AMA - Round Two - Tax and Tax Return Questions - Ask Me Anything - GO!

Associatednicolemcmilllon @ Titanium Accountants & Advisors on 31/05/2017 - 09:15
Last edited 05/07/2017 - 10:20 by 2 other users

Edit % June 2017

I have now closed this thread.

I will think about posting a third round on the last week of June depending on how many people want me to do it.

I will be ready to prepare everyone's 2017 returns in July. I look forward to hearing from you.

For everyone else, thank you for participating and I hope you appreciated our answers.

Hi All,

I did a tax AMA a few weeks ago and got an overwhelming response (close to 700 replies).

I am going to do another one that will go from today 31 May to Sunday 4th June.

If you have any tax or tax related questions then ask below and I will do my best to get back to you as soon as possible.

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.

P.S Please see my previous forum post as we tried to avoid duplicate questions.

I will reply to this thread with a link to the previous post.

Look forward to answering all your tax queries.

Lets do this!

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closed Comments

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 20:07

          I assumed he was joking. So I did too.

        • techboy on 02/06/2017 - 12:05

          @nicolemcmilllon: Sometimes people, no matter what is said, will believe every thing that you say as gospel……:)

  • inmyplums on 01/06/2017 - 00:03

    I Have a PAYG job but also have a side business which I am a sole trader ABN and its PSI. I understand I cant claim either rent, mortgage interest, rates or land taxes. However with the government's 20k writeoff, am I able to write off the full amount for assets used soley for the business eg Laptop, mobile, Car expenses.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 00:09

      PSI rules mean you aren't able to access small business concessions.

  • Rapt0r on 01/06/2017 - 00:31
    +1

    I have some stocks invested in the NYSE. If i sell them, is it taxed any differently to ASX stocks (will I just need to pay capital gains tax)?
    Also does the 50% tax discount still apply for overseas stocks if I hold them for at least 12 months?
    Thanks for running these threads Nicole!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 00:34
      +2

      No problem it's my pleasure.

      Yes same thing as having Australian investments.

  • McBanny on 01/06/2017 - 01:17

    Hi Nicole,

    Thanks for doing this :)

    I wish to ask about salary sacrifice.
    If I get a new laptop from work in mid June and the payment is split into two.
    E.g $2000 laptop and with 2 x $1000 payment.

    Since it's mid June so the second payment will be taken out in July.
    In this case does that mean the first $1000 will go towards 2016-17 and the second $1000 go towards 2017-18?

    Thanks!

  • relentless on 01/06/2017 - 01:45

    Is it end of month or month end?

  • CI on 01/06/2017 - 04:18

    Hi what happens if person is in a tax threshold for half the year and for rest of the year below $18k lets just say $0 for 26 weeks and $50k for 26 weeks.
    The first 26 weeks he/she gets taxed fortnightly as if they make $50k a year but for the remainder 26 weeks they make $0. Now how do they get the excess tax back they have paid since there salary for the year 16/17 was only $25k but for half the year they paid more tax.
    I hope I explained myself well enough - sorry might be a completely stupid question.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 06:50
      +1

      You get it back in your tax return.

  • discod on 01/06/2017 - 08:00

    Hi,

    I work for a company that re-imburses me for business km.
    Is this still something I can claim as a tax deduction given I am reimbursed?

    Cheers :)

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 08:17

      Depends on if they reimburse you or give you an allowance.

      Check if its on your PAYG payment summary to see if its an allowance.

      • discod on 01/06/2017 - 15:06

        Thanks!
        just checked, and it is listed as an allowance.
        How does that change things? what are the difference in entitlements to claim between the two (allowance vs. reimbursement).

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 15:08
          +1

          Reimbursement means that you didn't incur any expenses out of your own pocket because work directly reimbursed you for every cent you spent.

          An allowance means they give you what they think you will need. You include that as income in your return and you can include a deduction for the amount spent. A bit different for motor vehicle expenses though, use the cents per km method. Probably better if you see an accountant too.

        • discod on 01/06/2017 - 17:51

          @nicolemcmilllon: Thanks! I was intending to use the c/km method, had a suspicion that was the case. Cheers

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 18:21

          @discod:

          No problem:)

  • poptops on 01/06/2017 - 08:19

    Hi there, appreciate your advice on this.

