Frequently Asked Questions

What You Need to Know About the Stage 3 Tax Cuts and Your Tax Return

Individual Tax Return, Frequently Asked Questions

Content

What is Stage3 Tax Cuts

Beginning on July 1st 2024, most Australian taxpayers will see reductions in their tax obligations thanks to the stage 3 tax cuts.

By lowering marginal rates of income tax, particularly for middle-income earners, these tax changes aim to ease financial pressures in a fiscally prudent manner. At a time when living costs are rising sharply, putting more money back in people’s pockets through tax relief should boost household spending power.

By delivering tax cuts that benefit over 13 million Australians, including many women, the goal is to encourage workforce participation and address skills shortages as our economy transitions. While tax cuts often benefit higher earners too, on balance these tax changes are designed to support those feeling the most squeezed due to current economic conditions.

Summary of Stage 3 Tax Cuts Changes

Summary of the new individual income tax rates and thresholds effective July 1, 2024

All Australian taxpayers have a $18,200 tax-free threshold.
Income between $18,201 and $45,000 is taxed at 16%.
Income between $45,001 and $135,000 is taxed at 0% on the first 18200, 16% on the next $26,800, then 30% on the remainder.
Income between $135,001 and $190,000 is taxed at 0% on the first 18200, 16% on the next $26,800, 30% on the next $90,000, and 37% on the remainder.
Income over $190,000 is taxed at 0% on the first 18200, 16% on the next $26,800, 30% on the next $90,000, 37% on the next $55,000, and 45% on any amount over $190,000.

2023 ~ 2024 TAX RATE

2024 ~ 2025 TAX RATE

Thresholds	Rates
0 – $18,200	Tax free
$18,201 – $45,000	19%
$45,001 – $120,000	32.5%
$120,001 – $180,000	37%
Over $180,000	45%

Thresholds	Rates
0 – $18,200	Tax free
$18,201 – $45,000	16%
$45,001 – $135,000	30%
$135,001 – $190,000	37%
Over $190,000	45%

While the changes don’t take effect until 2024 tax time, you can benefit this year by ensuring you receive the full lower rate tax on any income earned in 2023-24 financial year that falls under the future thresholds.

Check with your employer to make sure the correct amount is withheld from your last few paychecks of 2023 before the new rates kick in fully.

Stage 3 Tax Cuts Calculator

Estimate your 2024-25 tax changes here. This calculator shows how much tax cuts you can get in 2024 – 2025 tax return.

Source: https://treasury.gov.au/sites/default/files/2024-01/tax-cuts-government-fact-sheet.pdf

13/02/2024

Why commuting costs can’t be claim as a travel expense in tax return

Individual Tax Return, Frequently Asked Questions

The key reason is that under Australian tax law, normal trips between home and your regular place of work are considered private commuting travel expense in tax return rather than work-related travel. In this article, I will introduce the right way to claim a deduction for transport expenses in tax return.

Content

Claiming a deduction for transport expenses

limited circumstances

Types of transport expenses you can claim in tax return

How to keep a record for transport expense

Claiming a deduction travel expense in tax return

In Australia, to claim a deduction for the work-related travel expense in tax return, the expenses must be incurred when carrying out income-earning activities. So you can’t claim the trip between an employee’s home and work place because it counted as a private trip. However, there are also some exceptions(see limited circumstances).

Deductible transport costs can include trips between separate workplaces to undertake employment duties or assignments. The taxpayer must have paid for eligible expenses out of pocket without reimbursement to claim a deduction. If your travel serves both work and private purposes, you only can claim the work-related portion.

To successfully claim this deduction in tax return, you must retain records substantiating payment of deducted transport costs. Receipts should evidence amounts spent on eligible fares, tolls or vehicle hire.

Limited circumstances of travel expense in tax return

There are some circumstances where you can claim a deduction for the cost of trips between home and work. You must check that you meet the eligibility conditions:

Home is a base of employment.
The purpose of trip is to transport bulky tools and equipment.
You have itinerant or shifting places of work.

