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

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

    • No. You should pay it off then not have to worry about it in the future.

      • I prefer to pay it next years when getting some extra income, it has a been a tough year for me in terms of finance :(

        • What kind of job do you have? PM me

  • Hi Nicole,

    I applied for a Master Course in Uni which relates to my current profession/job. I am using HELP but will I be able to claim any tax back?
    What sort of study expense can I claim back on?

    Thanks.

    • Have a look at the ATO website, it has an itemised list of everything you can claim.

  • I am interested in a cruise ship career. I'd like to know if any tax is payable working on an international cruise (out of Australia waters).

    Thanks a lot.

    • You will have to work out if you are a resident for tax purposes. Have a look at the ato website for detailed tests.

      You would most likely be an Australian resident as you will still maintain your place of residence here in Australia and therefore will have to pay tax on your income here.

  • As a sole trader how strict is the classification of a van to make it 100% deductible without keeping a logbook? Would a small van suffice?

  • can you explain uber tax/gst/bas

    can i claim
    1. gas money?
    2. water and mints?
    3. cleaning fees?
    4. tyers?
    5.services?
    6. high end gaming laptop for business purposes?

    what is the logbook for as i keep reading on fourms that i have to keep a logbook, what is that for?? noob here. still ahvent started uber but thinking about it.

    • It's complicated and best if you sit with your accountant and discuss your obligations as you are running a business.

      Asking someone to explain tax bas gst is too broad and inefficient.

    • basically u keep logbook for 12 weeks to work out how much % of ur car is used for work and how much % is for personal use. Then sum all the expenses and apply the work % to determine dollar amount of deduction.

      • so its basically for claiming back?

        • You are confused about what a deduction is. IT is not claiming back. You don't automatically get money back for claiming a deduction.

          Speak to your accountant about what a deduction is.

          IF you don't have a full time job in which tax is paid, your deductions won't get you anything back.

  • Hi, thanks for doing this and answering my question last time!

    If I made money from buying and selling bitcoin (but not as a business, I only did a few and earned a few grand), how does that get taxed?

    Thanks again!

    • Capital Gain - see your accountant to work out your gain and apply any discount for you. I would not recommend doing it yourself.

  • Hi, is it worth working out how much you are going to be earning before the EOFY? I.E Could there be situations where it is worth making a charitable donation in order to get my income below certain points where things like the medicare levy kicks in? I hope this makes sense, Thanks!

    • Of course it is. That is why you need an accountant. If your income is just above the HECS threshold for example, a donation of $200 might get you below that.

  • If I purchase an asset in a financial year and sell that same asset in the same financial year,
    can I claim depreciation for the period of ownership of that asset?

    • Yes but there will be a deductible/assessable adjustment based on the value you sold it for.

      Once again, probably a discussion with your accountant and provide them with actual figures when doing your return.

      • thanks again.

        • you're most welcome :)

  • If I started work in May, received a sign on bonus as well as my pay for the month before the financial year ends, have not made over the tax-free threshold for FY16/17, and the sign on bonus and pay were taxed, can I claim it all back in the upcoming EOFY? Mainly wondering about the sign on bonus.

    • +1

      Yes you will get it back.

  • Just sent a pm. Please check thanks :)

  • Well you skipped over my question last time, so I'll ask it again. (https://www.ozbargain.com.au/node/308427?page=5#comment-4713…)

    What's something I wouldn't expect I could claim but probably applies to everyone?

    • +1

      I skipped over it for a reason. Claim the expenses you incur in the course of your employment that you are not reimbursed. i.e if you're an employee, there is very little you can claim.

      • Thanks, that's the answer I was looking for.

  • Grateful for your time!

    18 months ago, I withdrew a lump sum from a home loan to invest in Vanguard Wholesale index funds.

    The ATO says "Only interest expenses incurred for an income-producing purpose are deductible."

    I've opted for the 'Reinvestment' option. Does this mean I'm still investing for an income-producing purpose? If not, do I need to get my distributions paid out (ie. not re-invested) to ensure that I'm able to claim interest on the lump sum?

    • +1

      Dividend/Distribution Reinvestment Plans are an income producing purpose as you are claiming the dividend/distribution in your tax return as income :)

      • Thank you! That's good to know :)

  • Hi Nicole,

    What is the amount this financial year you can claim for meal allowances ?
    If I do overtime then work pays me $13.85 per meal allowance but I can claim the difference which I believe is around an extra $15 ?

    Thanks in advance

    • You don't just claim the difference. It's what you have actually incurred.

