Tax for Australians For Dummies (eBook)

Jimmy B. Prince (Autor)

eBook Download: EPUB

2023 | 9. Auflage
Wiley (Verlag)
978-1-394-23743-2 (ISBN)

Infos

Tackle your taxes with ease - and get the most from your next return!

Do you want to be sure you're getting the maximum tax refund? Of course you do! Luckily, Tax for Australians For Dummies makes it easy to ensure you get every cent you deserve. Written by respected tax specialist and CPA fellow Jimmy B. Prince, this fun and friendly guide walks you step-by-step through the complex Australian tax system. It explains in plain English what you can claim - and exactly what you're owed.

Tax for Australians For Dummies has you covered from every angle: from family tax benefits to electric cars, superannuation tax thresholds to working-from-home deductions, personal investments to business concessions, and much more. Full of top tips and quick facts, this new and revised 9th edition will ensure you're up to date with the latest tax changes. Whether you prepare your tax return online or go to an accountant, you'll find something inside that will take your return from 'What?' to 'Wow!' in no time.

• Includes up-to-date tax rates and superannuation thresholds
• Explains Fringe Benefits Tax and Capital Gains Tax
• Covers tax and financial hardship and relief measures

If you're an employee, investor, small-business owner, retiree or even a student, Tax for Australians For Dummies is the no-nonsense, easy-to-follow guide that answers all of your tax questions.

Jimmy B. Prince is a fellow of CPA Australia, a tax specialist, and a bestselling author. He is a former lecturer in income tax law at La Trobe University and has worked for the Australian Taxation Office.

Inhalt

Introduction 1

Part 1: How You're Taxed in Australia 5

Chapter 1: Understanding the Australian Tax System 7

Chapter 2: Taxing Australians: The Formula You Need to Know 15

Chapter 3: Lodging Your Tax Return: This One Is for the Nation 31

Chapter 4: Receiving a Visit: When the Tax Office Comes Knocking 43

Part 2: Income from Personal Exertion 51

Chapter 5: Taxing Employees: Working Class Folk 53

Chapter 6: Living in Your Castle: Main Residence 71

Chapter 7: Taxing Issues Affecting Students and Your Children 79

Part 3: Tax-Effective Investments 89

Chapter 8: Interesting Stuff: Bank Deposits and Tax 91

Chapter 9: Owning Part of the Company: Investing in Shares 97

Chapter 10: Building Your Dreams: Investing in Bricks and Mortar 111

Chapter 11: Catching Up on Capital Gains Tax 129

Part 4: Running a Business 145

Chapter 12: Structuring Your Business for Maximum Gain 147

Chapter 13: Starting a Business: On Your Mark! Get Set! Go! 163

Chapter 14: Reducing Your Small Business Tax Bill 179

Chapter 15: Collecting Tax for the Government: Goods and Services Tax 193

Chapter 16: Living on the Fringe: Fringe Benefits Tax 203

Chapter 17: Getting Wealthy: CGT and Small Business 215

Part 5: Thinking Long Term 223

Chapter 18: Preparing for Retirement Using Superannuation 225

Chapter 19: Reaping What You Sow: Receiving a Pension and Government Concessions 247

Chapter 20: Death and Taxes: Wills and Asset Distribution 259

Part 6: The Part of Tens 269

Chapter 21: Ten Ways to Minimise Your Tax while Keeping the Tax Office Happy 271

Chapter 22: Ten Common Tax Mistakes to Avoid 279

Appendix A: Taxing the Visitors: Non-Residents 289

Appendix B: Leading Tax Cases and Tax Office Publications: Study Guide 295

Glossary 307

Index 313

Textauszug

Chapter 1

Understanding the Australian Tax System

IN THIS CHAPTER

Breaking down the tax system

Progressing through the tax rates and rules

Determining sources of income

Paying tax if you’re a company

If you find tax a — excuse the pun — taxing subject, you’re not alone. Most people are confused by taxes and, of course, would rather not pay them. However, we all know the cliché: Death and taxes are the only sure things in life. So, put another way, you probably need to take some time to understand taxation.

