Tax Return: Why do I owe the ATO?

I'm just wondering why I owe the ATO. I don't really know much about how it works, so I'm curious. This is the 2nd tax return I've had to lodge.

I made ~75k (gross income) in the last tax period. I pay about ~$400/month in HECS debt and ~$1600/month in tax. When going through etax, it says I owe ~$600?

Could someone explain to me why that is? Any advice would be appreciated!

Thanks!

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Comments

  • +21

    Go to an accountant.

    • Have no idea why you were negged. You gave the best advice.

      • -7

        Because accountants are a profession that should not need to exist.

        Tax law should be easy enough to understand that everyone can fill in their form and work out their tax liability themselves if they wish to do so.

        If people decide to have better things to do than worry about those details, fine, pay someone to do it for you.

        But if laws and regulations are too hard to understand for the average person, then something is wrong.

        Fobbing off OP's question in the way rambutan did is utterly unhelpful trolling.

        • That's not true. Even personal taxes can be complex if you have investments, shares, etc. There are a multitude of variables to consider.

        • It's also about knowing what deductions you are entitled to claim.

  • +14

    You haven't paid enough tax for whatever reason.*
    Interest/dividends or other sources of untaxed income most likely.

    *This is assuming that you've claimed all relevant deductions.

    You shouldn't be disappointed, you're better off paying the ATO than getting a refund. You've held "their" money for (up to) 12 months and earned interest off it rather than them holding your money and earning interest from it.

    Medicare Levy is the big killer for me. I'm in a similar income bracket.

  • +3

    what @scubacoles said.

    Maybe you have 2 jobs and you have not been taxed correctly for one of them. I suppose you can call their helpdesk and ask about it if you do not want to pay an accountant.

    • +7

      2 jobs and claiming the tax free threshold on both is a classic.

    • Only have one job, but thanks for the reply! Figured out it was due to bank interest I believe

  • +1

    Medicare levy?

  • +2

    Medicare etc other than that you've made more income than your upfront salary-tax (PAYG), or the ATO didn't know about certain income streams.

  • +6

    On $75k income you should pay around $17k in tax and $4k in HECS over the year (assuming you're a resident for tax purposes yada yada yada). Did you have any additional income? Is the $75k salary, or with bank interest, dividend income, rental income etc? I thought it was pretty clear in etax where the numbers are coming from. If you have to pay $600, it means you haven't been taxed on around $1800 in income (at the 32.5% marginal rate).

    • +7

      Ahhh! It's because of the bank interest

      • +2

        Taxman's punishment for savers. Better off investing in real estate.

  • It could be due to your HECS repayment. Did your income change over the last financial year? With HECS you pay a percentage based on your total income - so if your income projected income was in a lower bracket then moved into a higher bracket, there will be a shortfall in the PAYG withheld by the end of the year.

    • what if the projected income reduce? e.g work first few months in high bracket and pay hecs, however contract for 6 months so total annual income is less than what is require to pay hecs, do I receive hecs refund?

      • +1

        Your tax and HECS are not technically paid until you file a return - so yes, if you are projected to earn a higher threshold but fall short for whatever reason, you will have the difference returned to you.

        • No you can pay hecs when your employers witholds tax from monthly pay.

          Both are you paying tax technically. Eoy tax return is like a reconciliation check what your tax should be an nd if less than your tax withheld to date you simply pay the difference

        • that's what I thought, thanks.

  • +2

    Do you have savings?

    Interest on savings is considered additional income which won't be accounted for in PAYG, which is calculated off your job's pay.

    • I think you're right!

  • -3

    I think it's ridiculous for you to think we can ascertain where the outstanding amount has come from. Go to an accountant and give them all the information. You obviously haven't accounted for something minor.

    Probably not the best idea to be sharing additional personal details on ozBargain.

  • +5

    If they've only been paying tax for 2 years and have HECS, they're still young. Paying an accountant when you've got simple tax affairs seems like a waste of money to me. With no kids, no investment property, an office job - there might not be much for accountant to do. Not every single person is eligible for deductions.

    Otherwise understanding it yourself won't be too hard. The ATO website has a lot of calculators and information. Depending on your luck the people in the call centre can also be helpful.

    My guess is you're young. Your income exceeds your expenses. Your savings are in a high interest account, and you've earnt interest. Perhaps you have shares that paid dividends. Neither of those are taxed as you go like your salary is, so you're paying tax on that like others suggested above.

  • +1

    You're making enough to go see an accountant.

    They'll be able to help you make sure you claim all the deductions you're entitled to.

    I know a big for me is business kilometres.

    A lot of people i know, who are preparing their own returns don't even know you can claim these.

