Holy shit, this, in conjunction with the instant asset write off for business.
Lost count of the number of clients who thought that buying a computer off old ‘tax-time-savings’ Harvey meant they got it back fully from government.
It reduces your taxable income amount, so essentially comes “off the top”. It saves you an amount of tax equal to your highest tax bracket.
For example, if you’re on $100,000:
* Your first $18,200 is tax free
* From $18,200 to $90,000 (iirc) is taxed at 32.5%
* From $90,001 to $100,000 is tax at 37%
So an eligible tax deduction of $100 would save you $37 ($100x37%) in tax.
(The long, long answer is that there are other factors - Medicare levies, HECS debt, family tax benefits - and also not all tax deductions are the same, as they may reduce tax owed but not change your income amount for calculating those other factors.)
Don't forget that there's no point getting a pay raise if you go into the next tax bracket. They'll just tax you more and you could end up with less...
Are you trying to say this is a common misconception people can have? Because your comment makes it seem like you're stating a fact, hence the downvotes.
What gets confusing though is that IS how HECS-HELP repayments work. You earn $80,935, that full amount is 'taxed' at 5% so $4,046. You earn $80,936 and it's 'taxed' at 5.5% so $4,451. By earning $1 more you're paying an extra $400. Medicare levy surcharge is similar.
Obviously HECS debt is not a tax and is something you'll have to pay off in the long run but just hitting the next bracket can sting and I think these are some of the reasons people get confused with how regular tax works.
HELP debt \*is\* weird. Back at an old full time job, I was earning something like $52k. I forget the exact number but it was below the threshold for HELP repayments (at the time the threshold was like $55k)
I was also doing freelance work on the side. That freelance work pushed me over the threshold limit and I was slugged with a FOUR THOUSAND DOLLAR bill. I had assumed that the HELP repayment would work in the same way as progressive tax, where you pay a percentage of your earnings over the threshold. But no, with HELP, the percentage reflects the entire amount of income.
It was OK I guess because now the debt is $5k less, but at the time, I remember wondering why I had bothered doing the freelance work. I basically did about $5k in freelance work to then hand over most of it for the HELP debt. Oh well.
Didnt mean to come off as a dick. I hear this all the time.
"I'm earning to much money with my education and now I have to pay back the money for my education" *insert face palm*
I get it. I was annoyed at the time because I earned something like $55k over a year and got slugged with an unexpected $4k bill at tax time. I think I might have had to borrow money from my folks to pay it.
Yeah, I was keeping a close eye on it last FY because I went from part time work the first half of the FY to full-time on 2021. I managed to just keep under it but was very close.
I feel you.
Years ago I was made redundant in June, got a payout of about 4k. I was earning $1k under hecs payback limit. It took months to get another job, but payout paid the bills.
But come tax time, I get a bill for $4k just in hecs. It took me a year of payment plan and harrassment from ATO to pay it.
It's utter bullshit.
did that freelance work have any tax taken out at all?
was it a very big amount of extra money?
did your full time employer take out the correct amounts based on your having a HECS debt?
>did your full time employer take out the correct amounts based on your having a HECS debt?
As I earned under the threshold at the day job, they didn't take anything out for HECS at all. Why would they?
But if you add the extra freelance money on, then I was above the threshold. From the ATO's POV, I had earned enough money over the year to pay part of my HECS debt, but as none had been taken out of the day job, I had to pay the entire lump at tax time.
>was it a very big amount of extra money?
No. It was literally $5k. I earned $5k through freelance then, because of being pushed over the threshold, had to pay $4k at tax time for HECS.
Theoretically you could earn a dollar below the threshold at a day job and pay nothing week-to-week. But if you earn $2 in freelance income, then suddenly you're hit with a massive bill at tax time.
So in certain circumstances it is actually not worth earning extra money because of the tax implications. (Although that HECS payment did pay off a chunk of HECS, so I suppose its money I no longer owe, so it wasn't totally pointless).
There's a couple things I don't understand.
1) I think if you earned just over the threshold it used to be 2% of your income (and it's now 1%) that accounts for just over 1k tax. Maybe it was once more than that but I don't think it was ever 6 or 7% for someone earning under 60k
2) normally on a second job, because you can't (shouldn't) claim the tax free threshold you have at least one third of your income, if not more, withheld.
