Australia, just like many other countries, has a tax structure that is overly complicated and can be challenging to comprehend. This article offers a concise summary of the tax structure that applies to employees and contractors in Australia, as well as the distinctions that exist between the two types of workers.
In addition to that, several suggestions for lowering your overall tax burden are included. Whether you are an employee or a contractor, it is important that you are aware of your tax obligations. This will allow you to pay the appropriate amount of tax and prevent any fines from being assessed.
The vast majority of individuals are aware that they are obligated to pay their taxes, but many of them are confused about how the process actually works. This article is written with the intention of assisting employees and contractors in Australia in comprehending the fundamentals of tax payments. To ensure that you are in full compliance with Australian tax law, we will go over everything, from the date on which you must begin paying taxes to the types of tax deductions that are available to you. Continue reading for more information!
Do you understand the tax obligations that come with working in Australia either as an employee or as a contractor? Are you taking advantage of every deduction to which you are entitled? In this post, we'll share some helpful advice on how to remain on top of your tax issues and make the most out of your tax return. We hope you'll find them useful! Stay safe, and have fun with your paperwork!
Everyone who has ever held a job is aware that certain expenses can be deducted from their taxable income. You should realize, however, that the same regulations apply to contractors. Were you aware of this? In this article, we will discuss some of the tax hints that workers and contractors in Australia need to be aware of in order to avoid any unpleasant surprises. Make sure that you read on, regardless of whether you are an employee or a contractor.
Do you understand the distinction between working as a contractor and working as an employee? The Australian Tax Office (ATO) is in charge of this, and they will not hesitate to enforce the law when it comes to filing taxes.
Continue reading for some advice from the Australian Taxation Office if you are unsure of your position or whether or not you are required to record a tax return. They can assist you in maintaining compliance with the law so that you do not face any unpleasant surprises when it comes time to file your taxes.
PAYG is the abbreviation for the payroll tax that is withheld from the wages of workers in Australia at regular intervals throughout the year (pay-as-you-go). The amount of tax that is withheld from your paycheck is directly proportional to the amount of income that is taxable.
If you have income from other sources (such as investments or rental property, for example), you may be required to file a second tax return in order to report this income and calculate the amount of tax that you are responsible for paying.
In Australia, do you work for an employer or are you self-employed? If this is the case, it is critical that you have a solid understanding of the fiscal regulations that pertain to your specific situation. In today's post on our company blog, we will discuss how to calculate the appropriate amount of tax to pay while avoiding incurring any penalties. Read on for some helpful hints, whether you're just starting out in the working world or you want to make sure you're always doing things the right way.
Do you work for a company or are you self-employed in the country of Australia? If this is the case, there are some tax strategies that you should be familiar with to ensure that you are paying the appropriate amount of tax and claiming all of the deductions to which you are entitled. In this piece, we will go over some of the most important things to think about when it comes to your taxes, regardless of whether you are an employee or a contractor.
Did you know that whether you work in Australia either as an employee or as a contractor, it is your responsibility to pay income tax on the money you earn? This may be difficult to understand, particularly if you are not familiar with the structure of the tax system. This post on the blog will provide an overview of various suggestions that can assist simplify the process of filing taxes.
In addition to that, we will supply you with a few materials that will be of further use to you. Continue reading in order to pick up some useful pointers, regardless of whether you have recently entered the employment or have been filing your taxes for years.
Let's get started!
Lodge Taxes On Time
If you are filing your own tax return, you are required to do so by November 1, 2021, at the latest. You have the option of doing so either through the use of myTax via myGov or by submitting a paper return.
If you use a registered tax agent, they will often have special lodgment schedules and will file returns for customers later than November 1, 2021. If you use a registered tax agent, you should do so. Therefore, in order for you to take advantage of late-lodgment dates, you will need to get on their client lists before October 31st.
Your tax return will have a lot of information prefilled by the ATO if you live in Australia. Therefore, before filing, it is recommended to hold off until all of the data have been finalized. Typically, this is finished by the end of July although it can sometimes take up to the middle of August.
