With Financial Year End Coming up, Do You Have Any Tax or Tax Return Questions I Can Answer for You?

Edit final time:

Started a new thread for this to keep up with everyone's new questions. This is the link…

https://www.ozbargain.com.au/node/309978

Edit again:

Thanks for all the questions once again everyone. We have now reached over 600 comments.

I will do another Q & A in about a month when it is closer to tax time.

Hope you have all got a bit of extra general tax knowledge. ]]

If your inquiry is urgent then you can PM me.

Goodbye for now and see you in about a month!

Hi All,

I just thought with financial year end coming up in just over a month's time, many people have tax and specifically tax return related questions.

I am a tax professional and I am constantly getting asked similar questions coming up to tax time by family, friends and new clients. So I thought that I could be of some use and answer any tax questions you may have.

Disclaimer: Any advice or answers given will be general in nature and you may need to speak to a tax adviser for more personalised advice.

Ok, start posting your questions :)

Edit: Thanks for all the questions. I am trying to get to everyone as soon as I can. If I miss your question please send me a PM or ask again so that I can see it. There are so many questions I am sure i've missed a few.

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  • +7

    I've got nothing to ask at the moment - but just wanting to say thanks!

    • No problem, if you think of something to ask, shoot… we still have 6 weeks until people start lodging tax returns.

  • Fringe benefits - over what period are they counted to contribute to the taxable income.
    Because the FBT year is different to the normal financial year. Cheers mate.

    • Good question. The FBT year, for example 1 April 2016 to 31 March 2017 is reported in the tax return in the financial year ended 30 June 2017.

  • My employer requires me to attend an external training day and i plan to claim the cost of course expenses on my tax return. Can i prepay for my course this financial year and claim a deduction this financial year, if the training is not delivered until august? (Ie next financial year)

    • Provided it is less than $1,000 you can claim the expense in your tax return at the time you pay it. So by all means pay for it before 30 June 2016.

      I am not sure why your employer wouldn't pay for you to go though if they require you to attend the training.

  • I don't remember quite well but last year our tax agent said we can claim on our property depreciation or something like that. Can you enlighten me what that means and would that mean I'll be getting back more tax than last year?

    What would I need to bring?

    • I am not sure why you haven't asked your accountant, perhaps you should move to a different one… hint hint ;)

      I would recommend you get a depreciation report from company's that specialise in them. for example from BMT Tax Depreciation. that will allow your accountant to claim the most deduction in your tax return.

      This doesn't necessarily mean you will get a greater refund. That would depend on the amount of tax withheld from your employer (assuming you and your partner have full time jobs as employees).

  • Can I buy a MacBook Pro (technically for personal use, but ya know…) and expense claim it for work? (I work as a developer).

    I have also worked as an accountant and I know the answer is no (unless you apportion it… but still, please?)

    • If you use a laptop for work purposes, you can estimate the amount of work related use and apportion it on that basis. You also can't deduct a laptop in the first year, you must depreciate it over three years at 66% per year.

      For example, if the MacBook is $2,000 and is used for work 50% of the time, your deduction the first year would be $660. You will also need to apportion it based on the number of days you owned it in the financial year.

  • +3

    Great initiative @nicolemcmilllon , need more people like you :) Thanks for making ozb a better place.

    • +6

      No problem, Always happy to share some of my knowledge. Also doesn't hurt to get a few new clients out of it.

  • When I started my graduate job, I ticked HELP component to automatically deduct my HECs loan payment from my pay. For this financial year I'm only earning around $17000. I have paid around $500 off the my HECS debt, however I'm well under the $54000 threshold (for this financial year) where you are required to start paying it off. Can I get my HELP component refunded?

    • The additional tax your employer has withheld due to the HELP repayments will be refunded back to you in your tax return.

      If you need your tax return prepared and lodged after year end, let me know.

  • I work from home once a week, and am a PAYG employee..
    What can I claim from an 'office space' POV?

    • You can claim running expenses as opposed to occupancy expenses such as

      for home office equipment, such as computers, printers and telephones, the cost (for items costing up to $300) or decline in value (for items costing $300 or more)
      work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you
      are on call, or
      have to phone your employer or clients regularly while you are away from your workplace

      heating, cooling and lighting
      the costs of repairs to your home office furniture and fittings
      cleaning expenses.

      here is a link to the ATO page that can provide more clarity https://www.ato.gov.au/individuals/income-and-deductions/ded...

      • Something you wrote sparked a question in my head.

