On 17 July, Triple S Local invited Valentina Meng, the client account manager of LJ Accountants & Associates to share some information about the regulations of the Australian Taxation Law and some helpful tax refund tips. She also answered many residents’ questions in regard to taxes.
The Australian financial year runs from 1 July to the next 30 June, which is a cycle for calculating personal and corporate annual income. Each year the statutory tax refund period starts on 1 July and ends on 31 October, and you must report your personal income tax for a previous financial year to the Australian Taxation Office (ATO) during this period.
- Am I a legal taxpayer?
The Australian Taxation Law stipulates that all Australian residents for tax purposes should declare all (worldwide) income to the ATO in their income tax return. International students are also tax residents, who need to submit a non-lodgement advice to the ATO if they do not have income.
- What if I don’t pay taxes on time?
Penalties may be imposed by the ATO, and if you do not file tax returns for many years, the chance of being reviewed and audited by the ATO will be increased. The penalty is calculated by adding one penalty unit every 28 days, up to a maximum of 5 penalty units, and each penalty unit is $210.00. To remit penalties, you can contact the ATO and provide them with a reasonable cause.
- How far back can my tax refunds be traced?
There is no time limit. The ATO began to store documents electronically since the beginning of 2000. You can contact an accountant to check the payment summaries, bank interests and dividends that your employers submitted to the ATO in previous years. With the update of STP, employers with more than 19 employees will be no longer issuing payment summaries. Starting this year, private insurance providers will upload statements to myGov before July.
- What is the difference between a tax refund using TFN and a tax refund using ABN?
The difference between TFN and ABN is whether the tax is managed on your own. Taxpayers working with a TFN can rely on employers to issue an income statement at the end of the year to get the overpaid tax back. A tax return using ABN needs to be lodged through the business schedule, and at the end of the year, it is necessary for taxpayers to report all income and reasonable deductions to the ATO before paying tax.
- Low and middle income tax offset
Starting from the financial year 2018-2019, the government will reduce taxes for low-and middle-income earners as long as their taxable income is below $126,000.00. Single taxpayers can enjoy up to $1,080.00 in tax cuts, and dual income families can enjoy up to $2,160.00 in tax cuts.
Answers to some common tax questions
Q: I’ve heard that I can claim a tax deduction if I make super contributions by myself. If I take $20,000 out of my $80,000 income to make super contributions, will my total income be taxed less?
A: This is a question related to personal super contributions. You need to make personal contributions to your super fund and contact the super fund to specify that the contributions will be used for tax deduction. Then the above amount of $20,000 will be taken as a super deduction item in your tax return.
Q: If I study for work-related reasons, can I claim a deduction for the tuition fee?
A: In principle, it depends on whether there is a connection between study and work. The tuition fee is tax deductible if the course taken by employees is required by their employers, such as an MBA course. If taking a course is not a mandatory requirement of your employers, then you can consider claiming a percentage of the expense deductions, such as 50% relating to work. However, if the expense is too high, the ATO may contact the employers for verification.