This chapter goes over some basic info that you need to understand in order to lodge your tax return in Australia. I explain the basics of the Australian tax system, tell you how to work out sources of income, and examine what tax you need to pay if you’re setting up as a company.

Explaining the Australian Tax System

In Australia, two income tax assessment Acts are used by the federal government to levy tax on taxable income. They’re equivalent in size to four telephone books and are the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. (The reason for two Acts is because the 1936 Tax Act is gradually being replaced with the more user-friendly 1997 Tax Act.)

TAXING MATTERS: HOW IT ALL BEGAN

In 1915, the Fisher Government introduced an Act to impose a tax on income from personal exertion, income from property and company profits. The major reason given was to help fund Australia’s involvement in the Great War. However, after you let such a genie out of the bottle, stopping a politician from continually dipping a hand in your wallet or purse is nigh impossible. The federal government has since introduced three additional taxes — capital gains tax (CGT, introduced in 1985), fringe benefits tax (FBT, 1986) and the goods and services tax (GST, 2000). When you come to think about it, the federal government has just about covered every conceivable way you can be taxed. The only thing it hasn’t done is tax the air you breathe. But, wait on, hold your breath … I’m quite sure some diligent bureaucrat in Canberra is currently examining this possibility!

Understanding Your Income Tax Rates

For resident individuals, tax is levied on worldwide income on a progressive basis, referred to as marginal tax rates. Your marginal tax rate can vary between 0 per cent and 45 per cent (marginal tax rates are detailed in Chapter 5). This rating system means the more income you earn, the greater the amount of tax you’re liable to pay.

Australia has numerous federal, state and territory, and local government taxes that you need to deal with.

The Australian Taxation Office (Tax Office or commonly abbreviated to just ATO) is the federal government authority responsible for administering Australia’s tax laws. To help you meet your legal requirements, the Tax Office regularly issues free-of-charge fact sheets, income tax rulings, tax determinations and interpretative decisions to explain tax issues that need clarification. You can access these fact sheets and tax rulings by visiting the Tax Office’s website (www.ato.gov.au). I reference many of these useful resources through this book too!

If you want to quickly know your tax obligations in a nutshell, visit the Tax Office website (www.ato.gov.au) and check out ‘Tax in Australia: what you need to know’. See also ‘Australian business taxes’ on the Australian Trade and Investment Commission website (globalaustralia.gov.au).

Federal taxes

The most important federal taxes include the following:

• Capital gains tax (CGT) is paid on gains you make when you sell assets you own and on the occurrence of certain CGT events. Your main residence is exempt from tax and some other concessions may potentially be available (see Chapters 11 and 17 for more).
• Customs duty is paid on certain goods you import into Australia (for example, cameras, perfume, alcohol and cigarettes).
• Excise duty is levied on certain goods manufactured in Australia, such as alcohol and tobacco. (The hefty hike in excise duty on cigarettes is enough to make you quit smoking for good!)
• Fringe benefits tax (FBT) applies to certain benefits you may receive (for example, your employer provides you with a car for private use). See Chapter 16.
• Fuel tax is levied on petrol.
• Goods and services tax (GST) is applied to most purchases and sales. See Chapter 15.
• Income tax is paid on income you derive from worldwide sources. See Chapters 5 to 7.
• The Medicare levy is used to help fund the Australian health system. The rate is 2 per cent of your taxable income.
• Withholding tax is paid on certain income derived by a non-resident (see Appendix A).

In the 2023–24 tax year, if you earned below $24,276 as an individual or $40,939 as a couple/family, you were exempt from paying the Medicare levy. Note: For each dependent child, the family threshold increases by $3,760. For single seniors and pensioners, the threshold is $38,365 and for families it’s $53,406.