        I've been claiming about 20% of home internet costs the last few years given the overtime I do from home (unpaid…so at least get "something" back elsewhere). I do keep a logbook for 3 months to claim the occupancy allowance as well (the one that's around 34c/hour).

        Given NBN is around the corner I'm going to need to get various new equipment for the home (new routers especially) - could I argue that 20% of this cost can be claimable?

        Thanks a lot

        • +1

          If it is equipment it will most likely be depreciated over 3 years.

          Therefore you can depreciate the purchase cost x 20% divided by 3 years.

  • I have a property in India for which I am paying a mortage of $800 AUD roughly per month. Do I need to mention this in my tax return in Australia? I do not earn any rental income from it.

    Thanks a million!

    • If you do not earn rental income from the property who is living in it? Is it empty?

      If you do not rent it out then you do not need to include it in your personal tax return.

      • Thanks for your quick reply. Yes it is empty as of now. If I do decide to sell it in the near future would my earning be taxable here as well? I will pay tax to the Indian tax office on the profit I earn. Will I need to show my profit thus earned to ATO as well as foreign income?

        • Yes you will pay capital gains tax here. You will be able to get an offset for tax paid overseas.

  • if your home loan is under owner occupied rate, con you claim tax deduction for home depreciation.

    • As long as your property is rented, the description of your home loan is irrelevant.

      Are you renting out the property?

      • can you claim tax deduction this financial year if you rent it out this financial year and you also claim first home owner grant this financial year.

        • You can start claiming rental deductions when the property is available for rent. You cannot be living in it at the time and the interest expense can only be interest paid from that time onwards. Not before it was available to be rented

        • @nicolemcmilllon: well to claim first home buyer, you need to be living in it. to claim interest duduction, you cant be living in it. I have heard people do both.

        • @Thenarrator:

          Both situations can be possible at different times throughout the year but not at the same time.

  • Hi Nicole,

    Say my primary living and working residence is in Australian City A, and I got a contract position for 1 year in Australian City B. I sign a rent lease of 12 months in Australian City B but I will go back to Australian City A at the end of the contract. What can I claim?

    Thanks!

    • You can't claim anything different other than if u had stayed in the first city.

      Will your employer be giving you meal and accommodation allowance?

      • No to meal nor accommodation allowance. For my relocation costs that's out of pocket, am I able to claim it?

        Also add in the fact that I will work from home 50% of the time. Can I claim heating and cooling costs?

  • If some one earns close to $600 in the "interest" from Savings/Fixed Deposit- Not active in the workforce- no other source of income.Do they need to file the tax return?TFN is already provided to the bank.

    • Have u previously lodged tax returns. If you have then you should lodge one or get a tax agent to lodge a return not necessary on your behalf.

  • $600 Desk and $1200 chair used exclusively for working from home. Can I claim or depreciate?

    • Depreciate both of them. Over their effective life. Approximately 5 years

  • Hi Nicole, I am a Reg. Nurse working in Emergency. I am going to a Paediatric 2 day Triage Course in June that I have to pay $160 for. My hospital will pay me study leave for these two days. Is the total amount of the course tax deductible on top of the $300 regular deductions I usually claim?

    • Thee 300 usual deductions you claim has to be expenses that you actually incurred. If you don't incur any expenses throughout the year but still.choose to claim the 300 then you can't add this 160 on top.

  • Thanks OP for a great topic. I have an investment property under my name and my partner's name. At the moment I'm paying 100% of the costs and can prove it. Do I still need to put 50:50 split in ownership on my tax return or can I claim 100% of the deductions. Any advice would be ace!

  • Can I claim purchases i have made for a business i intend to start-up in the new financial year on this years tax return?

    • No. What would you claim them against. There is no business yet therefore no income.

  • this is an awesome thread coming up towards the EOFY ! reminded me that I still haven't done my Tax for last year (will be a refund), am I in big trouble? cheers.

    • It's definitely not a good look as they were due in October if you lodged them yourself and May 15th if you use a tax agent.

      PM me if you would like us to prepare and lodge your return as soon as possible.

      • Is there a penalty for not submitting a tax return for the previous year?

        We have always used the same accountant and have recently had our first baby so haven't taken any time to gather paperwork.(sh*thouse excuse but that's the truth).

        We have submitted every previous year on time.

        • I would recommend you lodge as soon as possible. The ato usually imposes a fee for late returns. The returns were due on 15th of May.

          Let us know if we can assist you in preparing and lodging your returns.

        • @nicolemcmilllon:

          To be honest, I'm behind since 2012…

          Will I be hauled across the coals for this?
          My understanding is that if the ATO owes you money, they don't care. But if I owe them money, they'll slap me with fees galore

  • Speaking up for those who have likely pit through dodgy returns at some point over the years…

    What is the process if one does get selected for a ATO audit (unrelated to our recent tax commissioner scam)?