    My partner and I paid a holding deposit for an investment property which we eventually forfeited as we did not proceed with the purchase. Is the holding deposit tax deductible since the purpose of the expense was to obtain an income generating asset?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 08:34

      No it is not.

  • [Deactivated] on 01/06/2017 - 08:34

    Hi Nicole,

    Couple of questions please:

    1- Charity done overseas, can this be tax deductible?
    2- Supporting parents/siblings/family overseas, is this tax deductible?
    3- I am a contractor, work as PAYG in IT, and ends up paying lot of taxes. Would it be beneficial for me to move into some sort of ABN/Company/Pty ltd sort of setup with only one source of income? If yes, what would be the best option?
    4- Is there any way to avoid paying the Super?

    Thanks.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 08:37
      1. No
      2. No
      3. If they pay you as PAYG it means you are an employee and would fail the PSI rules so no point starting a company.
      4. Your employer is obligated to pay you super.
      • [Deactivated] on 01/06/2017 - 08:42

        Thanks for quick reply Nicole.

        3- My agency does not restrict me to work only as PAYG, so I can move to some other setup (am I missing something?)
        4- From avoiding to pay super, I meant, can I move into some different setup, something other than PAYG which can help me?

        Thanks.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 03/06/2017 - 08:02

          No, because you are an employee it means no matter what the set up, you will still be deemed to be an employee for superannuation purposes (unless you want to start a company in which the costs would be high to maintain)

  • Jackkkkkk on 01/06/2017 - 08:41

    Please advise the easiest way to claim KM's? is there a logbook example I can follow?

    I work between two sites, about 25kms apart, Daily between two sites using my own vehicle.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 08:46
      +2

      Put it on an excel spreadsheet.

      Date:
      Travel to and from:
      Number of kms:

  • Tom088 on 01/06/2017 - 08:54

    Hi Nicole,
    I work part-time and also am studying at uni.
    In the past I have claimed depreciation on my laptop and textbooks as self-education deductions as my course is directly relevant to my job.
    Last year I went on exchange to the US as part of my uni course (took 6 months off work but have returned to the same role) - could I claim the airfare/accommodation etc. as self-education expenses?

    Thanks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 09:02

      Short answer: Most likely not.

  • bemybubble on 01/06/2017 - 08:58

    Hi Nicole,

    Curious to know your client demographic. % of individuals, companies, trusts, sfunds etc? Notwithstanding I know most companies and trusts attract the individuals but in terms of salary wage earners that come to you?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 09:01

      99% of the individuals are because they have companies trust and smsf.

      Very rare that we do individuals on their own.

  • iforgotmysocks on 01/06/2017 - 08:58

    Hi, with regards to deductions associated with study expenses, as long as it can be interpreted that the degree is related to my current occupation, I can claim deductions?

    I.e. I am looking to do a masters next year in an engineering discipline, I currently work as an engineer, the degree isn't necessarily for my current job, but looks like it could be.

    And I can claim all costs associated with travel, textbooks etc?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 09:02

      Short answer: Yes if it is related to your current job. See the ATO website for details on what expenses you can claim.

  • Tea2Tango-Australia on 01/06/2017 - 09:10

    Hi,

    If someone earns over $250K in taxable income in a Financial Year from regular salary and wages (job unrelated to CFD trading) and they have non-Commercial losses in a Financial Year due to regular CFD trading of $50K (say gains were 100K and losses were 150K), can those losses be offset against the assessable income from the regular salary & wages or does the $250K threshold apply? If it does apply, how could one get their taxable income under $250K prior to the Financial Year end?

    Otherwise (assuming the above is not applicable), would these losses be carried forward until such time that your salary and wages taxable income is <$250K? If you have stopped trading, would you still be able to utilise the losses in future years?

    Thanks!

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 09:14

      If your income is above $250,000 you will have to carry the losses forward in definitely.

      Even once your income is under $250,000 you will have to pass a variety of other tests if you want to use those losses.

      • Tea2Tango-Australia on 01/06/2017 - 09:16

        Thanks. If I am no longer trading can I still carry the losses forward?