  • I am going to rent my property out in a few weeks time.
    Will I be entitled to tax savings (if any) with my rental property this financial year? Or will the savings be insignificant?

    • +1

      This financial year there's only 4 weeks left. Insignificant. You will still have to declare rental income though.

  • I have some Bitcoins invested.
    How does it affect my tax?

    • Yes it does. Capital gains.

  • A couple of questions around investment property:

    1) Assume I pulled-out a small equity loan (say $100) on my existing investment property and put the amount in an existing bank account with some pre-existing savings amount (say $150) already in it and later I paid a deposit to buy another property amount, which is say $200, from this bank account. How do I show to ATO (do I have to ever?) that $200 deposit towards another house that I paid consumed all my equity loan? It can be questionable since account had $250 and I used $200 so the remaining unused $50 can be from either my own savings or equity loan. How to deal with such situation?

    2) Can interest paid on equity loan (taken from investment property) be claimed for tax exemption (negative gearing) even if the amount hasn't been re-invested in any inv property yet but I am of course paying interest on the loan?

    Thanks in advance!

    • Awaiting your reply, OP!

        1. You don't have to show to the ATO, they will go by your self assessment subject to a random audit in the future.

        2. No

        • Thank you so much, Nicole!

  • Hi Nicole,

    I have been reading that certain millionaires are claiming really high fees for managing tax affairs. Rightfully or wrongfully. My question is as follows:

    Can you claim your own cost of researching and managing your own tax affairs. Ie, if I assume I invest my own time over the course of a year and utilise the appropriate software to manage it. Also assume I'm doing this to better manage my ongoing handling of personal taxes and I will be apportioning my time which will have an opportunity cost associated. I know there is a concept of incurred which may make this unachievable but just wondering if this has been attempted in some shape or manner. Incurred I assume means that I would have to invoice for my time and pay myself.

    I also know that it needs to be a registered tax agent so I can't just do this with a friend or family. But I am curious if this has been tested around the cost of managing your own affairs - by yourself. (Queue the inappropriate jokes)

    Thanks in advance.

    • Nope. Incurred means you have to pay for it.

  • what is a reasonable % of use for any electronic to claim back as work use (laptop, mobile phone etc)?
    and what sort of proof that we need in order to make those claims?

    Thank you very much

    • How long is a reasonable piece of string.

      What is reasonable is the amount you actually use it for work related purposes.

  • I'm an nz citizen living in Australia looking to purchase a house. Am I going to be considered an foreign investor for CGT purposes?

    • There are many factors to consider when figuring out if you are an Australian resident for tax purposes. Have a look at the ato website for the resident tests. If unsure book an appointment with an accountant.

  • If i just started trading cryptocurrency.. do I need to declare taxes for when I withdraw back into AUD?

    • Yes capital gains. Should probably talk to your accountant.

  • I wear glasses, is there anyway I can claim my prescription glasses. If I don't have them I can't see and therefor can't work.

    • They are still private in nature.

      If you don't wear them you can't see full stop. Not just at work. Sorry.

  • Hi, I use my own vehicle a lot for work. I receive a car allowance and have a fuel card from my employer. Is it worth tracking my kilometres at all?

    • You have a fuel card means you don't pay for fuel. You could use a diff method depending on your circumstances. Ask your accountant about claiming via the log book method.

  • I have a pretty low end job earning around $46 a year. I recently purchased an investment property which gains me ~18k a year in extra income. The money i get in rent isnt enough to cover the amount for the mortgage (400k), and I have to put in around $5200 a year of my own money to cover the mortgage. How much/if any of my own money that I have to put in can I claim back come tax time?

    • You should do your return with an accountant.

      Have you got a depreciation report?

      PM me if you want assistance with your return.

      • I was going to get an accountant to do my return this year

        No, I dont have a depreciation report.

        is there a "rule of thumb" of how much i can claim? Or can I only claim depreciation?

        Thanks for the reply

        • Turn on your PM so I can message you and discuss the deductions available to you.

        • done

  • How long can capital loss be carried forward?
    Indefinitely?

    • Correct

  • If i'm only working casually and earn within the tax-free threshold, can i claim back money i've spent on an RSA for work (has not been reimbursed)?

    • There's no point if your under the threshold as youre not paying any tax. Claiming it won't do anything.

  • For a engineer working at a construction site. Can him/her claim travelling to site everyday for work as deductible car expense

    • If you have to carry heavy tools with you. Up to 5000km.