    If we admit and come clean, is it just a matter of repaying? No penalties, and most likely lost interest?

    • Each case is entirely different and up to the ato on the penalties imposed. Generally they may not issue finds if it was a genuine mistake and your first time. But most likely they will impose interest on the amount from when it was originally due to be paid.

  • Appreciate your initiative, not everyone does that. It shows you have knowledge of your area and big heart to help others.

    I been looking for good accountant/financial adviser in Melbourne, who is decent priced and take time to look into my profession and all respective costs i can claim and suggest some future ways. So far i have tried couple of accountants and they are just tick and flick kind nothing more.

    If you can assist, please PM me your details.

    • What exactly are you looking for in an accountant.

      Are you an employee or do you have your own business.

  • +5

    Hi Nicole,

    If I buy an $80,000 car to impress my colleagues at Westpac, can I claim this as a tax deduction as it's business related investment?

    Also, if I have an investment loan for shares with an offset account, and I sell some shares for a profit. Do I have to put the profit and original cost moneys back in the investment loan offset account or can I put it all against my home loan in my home loan offset account?

  • Hi Op,

    i have not done any tax return since 4 years ago, they are under $ 18200. am i gonna get penalty ? is there anyway to negotiate it with ATO ? as i was international students and just recently got full time job.

    i was planning to use accountant to sort everything out. how much does it normally cost?

    Thanks nicole

    • You should have lodged a "non necessary" return with the ato in each of the last 4 years. I would recommend getting an accountant to do that for you. Just to avoid any potential fines from the ato.

      Let me know if you would like our assistance in doing this for you.

      • so i wont get penalty after doing so ? how much does it cost ?
        i tried to PM you but for some reasons i couldn't

        • It's approximately $35 per year. So for 4 years it's $140. This is assuming you had income less than $18200 for each of the years.

        • @nicolemcmilllon:

          How much do you charge for a 'normal' tax Return (normal payg and no investment properties, etc)? Or do you charge by the hour?

  • Thanks for offering feedback! As a full-time retail worker, I would like to know what I may be able to claim on tax.

    My company doesn't have uniforms, so I wear my own clothes to work every day, and run a wash with all of them once per week. How would I calculate what a reasonable expense for this is?

    I would like to buy boots for use exclusively at work as they would provide better support and safety for a job which requires standing all day. Would I be able to claim a pair of boots as a 100% work expense?

    My store uses messaging apps to communicate rosters to all staff. We also use our mobile phone data plans to answer customer questions, check prices at competititors and find answer for troubleshooting customer items. We also need to occasionally stream music or videos from a phone or create a hotspot to demonstrate product features to customers. Would it be reasonable for me to claim that my phone is used for work? I have once of those yearly Kogan prepaid plans and was thinking that over half of my usage is directly work related.

    On similar note, I just purchased a new mobile phone. As mentioned above, I use the phone for work a lot. Would I also be able to claim some it as a work related expense?

    I have about a million other questions but would really appreciate direction on the points I raised above, as I've never claimed anything on tax but feel like I am missing out on something I am entitled to.

    Thanks!

    • You can't claim the uniform or the laundry as you don't have a specific uniform. Most people still claim $150 in laundry expenses which the ATO doesn't really seem to be too bothered about.

      You can claim a percentage of your running expenses for your mobile phone. For example 20%.

      You could also claim 20% of the cost of your new phone over 2 years.

      • Thanks for the reply, Nicole! In your experience, are there any particular things I should be claiming as someone who works in retail?

        • Mobile phone and maybe laundry. Retail employees don't have any deductions as they're not required to purchase anything themselves.

      • so if I purchased an iphone in July 2015 for $1000, I should claim $100 in financial year 2016 and another $100 in 2017? or 20% on both years ($200 in 2016 and $200 in 2017)

  • Hi there.

    I work full time during the day, company car plus extras

    I also spend 3-4hr a day with a second job, selling products online, or direct to returning customers. This requires me to drive to locations and pick up items or deliver.

    I pay a higher tax on this second job. I accept that. Say for example this job brings in 20k in income,

    I don't want to compromise my main job and use the company car for this extra work.

    I am looking to buy a used car, it's a unique car and brand is irrelevant at this stage. It's around $40k though for a car 12 years old car.

    What advantages or what can be done to claim on this used car? The depreciation had been done?

    Thanks!

    • Long story short what you would be able to claim would not be worth the effort in buying a different car.