        Yes, I believe I passed the other tests as I have claimed in prior years.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 09:31

          Correct. Best to seek the advice of your accountant though. Especially if your income is over $250,000.

          PM me if you would like to discuss in detail.

  • tik tok on 01/06/2017 - 09:11

    I purchased an investment property. I made a deposit of 50k into my existing PPOR mortgage and did a redraw into a new offset account. Used these funds as the deposit. Can I claim this amount as tax deductible ? If so, till how long does this claiming process go ? Until I dispose off the investment either by selling or by paying it down ? Current mortgage is IO but will switch to PI next year.

    • tik tok on 02/06/2017 - 09:24

      @nicolemcmilllon - tough question this one ?

  • Epokk on 01/06/2017 - 09:39

    Hi Nicole, if I undertake further study (i.e. Masters in Computer science) to advance my career and increase potential future income earning activity. Can I deduct the cost of a new laptop? Or can I only claim the depreciation?

    Thanks in advance.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 10:07
      +1

      You can never deduct the entire cost of a laptop. It is always depreciated over 3 years. Have a look at the ATO website for detailed expenses you can claim regarding study. If it is for career advancement and not your current role, the expense isn't deductible.

  • SharkChu on 01/06/2017 - 09:49

    Working at a IT company,

    If I purchase my own Mouse/Keyboard, is that deductible?

    Note working 2 different jobs, 1 as a pharmacist, and 1 as tech support at the IT company (the main job).

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 10:05

      Not sure why an IT company wouldn't reimburse you or provide you with a mouse/keyboard, but theyre minimal deductions so its not a problem.

      • SharkChu on 01/06/2017 - 10:59

        They do provide me with a keyboard/mouse.

        it was more of I wanted my own keyboard/mouse out of my own preference to use at work.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:18

          Thats understandable and totally fine to claim :)

        • SharkChu on 01/06/2017 - 11:27

          Thank you!

  • BargainHunterKD on 01/06/2017 - 10:27

    Hi Nicole, I worked a fair bit of overtime this last financial year and received an overtime meal allowance on those days worked. On my payslips it comes under non taxable earnings - could you please explain how this will works when submitting my return? Is it true that because it wasn't taxed that I can't claim it?

    Thanks

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 10:32
      +1

      If it is not on your payment summary as taxable then you are not paying tax on it and can't claim the deduction for meals. It is a good thing. It means you don't have to pay tax on the allowance :)

      • BargainHunterKD on 01/06/2017 - 11:07

        Another question if that's alright - I have just realised that because of the overtime I have been pushed up into the next hecs repayment bracket (by about ~600). This means that even though I paid a lot of tax I now have to pay an extra 0.5% in hecs. Is the only way to go down a bracket to have deductions over $600?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:22

          Correct. Having an accountant that knows how to get you under that bracket is a good idea. Hint Hint ;) Contact me if you need assistance with your tax return.

  • yellowfever on 01/06/2017 - 10:51

    Hi, while this discussion is about tax deduction//return questions, there is no doubt that people would want to max their deductions in their best interests, while their entitlibilty may not be fully legitimate and transparent. I read articles about the government considering to abolish the work expense deductions and somewhat follow the UK system. This could reduce taxes if people didn't try overclaim (e.g $2K pen as work deduction?!) What are your thoughts on this?

  • thydzik on 01/06/2017 - 10:59

    I have a property that I purchased furniture to stage for photos, I can reuse that furniture for staging on another property.
    is that furniture an expense or asset?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:26

      Asset.

      Are you in the business of staging photos or is this a one off?

      • thydzik on 01/06/2017 - 11:47

        thanks.
        business is property development, so not a one off.

  • tomleonhart on 01/06/2017 - 11:11

    If i am currently work in aviation industry and is going for my pilot training. (not earning an income as a pilot yet).

    Is the medical cost (blood test, hearing test, ecg etc etc) to get my license tax deductible against my current income?

    Not related to the the eye test I asked previously

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:25

      If the license is required by your current work it may be. If it is for a future job then no.

      • tomleonhart on 01/06/2017 - 11:26
        +1

        Love your work.

        Thank you.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:30
          +1

          I appreciate your appreciation :)

  • bargains9000 on 01/06/2017 - 11:18

    Hi, thanks for doing another one of these.