You may also be able to claim a deduction for a trip that includes an alternative place of work that isn’t a regular place of work, which includes:

perform your work duties – for example, if you travel from your regular place of work to meet with a client
attend work-related conferences or meetings away from your regular place of work
deliver items or collect supplies
go between 2 or more separate places of employment, such as if you have more than one job (but not if one of the places is your home)
go from your

regular place of work to an alternative place of work that isn’t a regular place of work (for example, a client’s premises) while still on duty, and back to your regular place of work or directly home
home to an alternative place of work that isn’t a regular place of work to perform your duties, and then to your regular place of work or directly home (this doesn’t apply if the alternative place of work has become a regular workplace).

Types of travel expense in tax return those you can claim

Public transport fares – This includes train, bus, ferry, tram and taxi fares where travel is for work purposes.
Ridesharing and ride-sourcing apps – Work related costs from services such as Uber or Ola.
Vehicle expenses – Expenses relating to operating a vehicle for work like fuel, servicing and repairs may be deductible.
Flights – Airfares for income-earning activities.
Car hire – Short-term vehicle rental costs can be deducted if the hire car is used only for trips that are work-related.
Tolls and parking – Road tolls, bridge tolls and temporary parking fees incurred while traveling for work purposes qualify.

How to keep a record for transport expense

If you want to claim a deduction of travel expense in Australia tax return, you must have written evidence which meet the following requirements:

Explanations for each eligible trip detailing the work-related purpose and activities undertaken
Travel dates and times, including start and finish of work duties as well as any private activities or detours
Trip destinations and locations of work tasks or meetings
Itemized receipts for public transport fares like trains, buses and taxis showing payment amount and date
Vehicle logbook (if claiming car expenses) outlining total and work-related kilometers over a representative period
Receipts for any parking fees, tolls or vehicle hire costs incurred while traveling for work

If one’s employer provides a payment intended to cover transport costs incurred for work purposes, this amount must be disclosed as assessable income when filing the annual tax return. Normally, the employer will document it on the income statement or payment summary at the end of financial year. While such allowances constitute taxable income that boosts assessable totals, individuals may be able to claim as a deductions for actual transport expenses to offset this amount.

12/02/2024

Why overseas student can’t claim self-education deduction in tax return?

Individual Tax Return, Frequently Asked Questions

As a tax agency that has been in operation for over ten years, we handle a large volume of tax return cases every year. We have seen a lot of common mistakes made by younger taxpayers, for example, international students incorrectly claiming for self-education deduction.

Content

Requirements of self-education deduction

A Requirement Behind the Rules

More Information

Rules for Claiming Self-education Deduction

You may have a question, as a oversea student, could you claim your university course fee as a self-education deduction? The answer is NO. Here are the some of the basic rules around claiming self-education expenses like university fees as a tax deduction in Australia:

You can claim a deduction for self-education expenses like tuition fees, textbooks, stationery, etc, only if your course is directly related to your current job/business activities. Simply studying a course to get a qualification or maintain/improve your skills is not enough – it must relate to your current income-earning activities.
You cannot claim a deduction if your study is only related to getting a new job or income-earning activities you don’t currently engage in.
You can only claim fees if you paid them in the same income year you are claiming the deduction. Unpaid fees cannot be pre-claimed.

The Requirement of Self-education Deduction Behind the Rules

While these rules may not seem directly relevant to international students, but there is an important eligibility requirement for self-education deductions hiding within:

Specifically, at the time of enrolling in the course of study, you must be legally employed in Australia, and your enrolled course must be highly relevant to improving your skills for this existing job.

This serves to demonstrate that the purpose of your learning is to further develop competencies for your current role, rather than simply to obtain a qualification or find better work in the future. As most student visa holders in Australia do not meet these criteria of current legal employment that is directly linked to their program of study, they traditionally do not qualify to claim any deductions for self-education expenses on their tax return as a consequence.

Student visa intent is to study, not work. The primary purpose for overseas students coming to Australia is to undertake an education program, not earn an income. Although it gives students part-time working rights, however, prior to enrolling and incurring tuition expenses, students can’t prove their intention of improving skills for the current job, as they were not permitted to work or be employed in Australia.

More Information

If you want to know more about self-education deduction in Australian tax return, please check the ATO’s page: https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/education-training-and-seminars/self-education-expenses

24/01/2024

Income Tax Calculator – How to estimate my tax refund?