Before you start working on your tax return, you should make sure that your employer's end-of-year income statement indicates that it is "tax ready" and that the information you need regarding your private health insurance, dividends, and interest is readily available. In that case, it may contain data that has not been finalized, and you may be required to make changes to your tax return and pay additional tax.
When it comes to taxes, can you be classified as a resident?
The criteria that are used for determining a person's residency status for tax purposes are not the same as those that are considered when determining residency status for other purposes, such as immigration.
The guidelines can be difficult to follow, however, the ATO offers information on tax residency in order to provide assistance. In addition, there are regulations in place for people who are dual residents, working holidaymakers, or overseas students.
The Australian Taxation Office (ATO) has issued guidance to the effect that individuals who are in Australia temporarily for some weeks or months will not become an Australian residents for the purposes of taxation, as long as they usually live overseas permanently and intend to return there as soon as they are able to do so.
If you are required to pay income tax in another country, you may be eligible for a foreign income tax offset, which will lower the amount of tax that you owe to the Australian government.
For businesses, accountants ensure that all transactions are recorded accurately for tax purposes.
Are You Running a Business?
For monetary and other reasons, it is essential to have a solid understanding of the distinctions that exist between a pastime and a business. There is no one term that fits all cases, and what may have begun as a pastime may eventually develop into something more.
Considerations to make include whether or not you aim to turn a profit, carry out activities in a manner consistent with a business, or repeat activities with a similar format. In addition, the Australian Taxation Office (ATO) offers information on home-based businesses, internet sales, and share trading, and the tool at business.gov.au is available for you to try.
A business that is little more than a hobby or a lifestyle choice cannot legitimately be written off as a financial loss. Even if it is unlikely to ever turn a profit, has business-like qualities, and doesn't have a significant commercial purpose or character, you cannot deduct the loss from any other income you have. This is the case even if it is unlikely to ever generate a profit. You may, however, defer the loss until such time as the business begins to generate a profit.
Report Your Income
1. Your income statement
Single Touch Payroll is a system that requires the majority of employers to send information about your salary, taxes, and superannuation directly to the Australian Taxation Office (ATO) on a weekly basis (STP). In the end, reporting will be done by every employer via STP.
Your income statement will be provided to you by any employer who files their taxes using STP. By the end of July, this will have been completed and marked as "tax ready." You can get to it by using the online services provided by the ATO through myGov. In addition to this, your tax agent is able to access your income statement on your behalf.
If your employer does not report to the ATO via STP, they are required to provide you with a PAYG yearly payment summary by the following Wednesday, July 14, 2021.
2. Government payments
The Australian Taxation Office (ATO) prefills tax forms with information regarding a number of Australian Government payments, such as JobSeeker and Newstart. These should be included in your tax return by the end of July 2021 at the very latest.
Make sure that your tax return includes all of the necessary deductions and payments, but leave off any amounts that are exempt from taxation, such as tax-free government pensions and benefits.
Payments made through JobKeeper are to be regarded in the same manner as your customary salaries or wages for employees. Consequently, if you were an employee and received JobKeeper, it would be reported on your income statement either as pay and earnings or as an allowance, depending on the specifics of your situation.
If you are a contractor (i.e. a sole trader) and have received JobKeeper payments as an eligible business participant, you are required to report such payments as income from your business on your tax return. Be sure to include the amounts that were paid to you under the heading "Assessable government industry payments."
3. Payments for termination and redundancy
You have an obligation to include in your tax return any compensation that you received from income protection, sickness or accident insurance, redundancy benefits, and accrued leave payments.
If you go on leave, are temporarily placed on administrative hold, or are let go from your work and get money from your employer, you will be subject to different tax laws for the extra salary.
4. Early admission to the super
You are not required to pay tax on these amounts and you are not required to include these amounts in your tax return if you access your superannuation early due to COVID-19. You are also not required to pay tax on these sums.
5. The sharing, online platforms, and the gig economy
Your income from activities such as driving people about, doing odd jobs, renting out your goods, running social media accounts, or selling things may be taxable, but the expenses you incur as a result of these activities may be deductible. This may include earnings from trading goods and services, receiving payments in cryptocurrencies, or participating in a sharing economy.
