Tax is an eminent part of government revenue and it is necessary to pay your taxes on time. You may have several questions regarding the different tax slabs as well as the latest updates in the Australian Taxation Law. Taxation laws are subject to change and it is up to us to keep note of these changes. Missing out on paying your taxes could sum up to a huge fine and you may end up paying a lot of money as a penalty.
Tax Slabs for Various Individuals 2021-2022
Here are the tax slabs for diverse income levels for the Residents of Australia
- From $0 to $18,200 – Nil
- From $18,201 to $45,000 – 19 cents for every $1 above $18,200
- From $45,001 to $120,000 – $5,092 + 32.5 cents for every $1 above $45,000
- From $120,001 to $180,000 – $29,467 + 37 cents for every $1 above $120,000
- From $180,001 and Above – $51,667 + 45 cents for every $1 above $180,000
Here are the tax slabs for diverse income levels for the Foreign Residents of Australia
- From $0 to $120,000 – 32.5 cents for every $1
- From $120,001 – $180,000 – $39,000 + 37 cents for every $1 above $120,000
- From $180,001 and Above – $61,200 + 45 cents for every $1 above $180,000
Here are the tax slabs for diverse income levels for the Working Holiday Maker of Australia
- From $0 to $45,000 – 15%
- From $45,001 to $120,000 – $6,750 + 32.5 cents for every $1 above $45,000
- From $120,001 to $180,000 – $31,125 + 37 cents for every $1 above $120,000
- $180,001 and above – $53,325 + 45 cents for every $1 above $180,000
Here are the tax slabs for diverse income levels for children of Australia
If you are aged below 18 years, you are considered as a child and would have to pay tax under the following circumstances. (Excepted Person)
- Disabled Physically or Mentally
- Permitted a double orphan pension
- Finished your full-time studies and working on a full-time basis
For children, some of your income can be taxed at a higher rate than those of adults
Tax regulations are getting complex with time and it is mandatory for a business or an individual to maintain a clean slate. Tax officers keep monitoring your defaults on the payments so it is the duty of the business or person to keep track as well.
You may also like to read:
- A Complete Guide to Family Tax Benefit
- 7 Best Practices While Preparing a Bank Reconciliation Statement
- How to Choose the Right Bookkeeping System for Your Business
- What is Accrual in Accounting?
- Bookkeeping vs Accounting: A Simple Guide
Do you get tax deductions when you get divorced?
Under the Australian Taxation Law, one cannot claim a deduction for the maintenance of an ex-wife.
Invalid and Invalid Carer Tax Offset
If your husband/wife is unfit o work because they are an invalid or they care for an invalid, you are entitled to the Invalid or Invalid Carer Tax Offset. The person however must be receiving a Government disability payment to qualify as an Invalid. On both of your returns, you will be required to disclose information about the other partner so that any entitlements you may have to certain family tax benefits can be calculated correctly.
Most common tax returns errors
- Failure to declare income earned abroad
Sometimes we come across people who move out in search of jobs or businesses. They often forget the fact that they need to pay the Australian taxes as well. Any citizen of Australia, no matter where he relocates, is liable to pay taxes according to Australian law. Consult a good tax agent to keep yourself away from tax troubles. You are expected to pay your Australian taxes even if you are living and working overseas or abroad. You are also expected to declare all your overseas income as such or they would find it out either way, which could mean that you could be penalized for the same. It is advised to consult a good tax agent to calculate your income earned abroad because default or mistake in the payment of the taxes can lead to a hefty penalty.
Here are the kinds of income earned abroad
- Capital gains on overseas assets
- Income from Business
- Income from Investment
- Income from employment
- Pensions and Annuities
- Over-claiming of expenses
For holiday rental properties – Many Australian citizens own a rental or holiday rental property which can be claimed for a claim only under certain circumstances. For example, claims can be requested only for actual renters that rent your property. Sometimes you let your friends or family stay rent-free on certain occasions. You cannot claim tax expenses for such scenarios. Such occupancy periods should be removed when you calculate your overall expenses.
In the case of joint ownership of the property, the tax shall be calculated on the basis of the percentage of ownership of the property. For example, if you own 60% of the property and your partner owns 40% of the property, you are expected to pay tax on the 60% portion while your partner pays the tax for the 40% portion.
You might also end up in scenarios like, during the COVID-19 crisis, many of the property renters received lodgers only during certain times of the year. In such cases, your tax deductions can be adjusted accordingly with the help of a reliable tax agent and you will be taxed only during the period when it was available for rent
For residential property – You are required to list out all your earned income from residential property every financial year. This can also include the period of the year during which the property was available for rent. Although one cannot claim tax deductions for the properties that were given out for rent for the first time. Also if you have incurred costs for renovation and capital works, you can claim them every year for forty years at the rate of 2.5% of the total cost incurred.
No Purchasing Proof
Sometimes you may come across situations where you don’t make a receipt for work-related expenses. Keeping a receipt for all your work items should be made a habit as the ATO does not entertain the loss of proof for these claimable expenses. According to sources, you may get a maximum of $300 worth of these expenses without a receipt. Even then it is advised to keep receipt of these expenses as there is no free tax deduction.
What happens if you claim more deductions for a bigger tax refund?
If you are caught claiming more refunds or deductions on your taxes, you will be asked to refund some of the money based on the amount claimed. They can even claim all of the refunds in case there are some issues detected. One must have solid proof of the source of income as well as expenses for which the tax has been deducted.
How can you maintain a good tax return?
- Keep Track of your Purchases, Investments, Expenses and Earnings.
This isn’t a tedious job at all. All you need to do is note down wherever you could possibly end up paying taxes and keep a receipt for verification.
- Consult a good Tax Agent
A tax agent fits well within your budget. One can get a bigger tax return if managed efficiently. You can get in touch with Iconz Tax Agents for the best tax return solutions.
- Private Cover
A private cover get you refunds on your taxes provided you are earning an average or lower income. But this decision is solely based on the person as the cover can cost a bit out of your pocket. This is not advisable for higher income levels as they may not be much benefitted in terms of tax deductions.
- Charity Donations
All charitable donations are tax-deductible under the Australian Taxation Law. You can claim a deduction for every donation made above $2. This is a great opportunity as charity is necessary to run certain private organizations that support various kinds of people with disabilities and challenges. Just remember to keep a receipt of these donations as they are necessary to claim a deduction. The amount spent on charity will be deducted from your total taxable income.
How can Iconz Business Solutions help you handle your taxes?
Iconzbiz has been in the accounting and taxation industry for over a decade. We have been handling the taxes of various businesses as well as individuals who had been facing several issues and ending up paying more tax while forgetting to claim the returns that they were entitled to. Icons Business Solutions helps you maximize your returns and cash flow through minimal expenditure. Our expert tax agents are well versed in the tax regulations of Australia and are eager to help you reduce the burdens and tediousness of your tax calculations.
Do you have questions regarding the services that we extend such as tax preparation in NSW? Or would you prefer a personalised tax preparation service that fulfils your requirements? Get in touch with our tax accountants and tax agents to make an appointment.