      Do you currently claim motor vehicle expenses in regards to your salary income?

      • Nope, company car is paid for in every single way by work

        Wife has a car, we've paid that out in full though. I have been using the wife's car for now, I just want to buy myself a luxury car, which will be 50/50 pleasure & work(for second job)

        • The most common deduction would result in approximately 3300 deduction per year which will offset your 20k income. So it's not a lot. But it's still something

        • that deduction would at least reduce my tax bill!

  • Hi Nicole,

    I bought an investment property in November 2016 & have been living in it since. How long should I live there to completely avoid the CGT?

    If I rent it out soon, does this make me liable for CGT?

    If I negatively gear, does this make me liable for CGT?

    What type of evidence does the ATO require if I want to avoid CGT e.g. I have water & electricity bills - is that enough evidence?

    • As you have been living there for 6 months it should be fine to rent now for the next 5 and a half years assuming you don't move into another primary place of residence.

      Being negatively geared has no relevance to claiming the exemption when it comes time to sell it.

  • -1

    Why should I pay tax to the government when they have illegally taken over land of out native people? Does using this line help me not to pay tax?

    • +1

      I think you'll find Australia to sue you, i.e. Commonwealth of Aus v hell0

      Or you could proclaim a country and declare war?

    • +3

      You're the one occupying their land

  • Hi Nicole,
    Thanks for doing this. I have a question related to travel expense.

    Working for same company and same task:
    Can you claim travel expense to work if you work at 2 different but fixed sites every week? e.g. Every Mon & Tue site A, Wed & Thur site B and Friday uni (work related course).

    Secondly, how do you claim travel expense if you go to uni and then go to work after finishing uni.
    Do you claim travel from home > Uni >work
    Or
    Do you claim travel from Uni > work only?

    Thank you.

    • You can claim from uni to work and work to uni.

      In your first example you can only claim from one work to another. If you are working at different sites but on different days then that is not work related travel.

      The easiest way is using the cents per km method which is total number of business kms (capped at 5000) times 66 cents per km

  • Hi Nicole, I'm on 91k, would it be worth salary sacrificing a car to reduce the tax bracket to less then 87k? Or would it be better to buy outright? Cost of car is 45k. Thanks.

    • You could salary sacrifice a motor vehicle lease then purchase the car at the end of the lease. There are companies that specialise in novated leases. Do u require a car for ur work. If not then you won't be entitled to any deductions.

  • Are you and your partner chartered and how much do you charge?

  • Hi Nicole
    In 2014-15 I sold the holiday house and have a capital loss. How long can I carry this forward? I.e. how long can it be used to offset capital gains?

    • It can be carried forward indefinitely forever.

      • +1

        thanks a million

        • +1

          That's a big loss on the holiday house.

  • Hi Nicole,

    The recent budget scheme for first home buyers to save $15k per year & $30k max for deposit. If I save it for couple of years in this superannuation fund & at the end of it decide to not use it for Home deposit(can be because of Housing bubble bursting by that time), can I still withdraw this money for any other purpose? What are the limitations like?

    Thanks

    • Whilst this is still only a proposal and the intricate details are not yet known. I would assume you can only withdraw it to purchase your first home.

    • can I still withdraw this money for any other purpose?

      AFAIK you will have to leave that money in the super.

  • Hi Nicole, my friend purchased a property just before the end of June 2016 and commenced main residence for 6 months before moving out in January 2017. 1) They purchased a depreciation schedule in June 2016. Can they claim the cost of preparation of the tax depreciation report in 2017 financial year? 2) During the end of financial year sales (June 2016 i.e. just before last financial year), they also stocked up on furnishings that were on sale for sole intention to rent out to tenant once they move out of the main residence. These items were placed in storage until they moved out in January 2017 and were not used while they were staying in the apartment. Some of the items cost less than $300, what proportion and financial period can these be claimed?

    • They can claim the cost of the depreciation report in 2017.

      For the furnishings under 300 they can be written off. For everything else they can be depreciated starting from the date of purchase apportioned for the days the property was rented. For example a 1000 dollar desk can be depreciated over 5 years with this year's depreciation being 50% (6 of 12 months) of the first years deprecitation.

      • Thanks Nicole. To clarify, for example, if they bought a desk and entertainment unit for $300 each in June 2016, can they claim both in full in 2017 financial year given they rented the apartment out in January 2017? Thanks

  • How does negative gearing work for an investment property which is to be subdivided? I.e. bought for 1000k, subdivide and build (duplex) for 800k, and sold for 1000k each (2000k total).