The following are some examples of actions that you might need to declare:
- the economy based on the provision of personal services through the use of short-term contracts or freelance employment; examples of such services include ride-sourcing, graphic design, and dog walking.
- the digital economy, in which activity and income are generated through the use of electronic platforms, such as social media;
- the economy based on people renting out their unused possessions to others for a price, such as rooms, automobiles, or storage space. This is typically done through an online platform.
The Australian Taxation Office (ATO) compares the data it receives from a variety of sites, such as AirTasker, Uber, AirBnb, and Amazon, with the information included in tax filings. Consequently, it is imperative that you maintain records and accurately disclose this income.
You must first ascertain whether or whether you are in the business of engaging in certain activities, such as selling products online or providing personal services.
6. Payments made in cash
It is OK to receive income in the form of cash rather than electronically transmitted funds; nonetheless, you are required to report these amounts on your tax return.
Even if you are an employee who is paid in cash, your company is still required by law to pay you the exact award wages, deduct tax from your salary, and pay your superannuation contributions. They are required to not only pay you, but also give you with an income statement that should correspond to the amount of money they paid you.
If cash income is not reported by independent contractors, the repercussions can include not only a tax bill with interest but also possible criminal and administrative fines. In addition, the ATO is conducting a crackdown on the cash economy; therefore, it is in your best interest to file your taxes in the correct manner.
You are able to report activity related to cash and the hidden economy to the ATO.
7. Income from personal services and sole traders
The personal services income (PSI) rules may apply if more than fifty percent of the amount you earned for a contract was for your labor, skills, or expertise. In other words, if you received more than fifty percent of the amount for your labor, skills, or expertise.
You won't be able to deduct some expenses from your PSI if you're working as a sole proprietor and earning the benefit. For instance, the rent you pay, the interest you pay on your mortgage, and any payments you make to your spouse or associate are typically not tax deductible. In order to properly file your taxes, you will also need to respond to the PSI question.
How can I go about claiming the expenses I've racked up while working from home?
If you have been working from home this year, there are three primary approaches to calculating expenses that you might take.
The first approach is referred to as the "fixed-rate strategy." If you work from home, you are eligible for a deduction of 52 cents for every hour you put in. This accounts for expenditures such as the declining value of furniture used in the home office, the cost of gas and electricity, as well as any costs associated with repairs. It does not include the price of using the phone or the internet, nor does it cover the cost of equipment or stationery.
The Australian Taxation Office (ATO) has created a second "temporary shortcut approach" for computing costs during the pandemic in recognition of the fact that many people have begun working from home for the first time as a direct result of the Covid-19 outbreak.
A deduction of 80 cents is available to you for every hour that you worked from home between the 1st of March and the 30th of June. You will need to use the rate of 52 cents for any expenses that you claim were incurred before this time.
You are required to keep a timesheet or account of the hours that you worked during this time period, excluding any breaks that you took during that time period.
This "shortcut technique" takes into consideration all of the deductible operating expenditures, such as the cost of electricity, gas, cleaning, phone and internet service, printer ink and stationery, as well as depreciating capital items, such as home office equipment.
If you conduct your work from home over the internet, you won't need to keep track of the time you spend on work calls or doing your job because you won't be required to submit receipts or track the time.
It's beneficial if you have nothing specific to claim or no proof of expenses because it allows you to claim without any documentation other than that you worked that time. You may claim without any substantiation other than that you worked that time.
However, if you do the math, 80 cents per hour multiplied by eight hours per day becomes $6.40 per day. This is not a lot of money when you consider how much money you probably spend each day on energy and the internet.
Claim Your Expenses
You may keep track of your expenses throughout the year by using the myDeductions function that is included in the ATO app, and then you can upload that information into myGov to prefill your tax return. If you hire a tax agent, that person will be able to access the data you have uploaded through the practice management software that they use.
1. Deductions related to work
Your tax liability could be significantly reduced if you itemize all of the deductions that apply to your job.