  • Do you salary sacrifice? If so the FBT doesn't help with pushings hecs repayments into a higher bracket

  • -1

    TBH, with all the effort by everyone in here to find out the answer, would have been cheaper, faster, more effective and less stressful to pay an accountant.
    This is coming from personal experience…

    • +1

      Paying an accountant is not cheaper than free advice off ozbargain

      • Free to the OP yes, but in not in total human hours.
        Also may have got a smaller bill, or even a return when you find out you could have claimed for things you didn't know were legally possible.

    • +2

      effort? cheaper and faster?
      Couple of simple suggestions and OP had the answer in 15 minutes for free.
      I'd like the details of an accountant who is easier to contact, cheaper and faster than that!

  • +1

    Another option (although you may have solved it) - did you receive any bonuses at all during the year? If so, your employer may not have correctly deducted enough HECS to cover you. It happened to my partner last year and is a rude shock (especially after I got a multiple thousand dollar return).

  • +1

    How can you not have gotten it was from Bank Interest? It says it right there in E-Tax…

  • +2

    $1800 worth of bank interest? I doubt it from someone on $75k two years into their working life!
    The Medicare levy is usually the killer in my experience as the PAYG rates alone leave you short.
    Unless you have lots of work related claims then the Medicare levy will leave you with a tax bill to pay most times.

    • +1

      But paying it in the end is still better than having an increased PAYG installment to cover Medicare Levy.

  • Wow, $1800 interest and paid $900 tax on that? If interest rate is 2-5%, you have $36,000 to $90,000 savings? Rematlrkable but needs to do some tax planning fren!

  • +1

    gee's straight into a 75K paying job, not bad, not bad at all!

    PAYG withholding isn't perfect in itself but it's probably that your interest tipped you into the next HECS threshold. Up until 75,190, it's 5.5%, go $1 above that and you're into the next threshold of paying 6% back

    If you're a mere employee with no complex investments, I genuinely believe that accountants/tax agents are a waste of money. There is enough info on the ATO wesbite and E-Tax explains things really well if you actually take a minute to read it.. unless of course you really have no concept at all

    • OP, I'd say go to an accountant at least one time to learn the ins and outs of the tax system. You have a Uni degree, you should be smart enough to deal with your tax matter going forward from then on.

      • Since when did having a uni degree equate to intelligence? Sorry but we can't assume everyone with a degree is gifted. Not saying OP is dumb, but I encounter this here and there and challenge it.

  • +1

    I work for a Queensland Government department, and last year was a 27 fortnightly pay year, due to the fall of the pay cycles and pay days. We were advised at the end of the 2013/14 financial year that we could talk to the pay office and make arrangements to pay slightly more income tax per fortnight or risk being hit with a tax bill. I didn't bother, and got a bill of $460 this year.

  • Basicallt your employer witholds tax on your wages. So anything outside of this, tax wouldnt have been withheld on these amounts. So interest income, net rental income/loss, deductions from donations, work expenses etc. Just query what had tax withheld on it and anything that didn't is the reason why the ato assessed it. This even includes hecs and other items where your employer didnt withhold hecs from your pay. Even working part year has the same effect as they withhold tax on a monthly basis off a chart which obviously assumes that same income over a course of a yr. So you might have been had tax.withheld by your employer on 10k of income x 12 months, whereas havinf worked only two months in a yr its likely you would be under certain tax brackets so all the tax should be refunded.

    If it gets too complex an accountants good but be wary those cheapo ones in shopping centres etc are exacrly that. Good for stock standard stuff that you dont know, but dont expect a typical chartered accountant who's gone a few steps further.

  • +1

    This is what you need to do: Look into all your purchases from Ozbargain for the past financial year and see what you can legally claim on tax (eg tablet, computer, phone, eneloops, proportion of your internet, electricity, phone bills etc, expensive bookcase, books, desk, stationary, education). Add them on to etax and see your liability reduce. It would be really touch knocking off the whole $600 unless you made a large purchase, but could make a significant reduction.

    It seems like ~1600/month tax on your income wouldn't cover your tax bill (rough estimate). There are tax calculators on ATO website so check that out as well. If so you might just have to pay the bill and ask your employer to increase your withheld tax amount.

  • i was paid gross $58k and got taxed $12k and the ato sote says i owe 6k still?? i have no hecs or any form of debt

    • Using the simple calculator, the ATO should be giving you money.

      Tax on $58k should be $10,397… you've over-paid, so should be getting at least $1k back.

      Are there any allowances listed on your payment summary?

    • Talk about dragging up an old post.
      Go to someone like H&R Block and get it sorted, sounds like you got one of those scam phone calls.

  • Medicare levy was deducted?

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