    What about if only 1 (out of the 2) duplex was sold? What's treated as capital loss/gain and what's treated as negative gearing losses?

    Can one nominate investment as PPOR prior to subdivide/build and what would happen with PPOR nomination after subdivide? Are there any gains to be had from PPOR nomination?

  • Hey Nicole , I work in bottle shop as a store manager and some times I have to move stock to other stores owned by same company and I use company's small truck which I can drive on my car licence but I'm thinking to get HR licence .if i do get one can I claim that licence fee on tax …?

    • Assuming your work doesn't pay for the course then you will be able to claim the deduction in your personal return.

  • Thanks for offering to answer tax questions. Is there any tax benefit to my wife charging her Mum rent?

    The rental house:
    My wife and I each bough houses in Perth before we met. We initially lived in my wife's house then moved into my house after a renovation in late 2015.
    We rented my wife's house out to a third party for 9 months in calendar 2016. At the time the tennant moved out my wife's mum needed a place to live. So we replaced the kitchen and flooring. My wifes Mum contributed to the renovation in lieu of paying rent this tax year.

    Wifes income:
    My wife is on maternity leave this calendar year and intends to go back to work 3 days a week from 2018 where she would earn about $58k.
    If my wife charges her Mum rent it would be the least the tax office would accept, most likely $200 a week (Other units in the strata complex advertise $280/wk).
    My wifes Mum works 3 days a week and will go on the pension when she turns 65 in a couple of years.

    Costs:
    My wife pays $800 a month in interest on the mortgage. Strata, maintenance, water and council rates came to $3500 for the past year.

    To charge rent or to not charge rent:
    If we didn't charge rent then my wife's Mum would probably pay directly for strata and water levies, maintenance and improvements. She'd also look after our baby while my wife and I work, so more than pay in kind. In this situation the Mum wouldnt pay my wife any money and therefore would my wife need to declare her property as a rental to the tax office?
    Or is it better to declare income and deductions for the property?

    • +1

      Probably better off claiming interest and deductions on the rental property.

      Your wife can then gift her mum back the 200 each week if she decides to as a thank you for being an amazing mum.

  • Hi,

    Last year I got a letter advising that my WRE were higher then the average for my role/income. I was about 3 times the average. If it makes any difference that's about 7% of my taxable income was WRE.

    Its got me worried, even though it's always been high, and I have receipts for everything and its done through an accountant.

    Not worried, but this time round I'm thinking of not claiming things I'm entitled to as I don't like this kind of ATO attention.

    I'm told the letter is an education letter and its nothing to worry about.

    Is this true about the letter?

    Should I be worried?

    Is 7% of my taxable income too high?

    Is 3 x the average too high?

    P.S: In IT

    Ciao

    • Some people have higher deductions than others. If you are confident that 1. You are legally entitled to claim deductions for those expenses and 2. You are able to substantiate them then you should claim what you are entitled to.

      You may get audited this year though.

  • Hello!

    This is my first year working from home(Web programmer). What would I be able to claim?

    I've also travelled up to Sydney twice for work. They covered the flight and accommodation but not food and other travel expenses. Would I be able to claim those?

    • You can claim depreciation on the assets in your work area. Such as the desk chair and computer.

      You can also claim a portion of the running expenses such as electricity.

      If your work covered accommodation and flights you haven't incurred any additional expenses there are no deductions available to you. You can't claim the meal deduction as I assume you weren't given a meal allowance.

    • You say you took out some clients to dinner.

  • What are the additional tax implications of buying a US domiciled ETF Vs anAustralian domiciled one?

  • PMed

  • Hi Nicole,

    My wife and I have started a new business as a company. We have started working on a project but won't be earning any money this financual year.

    We do however require to purchase some stuff (monitor, office desk and chair).

    Should we hold off untill the company earns income from the business and buy next FY?

    Can I buy them now, from my pocket, but claim the deduction as the company? Can you please suggest the best way to go about it?

    Secondly, will we be able to claim deduction on bank interest, for renting a room in our primary residence to the company?

    Thanks in advance!

    • If the company incurred expenses this year it will be able to claim them as deductions and depreciation for the monitor chair desk etc. These deductions will mean the company will have a tax loss this year and you can carry forward that loss to next year.

      If you can hold off on purchases then it would be better to wait 6 weeks until 1 july 2017 because you will have income in the next financial year.

      You can buy things from your own pocket and the company can effectively reimburse you.

      Secondly I would not recommend charging your company rent because it would be counter productive as you would have to include that rent in your personal returns as well as losing your full exemption to capital gains.

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