The following are examples of common costs associated to work:
- uniforms and objects designed to protect;
- costs associated with using a mobile phone and the internet for work;
- payments for memberships and dues in unions;
- costs incurred for commuting between different job sites or client locations (but not the commute to and from home).
If an expense was incurred for both personal and business reasons, the only portion of the expense that may be deducted was the business-related portion.
Because of COVID-19, the ATO anticipates an increase in the number of deductions taken for goods like working from home and safety gear that is necessary for work. They are also anticipating a decline in the number of claims for travel, motor vehicle, and laundry charges. Because to COVID-19, you are unable to deduct the costs associated with traveling to and from work as well as working from home.
It's possible that your typical work schedule shifted at some point during the year as a result of COVID-19 or other factors. If this is the case, you may be required to prepare an additional record for the time during which your work pattern changed, particularly in situations where claims are computed based on sample periods.
Be careful to maintain all of your receipts, diaries, and other supporting documentation to demonstrate how you arrived at your private use % and to back up any claims you make. The Australian Taxation Office (ATO) produces fact sheets for a variety of professions.
Be aware that the ATO conducts thorough audits of work-related deductions and employs real-time analytics to identify claims that appear to deviate significantly from the norm.
Keep in mind, in order for an expense to be eligible:
- You must have put the money out of your own pocket and not been compensated for it;
- it must have a direct bearing on the way you make your living;
- You are required to have a record to back up your claims.
2. Costs incurred while working from home
If you run your business out of your house, you may be able to deduct certain business-related expenses, such as those associated with running an office there, buying office supplies, and paying for internet and phone service.
However, expenses like coffee, snacks, and toilet paper are not tax-deductible, and neither are the costs of rent, mortgage interest, water, or rates for the majority of employees.
You can claim expenses related to your home office in one of three ways:
- a way to cut corners;
- a method based on a fixed rate;
- technique based on actual costs
If you want to use the fixed-rate technique, you need to have a dedicated work location such as a home office. If you want to use the actual cost method, it's unlikely that you'll be able to claim much if you don't have a home office.
You need to give some thought to which approach will offer you the greatest deduction, and this is especially important if you have expensive assets that are depreciating or if your operating costs are significant.
The simplified technique is available for use for expenses incurred between July 1, 2020 and June 30, 2021. It allows you to claim a deduction of 80 cents per hour spent at home and does not mandate that you have a designated work area, such as a private study, in order to be eligible for the deduction.
Be careful, though, because if you choose this way, you won't be able to deduct any of the other expenses associated with working from home, such as depreciation, for the time period in question. You are required to keep a log of the amount of time you spent working from home.
This could be a timesheet, roster, diary, or any record of a similar nature that outlines your work hours. For the sake of your claim, all you need to do is count the number of hours you put in and multiply that number by 0.8.
The fixed-rate technique provides you with 52 cents for each hour for home office expenses. This method also accounts for the depreciation in value of your furniture and other items, as well as the cost of maintenance and utilities such as electricity and gas. You need to keep a record of the number of hours worked in addition to a diary for a period of four weeks in order to demonstrate your typical work-from-home pattern.
The actual cost technique simply takes into account the money you actually spent. In most cases, the additional operating costs that you will spend will be little if you do not make use of a particular space for working, such as a home office. Especially if you work in a shared location, you will need to provide proof for any claims that you make regarding actual costs, such as records of the hours that you worked, receipts, and an explanation of how you calculated the amounts that you are claiming.
When it comes to helping employees working from home during COVID-19 analyze their expenses, the ATO has information available for them.
3. Costs associated with self-education
You are allowed to deduct costs associated with your own education as long as such costs are directly tied to the upkeep or improvement of present occupational skills, or if they are expected to raise revenue from your current employment. The costs of your education are not tax-deductible if they are not directly related to your work in any way.
The majority of the costs associated with self-education come from things like course fees, textbooks, stationery, fees paid to student unions, and the depreciation of assets like computers, tablets, and printers.