These two things are why normally people don't end up running into issues when they have multiple jobs.
Sounds like you or your second employer made a mistake not withholding tax.
Of course the net result of earning just enough to be over a HECS threshold is that you pay more tax in the short term, but once you've paid it off it's gone forever so it's nowhere near as bad as the couple of other weird thresholds where you are permanently worse off for exceeding them (medicare levy surcharge, div 3--, some family tax things)
I think your confusion comes from the fact that I didn't have a second job; I was working freelance. That means my freelance income was entirely untaxed until the end of the year when I had to claim it.
Why are people downvoting this guy? He's pointed out a weird scenario where earning more CAN appear to net you less money ... At least in the short run.
Its simple forced savings and yes you can invest it elsewhere but...... just keep getting the money taken from your account. You didnt have it previously, so you wont miss it. Every tax time = a free $8k.
See also childcare subsidy (childcare rebate at the time).
Not sure about now, but at least a year or two back… no tapering, so reach threshold, no subsidy. So $1 could cost you $10k.
The threshold was quite high, but still same issue.
Actually Medicare has a shade in, think it’s around 20% of excess until it hits 2%. Can’t recall exactly cos the tax software calculates it all for me.
Could they be talking about the MLS rates? Not 100% how they work but say you get a pay bump from $90,000 to $90,001, would you now owe 1% of your taxable income for the surcharge (assuming you didn't have PHI) so that $1 pay rise has costed you $900. I know this isn't really a net pay thing and more of a EOFY thing.
Side note: Ive also has an work mate tell they they were actually increasing their net pay by salary sacrificing into super because of the salary they were on at the time.
Um it is a fact for around $2000 of income, used to be somewhere around $80000 but that was some years ago. Why? HECS repayments are not progressive, as soon as you hit a certain level your HECS repayments move from x% to y% to z% of TOTAL income. So yes, the original comment about income tax is correct, but not in relation to any HECS repayments. btw this client was a schoolteacher, so already treated badly by society, and it broke my heart to tell her that her pay rise has led to less take home pay. Source: am a registered tax agent and also CA/CPA (yes both; joined CAANZ and was going to leave CPAA due to the whole Alex Malley thing, but couldn’t bring myself to leave)
Yeah obviously you don't end up with less. But, pay raises do get less beneficial for you over time.
The more you earn the less you see of your raise. As you're starting out, you get 81c from every new dollar. In the top bracket that drops to 55c.
Does it have to be your main income? Like if you worked a normal salary job but say you wrote a book and receive a small payout from a distributor? Can all your income be averaged or just the portion applicable?
If you have kids and wanna open an index fund on behalf of them (giving them a head start and all), choose a minor trust account and purchase funds that allow DSSP e.g. AFI. Any gains or dividends share repurchase from a DSSP *will not be taxed at all*.
A lot of people on this sub sometimes hastily chooses to open a minor trust share account for their kids but then proceed to buy all sorts of index funds, like vanguard, without realising what are the tax implications or even considering how much it can erode future gains. For example, any profits above $416 _per year_ for a minor will be added to the parent's income tax thus can incur up to 66% tax if you are on the highest bracket!
DSSP or nothing. :)
That's true in some sense but it is a minor trust so when you hand it over to your kids once they hit legal age, it won't be classified as a capital gains event (as of 2021).
It is actually a retirement strategy too since the idea is that you accumulated enough up till retirement age so once you are ready to "retire", you switch off DSSP and get the dividends as income, which will be taxed accordingly, and the idea is that since you are retired, your income is $0 by then.
It's true in the sense that a $5,000 investment now might be $200,000 over a lifetime (bullshit figures for an example), and if it's all grown from DSSP then it still only has a cost base of $5,000, meaning the gain is $195,000 (subject to losses, discount, etc)
Sure! Google DSSP and you will find loads of resources on this but here is one that will help - https://strongmoneyaustralia.com/tax-efficient-dividend-investing-dssp/
If you do things properly you can pay zero tax, all you have to do is make a multi-billion dollar international corporation and write your entire revenue from Australia off as losses.