Individual Tax Return, Frequently Asked Questions

Estimating income tax in Australia is complicated, you can use our Australia income tax calculator below to estimate your tax return amount:

Calculate tax without income tax calculator

If you want to calculate yourself, here’s a general overview of the process:

Determine your taxable income

Start by calculating your taxable income. This is done by subtracting any allowable deductions from your assessable income. Assessable income includes your salary, wages, rental income, dividends, and other income sources.

Understand the tax brackets:

Australia has a progressive tax system, which means that different income ranges are taxed at different rates. Familiarize yourself with the current tax brackets and rates provided by the Australian Taxation Office (ATO). These brackets are subject to change, so it’s important to refer to the latest information from the ATO.

Apply the tax rates

Once you know your taxable income and the applicable tax brackets, you can determine the tax payable for each bracket. The ATO provides tax tables and calculators that can assist with this process. The tax payable is calculated by multiplying the income within each bracket by the corresponding tax rate.

Consider Medicare Levy

In addition to income tax, most Australian residents are also required to pay the Medicare Levy, which helps fund the country’s healthcare system. The Medicare Levy is calculated as a percentage of your taxable income, and there may be additional surcharges or exemptions based on various factors.

Apply any offsets and rebates

Australia offers various tax offsets and rebates that can reduce your final tax liability. These may include the Low and Middle-Income Tax Offset (LMITO), Senior Australians and Pensioners Tax Offset (SAPTO), and other specific deductions or credits. Ensure that you meet the eligibility criteria for any applicable offsets or rebates.

Complete your tax return

Once you have calculated your income tax, you will need to complete your annual tax return. This can be done by using our online tax return system . Provide accurate information regarding your income, deductions, and any other relevant details.

It’s important to note that the above steps provide a general overview of the income tax calculation process in Australia. Taxation can be complex, and individual circumstances may vary. It is always recommended to consult with us or use our online tax return services to resolve your tax problems.

06/10/2023

What is the Medicare levy Exemption in online tax return?

Individual Tax Return, Frequently Asked Questions

The Medicare levy is a tax imposed by the Australian government to help fund the country’s public healthcare system, which is known as Medicare. It‘s a percentage-based levy applied to the taxable income of most individuals and families in Australia. However, if you meet certain condition, you could apply an exemption with online tax return system.

Content

Conditions to apply an exemption with online tax return system

Family agreement for Medicare levy exemption

Foreign residents Medicare levy exemption

Conditions to apply an exemption with online tax return system

You may be able to claim a full or half exemption with online tax return system if you satisfy both of the following conditions:

One of the following medical conditions applied during all or part of the income year:
- you were a blind pensioner
- received sickness allowance from Centrelink (allowance ceased 20 September 2020)
- you were entitled to full free medical treatment for all conditions under either
  - Defence Force arrangements
  - Veterans’ Affairs Repatriation Health Card (Gold Card).
During the period you met a condition above, you also met one of the conditions listed in the table below.

You had no dependants.	Full exemption
Each of your dependants (including your spouse) either: 1. was in one of the exemption categories 2. had to pay the Medicare levy.	Full exemption
You had dependent children who were not in an exemption category but who were also dependants of your spouse, and your spouse either: 1. had to pay the Medicare levy 2. met at least one of the medical conditions and you have completed a family agreement stating that your spouse will pay half of the levy for your joint dependants.	Full exemption
You had at least one dependant (for example, a spouse) who: 1. was not in an exemption category, and 2. didn’t have to pay the Medicare levy.	Half exemption
You were single or separated and you: 1. had a dependent child who was not in a Medicare levy exemption category, and 2. were entitled to Family Tax Benefit or the rental assistance component of Family Tax Benefit for that child, and 3. were in a shared care arrangement.	1. for the days that you had care of your dependent child – Half exemption 2. for the days that you did not have care of your dependent child – Full exemption
You had a spouse who met at least one of the medical conditions and you had a dependent child who was: 1. not in an exemption category, and 2. dependent on both of you.	Either you or your spouse can claim a full exemption and the other can claim a half exemption by completing a family agreement.

Family agreement for Medicare levy exemption

A family agreement is a written agreement signed by you and your spouse. It’s an agreement stating who will claim the full exemption and who will claim the half exemption.