You are required to disregard the first $250 of any costs associated with self-education that were incurred from a place of education, such as a college or university. This $250 can be offset by expenses that are not tax-deductible, such as childcare costs incurred while attending events connected to self-education or capital costs associated with self-education.
Repayments made through the Higher Education Assistance Program (HELP) are not tax-deductible.
4. Car expenses
You have two options for filing a claim when it comes to your motor vehicle if you use it for business travel:
- cents per kilometre technique;
- technique based on a logbook
When using the cents per kilometre technique, you will receive 72 cents per kilometre for a trip that is up to 5,000 kilometres long. This sum takes into account all of the costs associated with operating your vehicle, including its depreciation.
The Australian Taxation Office (ATO) and your tax agent, if you have one, may ask you to demonstrate how you determined the number of kilometres driven for business purposes. However, the ATO is concerned that some taxpayers claim the 5,000-kilometer maximum automatically regardless of the actual amount of travel that they did.
If your work-related travel is more than 5,000 kilometres, you are required to use the logbook method in order to claim a tax deduction for the percentage of your car expenditures that is related to your employment. In order to provide evidence in support of your claim, you will need to keep odometer readings, receipts, and invoices.
You are not permitted to make a claim for any costs associated with the use of a vehicle that is owned or leased by another person, regardless of whether that person is your employer or a member of your immediate or extended family.
5. Travel expenditures
When travelling for work overnight, you may be eligible to receive reimbursement for some travel expenses. It's possible that these will include things like meals, lodging, transportation fares, bridge and road tolls, parking fees, automobile rental fees, and other costs.
Your claim will need to be reduced if you take a vacation and pay for travel expenditures that are partly for personal reasons. For instance, if you are travelling with other members of your family or combining personal and professional responsibilities during the same trip, the amount that is removed from your paycheck might need to be adjusted. If you are eligible for a travel allowance, you may also need to alter the amount that you have claimed.
In general, travel between one's residence and place of employment is regarded as private travel and is not tax-deductible. However, there are certain circumstances in which you may be eligible to make a claim, including the following: travelling from your house to an alternative job; carrying large tools or equipment; or performing work that requires you to move around.
You are eligible to make a claim for a deduction for lodging, food, drink, and other incidental expenditures if you are required to quarantine because you are "travelling on work" during COVID-19. However, there is no possibility of claiming a tax credit for the costs associated with private quarantine or for those incurred when travelling to or from a work location and being required to quarantine.
The manner in which you report and claim allowance and expense amounts will be determined, in part, by whether or not the amounts are reflected on your income statement and how much money you really spent.
The regulations for keeping records vary depending on whether or not you receive a travel allowance, travel for six nights or more, and claim an amount that is less than the reasonable amount. To make it easier for you to substantiate your claim, we recommend that you keep track of your travel allowances, keep a trip diary, and retain your receipts.
6. Depreciation
It is possible to claim an immediate deduction for assets with a cost of less than $300, provided that the asset is utilized to generate revenue other than that from a business. Tools, calculators, briefcases, and computer equipment are all examples of this category.
Any asset worth more than $300 that is put to use in a manner that generates revenue is eligible to be "written off" (depreciated) over the course of time as a tax deduction.
The amount that you can deduct from your taxes is often based on the value of the item, how long it will be beneficial to you, and how much of it you use for work-related activities.
You should be aware that if you utilize the shortcut technique for working from home claims provided by the ATO (80 cents per hour), you will not be able to claim depreciation for your home office expenses.
7. Expenses for contactors
You are eligible to take a tax deduction for the majority of the expenses that are associated with the operation of your business. This includes costs related to transportation and advertising, as well as those associated with running a business out of your home. When making acquisitions of assets, you should think about using the simplified depreciation standards. Be sure to accurately account for private use, and preserve detailed records of your transactions.
8. Financial Support
The information that the ATO has on hand regarding donations and gifts will be prefilled into your tax return. Be sure to include any additional donations that weren't previously shown on the receipt if it indicates that the donation is tax-deductible.