If you are young, and considering a personal tax accountant to save money. You don’t have to go to them every year.
Get them to do your first tax return for you, then copy the deduction method they used for next years tax return.
Well, if you ask this forum, you find things like:
1) A tradie claiming his LV purse
2) The office guy that claims his Nike shoes to walk from the bus station to the office
3) The lady getting botox for the Zoom chats
List is too long, I have a separate list for property “investors”
I’m curious about this. So if I liquidate an asset that is currently down enough $ to offset my current capitol gains, I won’t have to pay tax and can use the new capitol to invest back into that same asset or another? Are there any implications here?
Just be wary that you don't involve yourself in a ['Wash Sale'](https://www.morningstar.com.au/learn/article/avoid-this-expensive-tax-time-mistake/168452). Reducing capital gains with capital losses is fine, buying back into shares you sold for a capital loss in a short period of time is not.
Someone else mentioned wash sale, but also note that capital losses are applied against capital gains *before* the discount is, so it's not quite as effective as you might initially think.
* **correct** $10,000 gross gain, less $5,000 loss, equals $5,000 gain eligible for discount, equals $2,500 net capital gain
* **incorrect** $10,000 gross gain equals $5,000 net gain, less $5,000 loss, equals $0 net capital gain
Yep. Tax wise you have not gained or lost anything. There are some benefits when the capital gains are more than 12 months. Another one would be the wash sale rules. Other than those 2 i dont see any other problem.
Okay rad. That’s a really interesting strategy. I guess it’s time to sum up my gains and losses for the year and see if there is anything I can liquidate to make it balance. Awesome!
If your tax return resulted in a tax debt, you can earn a tiny little bit of interest from the ATO if you pay it off early(note: earlier than 14 days before it is due): https://www.ato.gov.au/calculators-and-tools/credit-for-interest-on-early-payments/
But if you're confident you can beat those interest rates investing the money somewhere else before the due date of the debt, then you can wait until the exact date the debt is due before paying it, lol.
-If you go to an accountant you can claim a $ amount of travel to the accounting firm when you do your tax.
-A lot of people forget that you can claim mobile costs if you use your phone for work..
You can claim your handbag or work briefcase if you use it for work
https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/tools,-equipment-and-other-assets/
You can deduct 52 cents per hour for work from home for your utilities (electricity, gas and water), and still claim a portion of your rent, phone and internet, and depreciation on work equipment (e.g. desk, monitor etc).
Or you could claim 82 cents per hours for a catch all which will prevent you from claiming any of the above.
Tax accountants usually go for option one for their clients.
The 52c method includes furniture within the 52c. You can claim depreciation of equipment such as computer and mobile phone on top of the 52c but not desk or chair.
Last time I looked it worked out better with tbe 52c if you bought equipment (desk etc) but the 82c was better if you were already set up.
Edit. Desk/chair were under threshold cost to claim in a chunk not as depreciating assets.
Claiming it as a chunk is still depreciation, it's just depreciating it straight away. There's an example in this article of a chair that's under the $300 limit and they say it can't be claimed. https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/home-office-expenses/?anchor=Examplescomparingmethods#Examplescomparingmethods
Yes. But you can only claim rent for the portion of your home that is your office. If your home is 100m2, and you work out of a room that is 3x3 m2, you can only claim 9% of your rent. Of course, you also then have to further calculate your daily rent rate and figure out days worked from home.
If you have an internet bill and some hardware to claim you can usually end up with a bigger deduction by disclosing those all rather than just using the shortcut 82c method
The shortcut is ok for some people but if you take the time to work out your deductions it’ll probably be better to go for the 52c way
Some tax are not progressive, if you exceed the threshold by $1 you will have to pay the tax. Examples include MLS and Div 293 tax. I learned the hard way on Div 293 as a redundancy payout few years back took me over the limit unexpectedly, as that year my income almost doubled as an one off.