    I had two questions:

    1. At the start of the year I started working as a paralegal at a law firm, I am currently a later year law student. Am I able to legitimately claim self-education expenses for textbooks, university fees (HECS, SSAF), travel between work and university as deductions?

    2. My boyfriend earns about 48k or so per annum and seems to get taxed about $8,000 and gets about ~$400 back as a rebate, is this about right or is there something that we're missing? (I've looked at the general calculations and I'm still unsure). He has no real deductions other than the $150/150 laundry/work expenses.

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:24

      1. Do you think that a law degree is for your future position or for your position as a paralegal? I think those deductions may be denied.

      2. That sounds about right. Most employees don't have deductions as their employers will realistically provide them with most things they require to complete their job :)

      • PAPower on 02/06/2017 - 09:13

        Hi Nicole,

        Could you tell me what the worst case scenario if someone just takes a punt at these deductions?
        Paying back the claimed amount or getting a fine or so on?

        In most case it sounds like self-justification more than law-based decision to me.

        Cheers.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 03/06/2017 - 08:04

          In Australia the tax system is one which involves self assessment. Which means they are trusting you to claim only what you are entitled to. IF you are audited, and found to be in the wrong, they will make you pay back the tax, and a penalties, and interest. On top of that, they may audit your last 5 years as well as having you on a list for future "random" audits.

  • Mellyp on 01/06/2017 - 11:26

    Do you get any tax back on the high rate of tax paid on paid out holiday pay when you leave a job? Or is it treated separately?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:30
      1. Are you referring to unused annual leave on a normal termination (i.e not a redundancy package). If so then it is taxed at your normal marginal rates (the higher rate per your question)
      • Mellyp on 01/06/2017 - 11:39

        Thanks for answering so quick. Correct, standard annual leave. So it should just be taxed at a standard rate? When I left my role they over paid my salary and then took the difference out of my holiday pay, I feel like I was over taxed but now thinking about it, are you saying paid out holiday pay is treated as standard income?

        I guess the reason I'm asking is to figure out if it's worth seeing a tax agent this year or not. I've had two employers in the last financial (one at a time) and no other forms of income or any expenses I can claim back on.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:43

          The logic behind the leave being taxed as normal is that if you were to take annual leave for a few weeks holiday it is taxed the same as wages. So unused leave is the same thing.

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:44

          Tried to PM you regarding your tax return but it wouldn't give me the option for some reason.

        • Mellyp on 01/06/2017 - 12:21

          @nicolemcmilllon: maybe because I'm so new still?

        • Mellyp on 01/06/2017 - 12:23

          @Mellyp: I had messages turned off. They're on now :)

  • Ruckmauler on 01/06/2017 - 11:31

    If I have additional tax to pay - and I want to split the payments over a set period - what's the longest I can stretch those payment out to?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:34

      That would be up to you, or your tax agent, to negotiate with the ATO. Usually 6 months is the expected period (expect interest on the arrangement though).

      Also, a tax agent can lodge your tax return later thereby giving you more time to save until you have to pay the tax.

      Contact me if you need assistance with your return :)

  • Mamaof3 on 01/06/2017 - 11:56

    Hope you're still answering questions! Our Accountant has sought an extension to lodge our tax returns but because we're waiting on a third party to supply some final bits of information in order for our Accountant to be able to finalise ours, we're not going to lodge it in time (before extension deadline). How likely are we able to seek a further extension and if we do get fined, are we able to appeal it?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 11:57

      I assume this is for 2016. What third party information is this that is 12 months late?

      • Mamaof3 on 01/06/2017 - 12:13

        Yes correct YE 2016 returns. We don't normally get our previous returns completed until May the following year (which i think is normal?).
        Our returns require a business partner to complete their returns (which their accountant is working on…

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:14

          My advice would be to call the third party and get them to hurry up because you might be fined.

        • Mamaof3 on 01/06/2017 - 12:16

          Done that. Their Accountant is doing the best he can but the earliest he can get it done is beyond the deadline next week :-(

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 03/06/2017 - 08:05

          @Mamaof3:

          You could lodge your return then lodge an amendment.

          Or just wait it out and hope you don't get fined.