Suppose you gave a donation of at least $2 to one of the bucket collections for victims of natural disasters that was organized and carried out by a recognized organization. If this is the case, you can deduct up to ten dollars worth of charitable contributions from your taxable income even if you don't have a receipt for them.
You are required to keep a record of the total amount of your donations if you gave money to a charitable organization through your place of employment's workplace giving program. Your income statement, payment summary, or another written declaration from your employer showing the donated amount are all appropriate pieces of proof to support your claim. A receipt is not required of you at this time.
9. Superannuation contributions
You should carefully consider whether you should maximize your concessional or non-concessional contributions before the end of the current financial year. The limit on concessional contributions for the 2021 income year is set at $25,000.
Check your superannuation contribution limitations, and if you want your contributions to reach your super fund on time, don't wait until the 30th of June to send them in. Your super fund will miss out on the money.
Carry-forward laws enable you to make additional concessional contributions, up to the limit of $25,000 per year, without incurring any additional tax liability. This is made possible by the cap on concessional contributions.
To be eligible to contribute to your superannuation after the age of 67, you will need to demonstrate that you have met the employment test requirements. If you were under the age of 18 on June 30th, the only way you may claim the donation as a tax deduction is if you made income as an employee or as the owner of a business. Additional eligibility requirements can be met as well.
It's possible that you'll be able to get a tax break for the contributions to your personal retirement account that you made using money that was left over after taxes. On the other hand, you will be required to submit a Notice of intent to claim or vary a deduction for personal donations.
Do I qualify to deduct payments made toward my mortgage or rent?
It depends on whether you rent an apartment or own your own home.
If you rent your home and have a dedicated room or space for use as a home office, you may be eligible to deduct a portion of your monthly rent in proportion to the total number of rooms in your residence. If you have five rooms in your home, including the kitchen and the bathroom, and you use one of those rooms as a home office, you are eligible to claim twenty percent of your monthly rent as a deduction.
On the other hand, you probably shouldn't claim mortgage repayments if you already own the house.
Both your long-term capital gains tax and the legal standing of your home are impacted as a result of this. For this reason, for instance, if you begin deducting a certain amount of your mortgage payment, then a certain percentage of the sale price of your home will be subject to taxation. That is a significant point that a lot of people get wrong.
What Should I Do If My Income Has Significantly Shifted Because Of Covid-19, And I Am Feeling Anxious About Paying My Taxes?
This year, there will likely be a widespread desire among individuals to reduce or eliminate their tax liability.
If, on the other hand, taxes have been withheld from your wages throughout the course of the fiscal year and your income has fluctuated, you should probably file your tax return as soon as feasible, around the middle of July.
When you file your tax return, the Australian Taxation Office will investigate all of the ways in which you earn money, including your employment, investments, and share allowances. How much you earned in comparison to how much you paid out in total.
Therefore, if you saw a decrease in income and you paid tax earlier in the year, you have a better chance of getting a significant portion of that money back (since the total amount you earned during the year is less than what the ATO originally calculated).
On the other hand, if you are a sole trader, haven't been paying tax as you go, and fear a large tax bill, Filipich recommends waiting to submit your tax return until October – the end of tax return season – to give you more time to get the money together. This will allow you to submit your return at the end of the tax return season.
Tax Offsets
Tax offsets lower your overall tax liability. Your level of income, the dynamics of your family, and the particular conditions under which you live all play a role in determining whether or not you qualify for certain tax offsets.
Some offsets will be applied without any further action required on your part, while others will require you to give extra information along with your return. The majority of tax offsets are non-refundable, which means that while they may bring your total tax liability down to zero, you will not receive a refund for any amount that is paid over.
Some examples of offsets are the low and middle-income tax offset, the low-income tax offset, the offset for senior Australians and pensioners, and the offset for superannuation contributions on behalf of a low-income spouse. All of these offsets reduce the amount of tax that is owed.
One-person businesses with annual revenues of less than $5 million are eligible for a tax credit of up to $1,000 under the small business income tax offset program. A person's "total net small business income" is the percentage of their taxable income that is subject to the offset rate, which is 13% of the income tax that is owed on that component of their income.
