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Accounting and Tax

Medicare Levy – I recently changed private heath funds because my new fund gives me a better rebate on Extras such as dental. Do I have to pay the Medicare Levy if I have Extras cover with a private health fund or do I need to have private hospital cover as well?

Unless you qualify for a reduction or exemption, all Australian tax payers pay the Medicare Levy. The amount you pay is calculated as 2% of your taxable income.
For more information on the Medicare Levy.

In addition, if you don’t have private hospital cover and earn over $90,000 as a single or $180,000 as a family, you will need to pay an additional Medicare Levy Surcharge. Up to date information on tiers and rates.

Why do I have to pay Pay As You Go (PAYG) income tax instalments when I also have to pay income tax at the end of the financial year?

PAYG income tax instalments are intended to cover your expected income tax liability for the current financial year. You only have to pay PAYG instalments if you earn business and/or investment income and generally, for individuals and trusts, only if you reported $4,000 or more of business and/or investment income in your last tax return. The ATO uses your most recent previous year’s tax return to estimate your income tax liability for the current year and then divides it into four quarterly instalments. In doing this, the ATO expects that at the end of the financial year your income tax liability will either be paid in full or there will only be a small amount still owing. Should your actual income tax liability be less than what the ATO estimated and you’ve paid more than you need to, you will be refunded the excess amount.

Click here for more details on PAYG Instalments.

Are there any additional deductions I can claim in my income tax return, to reduce my taxable income?

You’re entitled to claim deductions for some expenses, most of which are directly related to earning your income. To claim a work-related deduction:

  • you must have spent the money yourself and weren’t reimbursed;
  • it must directly relate to earning your income; and
  • you must have a record to prove it.

Common claimable deductions include tools, vehicle and travel expenses, mobile phone, internet, iPad and home office expenses. In addition, there may be expenses specific to your industry that you can claim. For example, if you work in the sun in the construction industry you may be able to claim sunscreen, sunglasses and hats that protect your skin from the sun. Industry memberships, education and other professional development expenses may also be claimable.

Please contact us for information specific to your individual circumstances.

When should I register for GST?

As a business owner, you are required to register for GST if your business has a GST turnover (gross income minus GST) of $75,000 or more. GST turnover is your business’s gross income, not your business’s profit. You must also register for GST if you provide taxi or limousine travel for passengers in exchange for a fare as part of your business, regardless of your GST turnover (this applies to both owner drivers and if you lease or rent a taxi) and, if you want to claim fuel tax credits for your business.

If you haven’t registered for GST and you become aware that your GST turnover will exceed the annual turnover threshold of $75,000, you are required to register for GST within 21 days of reaching the threshold.

If you don’t register for GST and are required to do so, you may have to pay GST on the sales you have made since the date you became required to register. This could happen even if you didn’t include GST in the price of those sales. You may also have to pay penalties and interest.

If your GST turnover is below the $75,000 per year threshold, registering for GST is optional.

You may choose to register for GST if your turnover is below the $75,000 threshold, however once you’re registered for GST, regardless of your business turnover, you must generally stay registered for at least 12 months.

My employer has been deducting tax from my regular pay, so why am I still required to pay additional tax when I lodge my return at the end of the financial year?

This could be due to a number of reasons, including:

  • Your employer may not have deducted enough tax. This can happen when you are working more than one job at the same time and wrongly choose to claim the tax-free threshold on both of them. When this happens, both employers calculate your tax liability on the assumption that they are your only source of income. As this is not the case, the result is likely to be a tax bill at the end of the year.
  • You may have asked your employer to withhold PAYG tax, but neglected to ask them to withhold additional tax for your HECS-HELP loans. This likely to result in a tax bill at the end of the year.
  • Your employer may have withheld sufficient PAYG tax, but you if you received other income that hasn’t been taxed yet it, will be added to your tax liability. This may include dividends, money from the sale of shares, capital gains from the sale of property or passive income from another source.
When is my tax return due for lodgement?

If you are a client of AustAsia Accounting Services Pty Ltd and we prepare your tax return, it is generally not due until the 15th of May of the following financial year. For example, for the tax year ended 30 June 2018, your return is generally not required for lodgement until the 15th of May 2019. However, there are some exceptions to this rule. Using 30 June 2018 as the end of financial year for this example:

  • If you had a Self Managed Superannuation Fund in its first financial year of operation, its tax return would be due by 28th February 2019
  • If you were a large tax payer nominated by the ATO, your tax return would be due by 15th January 2019 (for businesses) or 31st March 2019 (for individuals).
What expenses/payments can be paid from my Self Managed Superannuation Fund?

Self Managed Super Funds can only pay expenses that are related to the operation of the fund. Broadly speaking, fund expenses include accounting fees, audit costs, lodgement fees, investment advice fees, premiums for life insurance, total & permanent disablement insurance, critical illness insurance and income protection insurance, and other similar expenses.

Expenses related to the operation of the fund include any expense incurred as a result of the fund operating, such as the purchase of investments and expenses incurred by an asset already owned by the fund. For example, if a fund owned a rental property, all related expenses – loan repayments, interest, insurance, furniture, improvement expenses, or any other costs – could be paid through the SMSF. However, please note that these are general guidelines only, the rules regarding investments are strict and individual circumstances vary.

For this reason, it’s imperative to get expert advice on your specific situation. Please call us for an appointment today.

Why is my Self Managed Superannuation Fund (SMSF) required to pay PAYG income tax instalments?

SMSF’s are required to pay tax on their income just like any other individual or company. The ATO now requires entities to pay their estimated year-end tax liability progressively throughout the four Quarters.

So, an SMSF will generally need to pay tax instalments if either:

  • The instalment rate the ATO has calculated is greater than 0% and the notional tax is $500 or more
  • The instalment income included in your most recent tax assessment is $2m or more
Published Date: Jun 5, 2020