employment for any reason before then, a payment summary must be supplied within 14 days of receiving a written request from the former employee.
The request must not be made any later than 21 days before the end of the financial year.
If the employee has been receiving reportable fringe benefits and ceases employment before the end of March, the 14 day limit may need to be extended.
All records, receipts and other documentation used to prepare your tax return must be kept for at least five years. If you are claiming deductions, you must have written evidence to verify your claims.
Individuals must keep proper records relating to tax affairs for at least five years from the date the tax return was lodged.
Small businesses must keep proper records relating to tax affairs for at least five years from whichever comes later between:
- when the business record was prepared; or
- the transaction was completed.
The five year period may be extended, for example, in the following circumstances:
- if you are involved in a dispute with the Commissioner such as an audit.
- if information from your records is used in later tax returns.
- if a tax loss is carried forward, the records must be kept until the end of the review period for the tax return in which the loss is fully deducted.
- if you intend to dispose of an asset which will be subject to capital gains tax, you need to keep records of the entire period of ownership until 5 years after lodging the tax return recording the disposal of the asset.
Why Aero?
Qualified team
Our experienced accountants have all the qualifications necessary to handle any accounting task. Your tax return is in good hands!
Personalised tax experience
Our close-knit team is interested in your tax journey and will be able to provide services tailored to your specific needs.
Satisfaction guaranteed
We are confident we can give you top-end services but if you still have your doubts, book a consultation with us and we will come up with a solution for you.