Div293 is progressive
It only applies to the amount of super that's above the 250k threshold. For example if wage and super come to $260k, only 10k of your super contributions are taxed at 30%.
it's not progressive because super concessional contribution is capped at 25k - so earning over the div293 threshold means you get less benefit from that 25k.
to make this progressive, you'd have to have an uncapped concessional contribution, but tax it more and more as you contribute more; e.g. the 1st 25k is taxed the same for everyone, then the next 25k is taxed at a higher rate, etc.
For it to not be progressive in the way it's being spoken about here earning $250,001 would have the entire super contributions taxed at 30%. It doesn't work like this, in that example only $1 would be taxed at 30%
Add to that it's progressive in the traditional definition - earn more pay a higher rate.
Sorry to be harsh, but this is not correct, it is very very wrong on all levels
If you earn over $250k Div 293 is applied on your total concessional contributions. SG + any personal concessional amounts.
Not sure how to point out the errors in your initial comment as it logically doesn’t make sense.
Well done for being the most confidently wrong person on reddit today
https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Division-293-tax---information-for-individuals/?page=3#How_much_your_Division_293_tax_will_be
Shows an example of income plus super coming in at $255k, and div293 applied to $5k
Well done kiddo, well done.
More embarrassed actually as I deal with this stuff a lot of the time. But I think 100% of the time my clients Incomes are well above $250k so the whole amount gets taxed at 30%. Never had it actually apportioned like your example.
I made a similar comment about HECS (noting it's not exactly tax) and MLS above and I'm not sure why I'm getting down voted... This is how these work isn't it?
repayment income (RI) is taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.
Yes, but my point was the amount you have to pay is applied to your full repayment income. It's not like tax where you pay 34.5% on every dollar over $45k. If you go one dollar into the next bracket, it's not just the $1 that has the new percentage applied.
Once you’ve sorted through an accounts worth of receipts since July 1st, headings and meanings become what ever they want. Multiply that by 100s and thousands and put in a Bunnings tax time marketing campaign and you’re sitting low key easy days
New barbecue setting, gazebo, lawn mower, hedge trimmer, gardening tools, cordless drill, few cans of spray paint to tag up the Ipswich line and all while operating at a lose for 20-21. Tax time win like no other!
You can spread your donations over 5 years if you know that your marginal tax rate is significantly higher the next few years.
https://www.ato.gov.au/Forms/Election-to-spread-gift-deduction/
Invest in an ESIC and get 20% back as a tax rebate (rebate, not deduction)
I'm also exploring the implication of donating in kind to a DGR status charity and the implications on tax deductions.
Don't forget any work from home costs. Also, car travel for work can be claimed if it's not too and from the office.
Remember capital losses can only offset capital gains.
Essentially, yes, but you need to make sure the company fits the ESIC status.
https://www.ato.gov.au/Business/Tax-incentives-for-innovation/In-detail/Tax-incentives-for-early-stage-investors/
From what I understand, it's not an official title. You have to self assess if the company fits the criteria.
There is a section if you do your tax yourself to input the ESIC information. You don't just take it off, you have to input the amount you invested in a special section.
A $100 deduction does not give you $100 back.
And going up a tax bracket doesn't mean all your taxable income is taxed at that rate.
Yes a huge misconception I think even I only realised this a few years ago (I’m in my 30s)
Yeah, ‘I held off invoicing a guy for two weeks so I wouldn’t have all my income taxed at…%’
I know this might sound dumb to the readers here but I've corrected 2 friends in the last month on this exact mistake
Yes it's amazing how many people have n idea about something so fundamental because they just never do their own tax return.
Holy shit, this, in conjunction with the instant asset write off for business. Lost count of the number of clients who thought that buying a computer off old ‘tax-time-savings’ Harvey meant they got it back fully from government.
While I know you don't get the whole amount back, I don't know how much you get back either. How is it calculated? Thanks.
It reduces your taxable income amount, so essentially comes “off the top”. It saves you an amount of tax equal to your highest tax bracket. For example, if you’re on $100,000: * Your first $18,200 is tax free * From $18,200 to $90,000 (iirc) is taxed at 32.5% * From $90,001 to $100,000 is tax at 37% So an eligible tax deduction of $100 would save you $37 ($100x37%) in tax. (The long, long answer is that there are other factors - Medicare levies, HECS debt, family tax benefits - and also not all tax deductions are the same, as they may reduce tax owed but not change your income amount for calculating those other factors.)
