Australian Tax Learning

Key things to know about Australian Taxes

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Australian Tax Learning

Negative gearing simply means borrowing to invest, as when you take an investment loan, your property is ‘geared’. ‘Negative gearing’ happens when the costs of owning a rental property exceed the rent returns you earn.

The capital gains tax is a levy on the profit from an investment that is incurred when the investment is sold. … Short-term capital gains tax applies to assets held for a year or less, and are taxed as ordinary income. For most taxpayers, that is a higher tax rate than the capital gains rate.

Superannuation is one way Australians can save money for their retirement. Your employer should pay 10% of your salary into a super fund, through the Superannuation Guarantee (SG). … The money deposited into your superannuation account is then invested, and the growth reinvested, to help the balance grow.

The tax free threshold is an amount of money that the Government have declared to be tax free. Meaning if you earn under the tax free threshold, you will not pay tax on that income. … The tax free threshold still applies, but each $1 earned over that amount is taxable income.

A salary sacrifice arrangement is also commonly referred to as salary packaging or total remuneration packaging. It is an arrangement between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages. This is in return for the employer providing them with benefits of a similar value.

You may be able to claim a deduction for motor vehicle expenses, if you use the vehicle in performing your work-related duties. How you work out your deduction will depend on if you are using:

  • -a car your own, lease or hire (under a hire-purchase arrangement)
  • someone else’s car
  • a motor vehicle, that is not defined as a car.

If your travel is partly private, you can claim only the work-related portion of the motor vehicle expenses you incur.

When it comes to investing in cryptocurrency, Australia provides a very generous tax structure to work within. One of the most popular choices for investors that want to include Bitcoin and other cryptocurrencies within an investment strategy is the SMSF. According to the Australia Tax Office (ATO), SMSFs are a type of retirement savings fund. Compared to other types of funds, SMSF members also serve as its trustees. As such, SMSF trustees must ensure compliance with the relevant super and tax laws. SMSF tax benefits make the investment vehicle a popular choice for cryptocurrency holders. Under current SMSF regulation, income is taxed at a rate of only 15% and long-term gains are taxed at an effective rate of 10%. Income generated from assets in a retirement pension are taxed at 0%.

  • Are SMSF’s suitable for everyone?
  • SMSFs are appropriate for those individuals who have the time, superannuation balance, and financial knowledge to seek control over their superannuation.
  • Do SMSF’s need $1 million to be cost effective?
  • SMSFs do not need $1 million to be cost effective. In fact, far from it, we believe SMSFs can start to be cost effective and appropriate with balances far below that figure depending on the individual circumstances of the SMSF’s members. A starting balance of at least $200,000 is often considered to be the appropriate minimum amount an SMSF should be established with.
  • Does having an SMSF mean I have to go it alone?
  • SMSF trustees are likely to need help from a team of professionals to assist them in their journey of saving for retirement. SMSF advisors work across a broad range of areas of expertise, for example, they include accountants for tax advice, financial planners for investment and strategy advice and SMSF administrators for services to assist trustees run their funds.SMSF trustees should seek to use the right professionals to get the best outcome for their SMSF.

Retirees often move a portion of their retirement assets into bonds so they can maintain an appropriate level of risk as they age. Treasury bonds are generally exempt from taxes at the state and local level, while municipal bonds aren’t taxed at the federal level.

You can claim a deduction for self-education and study expenses if the education relates to your current employment activities or if you receive a taxable bonded scholarship. You generally can’t claim the first $250 of expenses for your self-education. Find out about when you must include a $250 reduction in expenses before you can claim.

When you become bankrupt, you have some obligations when it comes to your tax returns – just as you did prior to bankruptcy. You must inform your trustee when you receive a tax return. If your trustee is the Official Trustee, you can use the below online form to let us know if you have received an ATO Notice of Assessment.

Work clothes are tax deductible if your employer requires you to wear them everyday but they cannot be worn as everyday wear, such as a uniform. However, if your employer requires you to wear suits – which can be worn as everyday wear – you cannot deduct their cost even if you never wear the suits outside of work.

Personal super contributions—those made from money you’ve already paid tax on such as savings or your take-home pay—are tax deductible. These contributions can be claimed against your assessable income when you lodge your tax return.

  • Don’t neglect your super if you’re self-employed
  • You can – and should – check if your employer is making the right payments
  • There are tax benefits for adding money to super
  • If you’re a lower income earner there may be more perks
  • Write off bad debts
  • Keep up to date records
  • Know what deductions you can claim
  • Utilise the instant asset write-off
  • Bring forward expenses/spending
  • Defer Income
  • Value your stock properly
  • Determine real cost of goods sold
  • Separate business and personal expenses. …
  • Know the rules around expense claims. …
  • Keep digital copies of work-related receipts. …
  • Don’t leave tax planning and returns to the last minute. …
  • Don’t go it alone. …
  • Avoid these common sole trader tax-time errors.
  • Expenses you can’t claim
  • You can’t claim a deduction for the following expenses if you’re an employee working at home. These include:
  • coffee, tea, milk and other general household items, even if your employer may provide these at work
  • costs that relate to your children’s education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
  • items your employer provides – for example, a laptop or a phone
  • any items where your employer pays for or reimburses you for the expense.
  • Expenses you can claim
  • You can claim a deduction for the additional running expenses you incur as a result of working from home.
  • Running expenses are expenses which relate to the use of facilities within your home and include:
  • electricity expenses for heating or cooling and lighting
  • the decline in value of office furniture and furnishings as well other items used for work – for example, a laptop
  • internet expenses
  • phone expenses.

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