You complete a family agreement only if both you and your spouse would have to pay the Medicare levy if you were not in an exemption category.

You don’t need to send this agreement to us unless requested. If you fail to keep the agreement, both of you may become liable for the Medicare levy.

The agreement must contain:

the statement – ‘We agree that the Medicare levy exemption in respect of our dependants for the 2022–23 year will be claimed as follows’
– name of person claiming the full exemption
– name of person claiming the half exemption
– your signature (with date of signature)
– your spouse’s signature (with date of signature).
The agreement must be signed on or before the date the person claiming the full exemption lodges their tax return, unless the Commissioner of Taxation allows further time.

Foreign residents Medicare levy exemption

If you are a foreign resident, and you are using our online tax return services, you could apply an exemption if you meet the following condition:

If you were a foreign resident for tax purposes for:

the full year, you can claim a full exemption from the Medicare levy
only part of the year, you can still claim full exemption from the Medicare levy for that period if
– you didn’t have any dependants for that period
– all your dependants were in a Medicare levy exemption category for that period.

29/09/2023

How investment property benefits in tax return?

Individual Tax Return, Frequently Asked Questions

In Australia, you can generally claim deductions for expenses related to your investment property against the rental income you receive.

Investment Property

You can claim a deduction for your rental property-related expenses for the period your property is rented or is genuinely available for rent.

If you use your property for both private and income-producing purposes, you can only claim a deduction for the portion of any expenses that relate to the income-producing use.

Property rented or genuinely available for rent

You can claim a deduction for rental expenses you incur, if you use your property for income-producing purposes.

You can only claim a portion of your expenses if any of the following apply to you:

– Your property is only genuinely available for rent for part of the year.

– Your property is used for private purposes for part of the year.

– Only part of your property is used to earn rent.

– You rent your property at non-commercial rates.

– Your investment loan is partially used for private purposes.

1. When you can claim

You can claim expenses for periods when your property is either:

rented out not rented out but is genuinely available for rent, which means the property is advertised, giving it broad exposure to potential tenants considering all the circumstances, tenants are reasonably likely to rent the property.

If these don’t apply, it’s likely that you can’t claim all your expenses as you don’t have a genuine intention to earn income from your property.

2. Factors that indicate genuine availability

Property is genuinely available for rent when it is:

– advertised in ways that give it broad exposure to potential tenants

– having regard to all the circumstances, tenants are reasonably likely to rent it.

Factors that may indicate a property isn’t genuinely available for rent include:

– you advertise in ways that limit your exposure to potential tenants – for example, if you only advertise

— at your workplace, or by word of mouth

— outside holiday periods, so it is less likely to be rented out

– the location, condition of the property, or accessibility of the property means it is unlikely tenants will seek to rent it

– you place unreasonable or stringent conditions on renting out the property that restricts the likelihood of the property being rented out, such as

— setting the rent above the rate of comparable properties in the area

— placing a combination of restrictions on renting out the property, such as requiring prospective tenants to provide references for short holiday stays and having conditions like no children or no pets

– you refuse to rent out the property to interested people but you don’t give adequate reasons.

All or part of your property is used to earn rent

If only part of your property is used to earn rent, you can claim only that part of your expenses that relates to the rental income. As a general guide, apportion your expenses on a floor-area basis – that is, based on the area solely occupied by the tenant, together with a reasonable figure for their access to the general living areas, including garage and outdoor areas if applicable.

Property available for part-year rental

If your property is only available to rent for part of the year, you can’t claim a deduction for the portion of any expenses that relates to your private use.

For example, if you have a holiday home or time-share unit, you can’t claim a deduction for any expenses related to those periods when you, your friends or your family used the home or unit for private purposes.

You may need to decide which expenditure is private in nature. For example, council rates paid for a full year would need to be apportioned based on the total time the property was rented out and genuinely available for rent during the year as a proportion of the total year.

However, it may not be appropriate to apportion some of your expenses on the same basis. For example, expenses that relate solely to the renting of your property are fully deductible and you would not apportion them based on the time the property was rented out. Such costs might include:

– real estate agents commissions

– costs of advertising for tenants

– phone calls you make to a tradesperson to fix damage caused by a tenant

– the cost of removing rubbish left by tenants.

05/08/2023