      • What if their log book method says they've exceed 5000Km travelled for work purposes

        • 5000km is the limit. Regardless of how much you go over.

        • @nicolemcmilllon:

          5000 km is the limit if claiming under cents per km NOT logbook method.

        • @techboy:

          I assumed he means what if hia logbook shows more than 5,000km and he still wants to use cents per km method.

          Most people won't know how to claim using log book method

  • I apologise if this has been asked before (I did search each page)

    I am an Electrical & Chemical engineer working in Process Control and recently bought a 3D Printer to learn on. I'd like to know if I can claim any % as a self learning expense? Our company is heading in that direction but I suspect my discipline may restrict me i.e. it's more Civil/Mech. Eng

    • +1

      If it's not related go your current work you won't be able to claim it.

      • I beleive it to be which is the problem :-)

        Thanks for doing this, I appreciate the charity provided.

        • My pleasure

  • Hi, thank you for taking the time to help us all out with our questions. My question is, I have been working a bit of overtime this financial year. I am currently on $100,000 earned and looking like I will end up around $107,000 but I can stop doing OT and probably come in at $105,000ish. I currently have no private health insurance, is it worth me buying private health insurance or have I left it too late and is it worth me stopping doing OT so I fall under $105,000? Thank you :)

    • Get private health insurance asap for next financial year.

      • Next year I expect my earning to be around 80,000, is it still worth me getting private health insurance? I am 31 and rarely need to actually go to the doctors. Also should I be trying to keep my pay under 105,000 this financial year?

        • you want to earn $2000 less so you can save the additional $250 in tax on medicare?

        • +1

          @redfox1200:

          They are trying to avoid paying the medicare levy surcharge.

        • +1

          If you are single with no dependants then the limit is $90,000, between $90,001 and $105,000 it is 1%, between $105,001 and $140,000 it is 1.25%. So earning less than $90,000 next year you not have to pay the Medicare levy surcharge. This year you will depending on how much you earned.

        • @techboy: Thanks Techboy, so overall do you think it is worth me getting private health insurance? Seeing as how it will almost guaranteed to be useless for me next year. Also I guess it doesn't really matter if I go over the $105k limit

        • +1

          @slimdavy5: From a Tax point of view no, but from a health point of view then it is up to you weather you see a benefit in it.

          Your income for Medicare Levy Surcharge purposes is your Taxable income plus the following if they apply to you:

          (1) Reportable fringe benefits (shown on your payment summary)
          (2) Reportable superannuation contributions (which is the sum of both your reportable employer superannuation contributions and your deductible personal superannuation contributions)
          (3) Your net investment loss (which is the amount by which your financial investment deductions exceeded your financial investment income, plus the amount by which your rental property deductions exceeded your rental property income)
          (4)The amount on which family trust distribution tax has been paid.

          Remember that your taxable income is your gross income - deductions.

          If you go over the limit adding all of these together then use Taxable income + (1) x (either 1% or 1.25%)

        • @techboy: Thank you for your help, I can't give you much more than a +1. I did "purchase leave" so that will bring my taxable income down a bit but other than that I don't have fringe benefits or anything so I am sitting on exactly what it shows as :(. Thank you again, it is greatly appreciated.

  • Hi Nicole,
    I'm planning to sell a vacant land (residential) which has been held for over 15 years.
    Originally bought it to build a house but that never happened.
    Will there be GST on the sale? (Note: I'm not registered for GST either)

    • Not gst. But capital gains. And I'm guessing a big gain.

      • Thanks for the clarification. Is there a way to spread this gain over several years? or can you only do that for losses?

        • Unfortunately there is no way around it.

          Was there ever a loan on the money used to buy the land? Or did you purchase it with your own funds.

        • @nicolemcmilllon: ok, just as I suspected. Btw it was my own funds, and thank you for your response.

  • Hi there,
    Apologies if this has been asked previously. I'm based in one city and my work sent me on a conference trip for a few days to another city. Can I claim the cost of transport (taxis), food, that I incurred in the city?

    Second question: I'm in IT and recently took an IT certification related to my field of work. Can I claim the cost of my exam and any study materials that I purchased?

    Thanks.

  • Hi Nicole - Thanks for all your responses!

    Could you please provide an example of some plant and equipment items which can be fully depreciated over 12 months for an investment property?

    Thanks!

    • You should get a depreciation report.
      Plant and equipment is depreciated over its effective life. It's unusual for something to have an effective life of less than 12 months.