Thanks for taking the time to explain this for me.
Don't forget that there's no point getting a pay raise if you go into the next tax bracket. They'll just tax you more and you could end up with less...
Are you trying to say this is a common misconception people can have? Because your comment makes it seem like you're stating a fact, hence the downvotes.
I've heard that argument soooo many times. I don't know why people don't understand these progressive tax system
My eyes twitch every time colleagues say it. Extra distressing when my bosses say it...
What gets confusing though is that IS how HECS-HELP repayments work. You earn $80,935, that full amount is 'taxed' at 5% so $4,046. You earn $80,936 and it's 'taxed' at 5.5% so $4,451. By earning $1 more you're paying an extra $400. Medicare levy surcharge is similar. Obviously HECS debt is not a tax and is something you'll have to pay off in the long run but just hitting the next bracket can sting and I think these are some of the reasons people get confused with how regular tax works.
HELP debt \*is\* weird. Back at an old full time job, I was earning something like $52k. I forget the exact number but it was below the threshold for HELP repayments (at the time the threshold was like $55k) I was also doing freelance work on the side. That freelance work pushed me over the threshold limit and I was slugged with a FOUR THOUSAND DOLLAR bill. I had assumed that the HELP repayment would work in the same way as progressive tax, where you pay a percentage of your earnings over the threshold. But no, with HELP, the percentage reflects the entire amount of income. It was OK I guess because now the debt is $5k less, but at the time, I remember wondering why I had bothered doing the freelance work. I basically did about $5k in freelance work to then hand over most of it for the HELP debt. Oh well.
You mean you done 5k of work to pay of 5k of debt. Just like every one. It's a loan not a tax.
Yes you’re quite right. But it was annoying at the time.
Didnt mean to come off as a dick. I hear this all the time. "I'm earning to much money with my education and now I have to pay back the money for my education" *insert face palm*
I get it. I was annoyed at the time because I earned something like $55k over a year and got slugged with an unexpected $4k bill at tax time. I think I might have had to borrow money from my folks to pay it.
Yeah, I was keeping a close eye on it last FY because I went from part time work the first half of the FY to full-time on 2021. I managed to just keep under it but was very close.
I feel you. Years ago I was made redundant in June, got a payout of about 4k. I was earning $1k under hecs payback limit. It took months to get another job, but payout paid the bills. But come tax time, I get a bill for $4k just in hecs. It took me a year of payment plan and harrassment from ATO to pay it. It's utter bullshit.
did that freelance work have any tax taken out at all? was it a very big amount of extra money? did your full time employer take out the correct amounts based on your having a HECS debt?
>did your full time employer take out the correct amounts based on your having a HECS debt? As I earned under the threshold at the day job, they didn't take anything out for HECS at all. Why would they? But if you add the extra freelance money on, then I was above the threshold. From the ATO's POV, I had earned enough money over the year to pay part of my HECS debt, but as none had been taken out of the day job, I had to pay the entire lump at tax time. >was it a very big amount of extra money? No. It was literally $5k. I earned $5k through freelance then, because of being pushed over the threshold, had to pay $4k at tax time for HECS. Theoretically you could earn a dollar below the threshold at a day job and pay nothing week-to-week. But if you earn $2 in freelance income, then suddenly you're hit with a massive bill at tax time. So in certain circumstances it is actually not worth earning extra money because of the tax implications. (Although that HECS payment did pay off a chunk of HECS, so I suppose its money I no longer owe, so it wasn't totally pointless).
There's a couple things I don't understand. 1) I think if you earned just over the threshold it used to be 2% of your income (and it's now 1%) that accounts for just over 1k tax. Maybe it was once more than that but I don't think it was ever 6 or 7% for someone earning under 60k 2) normally on a second job, because you can't (shouldn't) claim the tax free threshold you have at least one third of your income, if not more, withheld. These two things are why normally people don't end up running into issues when they have multiple jobs. Sounds like you or your second employer made a mistake not withholding tax. Of course the net result of earning just enough to be over a HECS threshold is that you pay more tax in the short term, but once you've paid it off it's gone forever so it's nowhere near as bad as the couple of other weird thresholds where you are permanently worse off for exceeding them (medicare levy surcharge, div 3--, some family tax things)
I think your confusion comes from the fact that I didn't have a second job; I was working freelance. That means my freelance income was entirely untaxed until the end of the year when I had to claim it.