If you are eligible for certain allowances and payments from the government, you may be able to take advantage of the beneficiary offset, which may exclude you from having to pay taxes on such payments. On the other hand, you can be required to pay taxes on other income, such as salary or income from investments. The Australian Taxation Office (ATO) offers a calculator that can determine your beneficiary tax offset.
You should also investigate whether or not you qualify for the low-income super tax offset, which is sent into your super fund once you have submitted your tax return.
Superannuation
Suppose you are an employee who works more than 30 hours per week and makes more than $450 before taxes in a calendar month. In addition, you are under the age of 18 and make more than the minimum wage. In that situation, your employer ought to be making payments to the superannuation fund that you have designated as your preferred option.
You have the ability to examine your eligibility for super payments and to file a complaint against your employer if the payments have not been made. Nevertheless, let's say you want to get a head start on your retirement savings and you are eligible for the program. In such a scenario, you might want to think about taking advantage of the super co-contribution, in which the government adds an additional contribution of up to $500 to your fund if you make contributions of your own money.
Working a variety of jobs may have resulted in you having multiple super accounts with relatively little balances. As of the first of July in 2019, inactive low-balance accounts began to be consolidated, exit fees were eliminated, and insurance coverage will be made available for members under the age of 25 or with balances that are less than $6000 on an opt-in basis. On the ATO website, search under "Searching for lost super" to locate your missing superannuation.
With the help of the First House Super Saver Scheme, you'll be able to put away money for your first home while taking advantage of the favourable tax treatment that superannuation provides. If you are qualified, you have the ability to make additional salary sacrificing contributions to your superannuation account of up to $15,000 per year, for a total of $30,000 if you contribute to a conforming fund. The money you save on taxes goes toward your first down payment, which helps you save money more quickly.
Agreements to forfeit a portion of salary
It is recommended that you discuss your compensation plans with your employer and take into consideration the possibility of making a salary sacrifice.
In order to get tax-free or concessionally taxed fringe benefits and to make additional contributions to your superannuation fund, you will need to enter into an appropriate salary sacrifice plan. This will require you to give up some of your future gross salaries.
Before agreeing to participate in a salary sacrifice plan, you should see a financial professional for guidance.
Should I Make An Appointment With An Accountant?
It is highly suggested that you seek the opinion of an expert in the field of finance, particularly this year in light of the shifting tax regulations and the various sources of income you may have gotten, such as jobkeeper.
You don't want to be one of those people who accidentally claims the wrong thing and then gets audited by the ATO, which is unpleasant and can cause a delay in payment.
If you are truly down to your last dollar, it is in your best interest to consult with a financial counsellor because their services are provided at no cost to the client. They may not have the technical tax background, but they can negotiate with you if you are having trouble and have the possibility of ending up with a tax bill.
There are many organizations that offer free financial counselling, but two examples of these are the National Debt Helpline and the Wesley Mission.
The best course of action is to communicate with the ATO through an accountant. At this time, the ATO is showing a lot of understanding. For instance, if you ask if you can please have an exemption or an extension on paying a bill, they understand that people are quite stressed out because there is a lot going on and they are willing to accommodate your request. As long as you are aware of the issue, they will not coerce you into doing anything; nevertheless, they will not let you ignore it either.
It is in your best interest to have your financial paperwork in the most orderly fashion possible before consulting with an accountant or a financial planner.
Accountants will only be able to do their duties if they are provided with the necessary information. If you offer them an insane mess, they will have to spend more time figuring out the fundamentals and sorting through everything, which will take away from the time they could spend figuring out how to get you the most money.
It is recommended that you spend this tax season setting together with a system for collecting receipts and keeping track of expenses linked to work if you do not already have one in place. Doing so will make it easier for you to file your taxes next year.
This could be carrying around a notebook with you and jotting down expenses as they occur, snapping photos of receipts and storing them on your computer, creating an email folder in which any receipts that are emailed to you will be automatically filed, or entering every item into a spreadsheet.
Taking things step by step is the most effective course of action you can take.