If you don’t have private health insurance, you may be liable to pay a Medicare levy surcharge (MLS) if you earn more than a certain amount. For the 2023–24 tax year, the levy is 1.0 per cent if your taxable income (for the purposes of calculating your MLS) is between $93,001 and $108,000 for individuals or between $186,001 and $216,000 for couples/families. The MLS increases (in stages) to 1.5 per cent if you’re an individual earning more than $144,001, or couples/families earning more than $288,001. Note: The family threshold for the MLS increases by $1,500 for each dependent child after the first child. For more details see Tax Office fact sheet ‘Medicare levy surcharge income, thresholds and rates’ on the Tax Office website (www.ato.gov.au).

State and local taxes

Following are some of the taxes levied by states:

• Gambling tax is levied on certain gambling transactions (such as licence fees and poker machines).
• Land tax is paid on some property holdings.
• Payroll tax is levied on wages and fringe benefits an employer pays employees.
• Stamp duty applies to certain transactions, particularly when you buy a property.

In a local context, property valuation and rates charges fund local government services (such as rubbish collection).

Taxing Major Income Streams

Income is normally derived from three major sources:

• Income from personal exertion, such as salary and wages, bonuses and commissions you earn as an employee, and any allowances you receive (see Chapter 5)
• Income from property and investments, such as interest, dividends, rent, annuities and royalty payments (see Chapters 8 to 10)
• Income from carrying on (or running) a business, such as profits you earn from your business activities (see Chapter 12)

Taxing your treasures: CGT assets

You may be liable to pay capital gains tax (CGT) on profits you make when you sell CGT assets such as shares, real estate and collectables. However, just 50 per cent of the capital gain you make is liable to tax if you own the CGT asset for more than 12 months. This concept is discussed in more detail in Chapter 11.

Under the CGT provisions, your main residence is exempt from tax. If you’re temporarily absent from Australia, the good news is your main residence continues to be exempt for an indefinite period if the property isn’t used to earn assessable income. Alternatively, if you lease the property while you’re away, your main residence is exempt from tax for up to six years (for more details, see Chapter 6).

Bringing home the money: International sources of income

As an Australian resident, you’re required to disclose income you earn from worldwide sources, and non-residents are required to disclose income that only has an Australian source. Unfortunately, the tax Acts don’t provide a statutory definition of source. So it basically boils down to a ‘practical hard matter of fact’. Generally, three key tests are used to determine the origin or ‘source’ of income:

• The place where you perform the services
• The place where you sign the contract to perform those services
• The place of the payment

CHECKING YOUR RESIDENCY STATUS

Your residency status determines the amount of tax you’re liable to pay, because different tax rules and tax rates apply to residents and non-residents.

A resident of Australia is a person who normally lives in Australia and has a permanent home and job in Australia (commonly known as the residency test). In most cases, determining residency is relatively straightforward (for instance, you’re physically present in Australia for 183 days of the tax year or more). But this determination can become a little cloudy...

Produkt-Details

• Erscheint lt. Verlag: 22.12.2023
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber ► Beruf / Finanzen / Recht / Wirtschaft ► Geld / Bank / Börse
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management
• Schlagworte: Australian tax • Australian tax law • Australian tax system • Australien /Wirtschaft, Volkswirtschaft • Business & Management • Business Self-Help • Business Tax • business tax deductions • Capital Gains Tax • CGT • common tax mistakes • FBT: fringe benefits tax • Federal Budget • file taxes • filing taxes • Finance & Investments • Finanz- u. Anlagewesen • how to file taxes • lodge taxes online • lodge tax return • maximise refund • maximum tax refund • personal finance • Private Finanzplanung • Ratgeber Wirtschaft • superannuation tax • tax changes • tax deductions • tax expenses • tax for small businesses • tax help • tax in Australia • tax instructions • tax law cases • Tax rates • tax rebates • tax refund • tax relief • tax thresholds • Tax tips • Wirtschaft u. Management • working from home concessions
• ISBN-10: 1-394-23743-X / 139423743X
• ISBN-13: 978-1-394-23743-2 / 9781394237432