  • Hello,

    I donated to a kickstarter campaign (charity) in the US where the proceeds were used to fund newspaper advertisements for particular cause.

    Due to the amount donated, I was rewarded with a collectible for free. I have recently sold this.

    Because the collectible is below the $500 acquisition threshold for tax free sales on collectibles, will my sale of the collectible be subject to capital gains tax? Keeping in mind that my donation was spent on newspaper ads and not put towards the collectible.

    Thanks for your time.

    Regards

    • It shouldn't be subject to capital gains tax.

      But your initial amount paid isn't a donation either and you can't claim that as a deduction.

  • -1

    Hi nicole,

    Can I sell an asset(taxi license) to a family member on nominal value and claim Capital loss on it.
    Uber/rideshare legislation has basically eroded all the value in it and we might as well get some value out of it in form of tax savings.
    There are plenty of taxi licenses on sale but no buyers and there is no specific value (Bank valuation is NILL).

    Is there any rule on what Sale price has to be may be based on last few sales.
    Although there are no buyers but a low value may raise concern and create trouble for us.

    Thanks

  • Hi Nicole,

    Thanks so much in advance for your time, just a couple of questions for you. I plan to start trading shares on the side with three friends, and I have a full time salaried job as an accountant . I set up a small buisness with three friends, where we just pooled our $10 000 each and have started trading from a buisness account. The buisness is registered under a company structure. This financial year we turned generated about $2000 combined. So my questions are:

    1. I assume this gets taxed under the company tax rate?

    2. If I decide I need my $10 000 original stake and pull it out, do I get taxed on it (even though it was money I put in, no the profit)? Because I was already taxed when I received this money from my job. So would I get double taxed?

    3. Someone told me if your register for a abn as a company, you cannot get home loans for 2 years from big banks. However since my 'company' has no liabilities and no debts, and furthermore I still have my stable income, will making this company affect my ability to get a home loan?

    Thank you once again, I really appreciate the time you have devoted for all these questions.

      1. Yes unless you pay it as a salary to one of you if your marginal tax rates are under the tax rate of the company.

      2. Broadly speaking you won't get taxed.

      3. No it won't affect your loan ability.

      Since its a company you won't be able to do the tax return yourself. Get an accountant to do it.

  • Hi Nicole, I have questions regarding CGT. I purchased an off the plan apartment in 2014, before the apartment finished in 2017, it was sold with a gain. Would I be eligible to 50% CGT disc? How does the CGT is calculated? Will the gain be added as an income and calculated as income tax? Will it be simple to lodge tax return myself?
    Thanks.

    • It won't be simple to lodge yourself. Definitely see an accountant as they will know the types of things you can add to the cost base of the property.

  • Hi,

    Thanks for doing this!

    This one might be a bit difficult… I ended up getting one of those Centerlink debt letters in December and had to pay back around $500 (they originally wanted $5k!) for tax year 2012 and 2013. During those years, I did pay tax as I earned over the threshold, which means I also payed tax on that $500 that I have now paid back. Am I able to recoup that lost money this year? Or would I have to revise my tax returns from those prior years?

    Thanks again!

    • It's not worth it. The tax on that 500 would have been less than 100. The fees and time it would take you would cost more.

  • Hi OP,

    1. Just wondering if an auditor's work would be classed as itinerant? I travel to clients quite regularly throughout the year and receive expense reimbursements for myki travels but travel allowance (66c/km for the shorter distance of office to client or home to client) for driving. Would the vehicle costs incurred to earn the allowance be deductible? Can i claim 66c/km deduction on the travels where i've used the car and would i claim home to client or office to client?

    2. I've recently purchased a phone outright and use an optus 12 month BYO plan. Can i depreciate the cost of the phone and claim % of phone plan as deductions if i use it to call clients and tether my work laptop while out at clients?

    3. Would any expense incurred while at clients interstate be deductible if i have received per diem? Can i claim food and drinks, accomodation or petrol (not reimbursed by employer)?

    Thanks in advance for your time! Much appreciated :)

      1. Most likely no as It would not be regular (I am assuming its only like 10 or 20 times a year?

      2. yes and you also have to claim only a percentage of the phone depreciation, the same percentage of the plan costs

      3. is that per diem in your tax return as income? If not, then no

  • Hi,

    I work in IT for a company doing consulting. Often I have to go onsite to client, travelling from company location to clients location. Can I claim a deduction on my Kms travelled? What proof do I need?

    What about if I travel by train?

    And I worked from home for a month, can I get any deduction for that?

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