This happened to me too! It was painful so i had to pay that back on a plan whilst saving to pay again the next tax year
Why are people downvoting this guy? He's pointed out a weird scenario where earning more CAN appear to net you less money ... At least in the short run.
Just finished my hecs debt last month. An extra 8k in the hand per year now! 👌
Very excited that after the EOFY I will finally be free of Hecs debt for the first time in 20 years
Its simple forced savings and yes you can invest it elsewhere but...... just keep getting the money taken from your account. You didnt have it previously, so you wont miss it. Every tax time = a free $8k.
See also childcare subsidy (childcare rebate at the time). Not sure about now, but at least a year or two back… no tapering, so reach threshold, no subsidy. So $1 could cost you $10k. The threshold was quite high, but still same issue.
Actually Medicare has a shade in, think it’s around 20% of excess until it hits 2%. Can’t recall exactly cos the tax software calculates it all for me.
I was taught this misconception in school by our business studies teacher.
Could they be talking about the MLS rates? Not 100% how they work but say you get a pay bump from $90,000 to $90,001, would you now owe 1% of your taxable income for the surcharge (assuming you didn't have PHI) so that $1 pay rise has costed you $900. I know this isn't really a net pay thing and more of a EOFY thing. Side note: Ive also has an work mate tell they they were actually increasing their net pay by salary sacrificing into super because of the salary they were on at the time.
Um it is a fact for around $2000 of income, used to be somewhere around $80000 but that was some years ago. Why? HECS repayments are not progressive, as soon as you hit a certain level your HECS repayments move from x% to y% to z% of TOTAL income. So yes, the original comment about income tax is correct, but not in relation to any HECS repayments. btw this client was a schoolteacher, so already treated badly by society, and it broke my heart to tell her that her pay rise has led to less take home pay. Source: am a registered tax agent and also CA/CPA (yes both; joined CAANZ and was going to leave CPAA due to the whole Alex Malley thing, but couldn’t bring myself to leave)
Add an /s next time I suppose.
Yeah obviously you don't end up with less. But, pay raises do get less beneficial for you over time. The more you earn the less you see of your raise. As you're starting out, you get 81c from every new dollar. In the top bracket that drops to 55c.
That's why you gotta practice tax avoidance... Oops, I meant tax minimisation/optimisation
The only time where this is true is if you have a HECS-HELP debt. You will never be worse off because of income tax from a raise.
Yeh that's another big misconception I'm always explaining to people.
You need to add /s (sarcasm)
Best tip here. Seems to be a pretty common misunderstanding.
Everyone thinking negative gearing is the bees knees thinks all the losses are claimed back at tax time. Pffft lol
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It's really surprising how few people know about this. I am an accountant and I have met accountants who have never heard of this.
This terrifies me because the only reason I pay an accountant is to know shit like this
Does it have to be your main income? Like if you worked a normal salary job but say you wrote a book and receive a small payout from a distributor? Can all your income be averaged or just the portion applicable?
From what I just read, it only affects the portion applicable.
Don't spend money just to get a deduction. Only if you really need to.
If you have kids and wanna open an index fund on behalf of them (giving them a head start and all), choose a minor trust account and purchase funds that allow DSSP e.g. AFI. Any gains or dividends share repurchase from a DSSP *will not be taxed at all*. A lot of people on this sub sometimes hastily chooses to open a minor trust share account for their kids but then proceed to buy all sorts of index funds, like vanguard, without realising what are the tax implications or even considering how much it can erode future gains. For example, any profits above $416 _per year_ for a minor will be added to the parent's income tax thus can incur up to 66% tax if you are on the highest bracket! DSSP or nothing. :)
Not taxed at all… until they sell — then taxed all at once
That's true in some sense but it is a minor trust so when you hand it over to your kids once they hit legal age, it won't be classified as a capital gains event (as of 2021). It is actually a retirement strategy too since the idea is that you accumulated enough up till retirement age so once you are ready to "retire", you switch off DSSP and get the dividends as income, which will be taxed accordingly, and the idea is that since you are retired, your income is $0 by then.