  • Yonaton on 01/06/2017 - 12:02

    What tax implications should I be aware of when I need to declare my spouse details (no kids) as opposed to having always lodged TR as an individual?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:05

      There are various reasons to including your spouse details. First reason is that you are required to if you have a spouse. It is not a choice. The spouse details are used to calculate various rebates such as medicare levy tiers and other family tax benefit details.

      • Ruckmauler on 01/06/2017 - 12:59

        Does the ato have a guideline as to when a girl/boy friend becomes a spouse (in the ato's eyes)? Obviously marriage - but if no marriage - is it up to the individual??

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 13:09

          This is straight from the ATO website.

          Your spouse includes another person (of any gender) who:

          you were in a relationship with that was registered under a prescribed state or territory law
although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.
  • herysoe on 01/06/2017 - 12:14

    hello, i have got question for you. For sole trader, is it possible to claim rental car to visit prospective clients for the course of 5 days? thank you

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 03/06/2017 - 08:05

      Yes

  • bs0 on 01/06/2017 - 12:16

    I'm a final year full time student, finishing uni at the end of this year. I will be working full time next year, (health, salary of ~$60000).
    Are there any expenses/spending that I should keep track of this current or next financial year, before I start working, so I can claim.
    For example, I bought a computer for $2000 for uni last month, and would be using it for work next year, can I claim?

    Also, because half the financial year is at uni, and half is working, is there anything else I should be mindful of?

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:20

      Keep a list and invoices of all expenses incurred in the course of your employment and give them to your accountant next year.

      You may be able to claim depreciation on second year of the effective life of the laptop.

      • bs0 on 01/06/2017 - 12:23

        What about expenses in the second half of this year, as a student?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:25

          No, there is no income to claim the expenses against.

        • bs0 on 01/06/2017 - 13:45

          @nicolemcmilllon:

          Thanks!!

  • Mamaof3 on 01/06/2017 - 12:39

    We're a small business owner, can i claim all the coffees i buy for clients when i meet them at a cafe for a meeting? Our Accountant hasn't claimed but i hear other friends who are also small business owners claim all the food and coffee they buy for their clients…??

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:43
      +1

      Technically it is not deductible unless it is consumed at your work premises.

      But in reality, its not significant enough to bother claiming. How many coffee's will you buy for clients in meetings in the course of a year, maybe 25 coffees? $100? Not worth bothering with.

  • JJlikes2eat on 01/06/2017 - 12:41

    Hi Nicole,
    Thank you for this wonderful AMA. I'm a sole trader and recently enrolled in an online course designed to help find a fulfilling career. Would this be tax deductible? TIA

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:44

      If you are a sole trader then you already have a business.

      Is the course designed to help find a career? Don't you already have a career?

      I am guessing the answer is that its not deductible.

      • JJlikes2eat on 01/06/2017 - 12:49

        Thanks. Correct, I do have a career, however it is not fulfilling, hence the course. Does this help?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 12:54

          Yes, I do understand, it just means that the course isn't deductible.

        • unnamed on 01/06/2017 - 13:30

          @nicolemcmilllon:

          Hi Nicole,

          Just want to get some clarity on this and I will be using accountant as an example.

          From what I understand accountants who graduated and working as an accountant will require further studies to become CA/CPA.

          Will that membership be deductible and the course to become CA/CPA will it be deductible also?

        • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 13:33

          @unnamed:

          Yes because it is a requirement of your current job to be qualified.

          Realistically however, employers will pay these fees for you.

  • dealsniper on 01/06/2017 - 12:51

    Hi Nicole, I recently bought a computer over $300 for study and will be depreciating it over three years. If I decide to buy another computer during the next three years, can I depreciate both computers at the same time? Thanks in advance

    • Associatednicolemcmilllon @ Titanium Accountants & Advisors on 01/06/2017 - 13:07

      No you can't. You only need one computer at a time.

  • MiaSanMia on 01/06/2017 - 13:09

    Long story short, I'm owing $5000 in HELP debt, office worker, 2016/17 taxable income will be just over $60,000, no salary sacrifice to super. Is there any way that I can lower the repayment income down below 2016/17 threshold $54,869? An obvious solution is a nice deduction of $5000 - but need to be more specific and realistic on what to spend on in the next 30 days!

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