It's true in the sense that a $5,000 investment now might be $200,000 over a lifetime (bullshit figures for an example), and if it's all grown from DSSP then it still only has a cost base of $5,000, meaning the gain is $195,000 (subject to losses, discount, etc)
Do you have a link you can share on this? Interested to research more
Sure! Google DSSP and you will find loads of resources on this but here is one that will help - https://strongmoneyaustralia.com/tax-efficient-dividend-investing-dssp/
I'm pretty sure there are some big cons to this approach though.
If you do things properly you can pay zero tax, all you have to do is make a multi-billion dollar international corporation and write your entire revenue from Australia off as losses.
Is it really that easy? Do you think i have enough time to do this before tax time
With the right attitude you can!
Only if you stop eating so much smashed avo
I worked with someone who claimed the cost of her sunglasses. The ATO said she had to keep a logbook of their use during working hours.
I claim mine. Teacher here. Required to do yard duties, so can claim sun protective equipment.
If you are young, and considering a personal tax accountant to save money. You don’t have to go to them every year. Get them to do your first tax return for you, then copy the deduction method they used for next years tax return.
Well, if you ask this forum, you find things like: 1) A tradie claiming his LV purse 2) The office guy that claims his Nike shoes to walk from the bus station to the office 3) The lady getting botox for the Zoom chats List is too long, I have a separate list for property “investors”
You forgot the consultant that needed cosmetic dental lol
Please tell me that list is satire.
Absolutely true
Ooo what's the property investor list?
Have large capital losses so you don't have to worry about CGT.
Is this an asx_bets tip or something real?
I’m curious about this. So if I liquidate an asset that is currently down enough $ to offset my current capitol gains, I won’t have to pay tax and can use the new capitol to invest back into that same asset or another? Are there any implications here?
Just be wary that you don't involve yourself in a ['Wash Sale'](https://www.morningstar.com.au/learn/article/avoid-this-expensive-tax-time-mistake/168452). Reducing capital gains with capital losses is fine, buying back into shares you sold for a capital loss in a short period of time is not.
Good to know. Can I use that capitol on other shares in hour example? Is it more about leaving and reentering a position or?
Someone else mentioned wash sale, but also note that capital losses are applied against capital gains *before* the discount is, so it's not quite as effective as you might initially think. * **correct** $10,000 gross gain, less $5,000 loss, equals $5,000 gain eligible for discount, equals $2,500 net capital gain * **incorrect** $10,000 gross gain equals $5,000 net gain, less $5,000 loss, equals $0 net capital gain
Ahh that’s a good point. Thanks so much.
Yep. Tax wise you have not gained or lost anything. There are some benefits when the capital gains are more than 12 months. Another one would be the wash sale rules. Other than those 2 i dont see any other problem.
Okay rad. That’s a really interesting strategy. I guess it’s time to sum up my gains and losses for the year and see if there is anything I can liquidate to make it balance. Awesome!
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If your tax return resulted in a tax debt, you can earn a tiny little bit of interest from the ATO if you pay it off early(note: earlier than 14 days before it is due): https://www.ato.gov.au/calculators-and-tools/credit-for-interest-on-early-payments/ But if you're confident you can beat those interest rates investing the money somewhere else before the due date of the debt, then you can wait until the exact date the debt is due before paying it, lol.
-If you go to an accountant you can claim a $ amount of travel to the accounting firm when you do your tax. -A lot of people forget that you can claim mobile costs if you use your phone for work..
got to spend money to make money (about one third of what I spend in my case) with these tax tips. I think I'll keep doing it myself.
Yea if your tax return is pretty simple with the same deductions like laundry, tools, protective clothing etc. Then do it yourself.
Hundreds of tips by Terry on property chat - https://www.propertychat.com.au/community/threads/terrys-tax-tips.3010/
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Terry treasures the task of telling tantalising tax tips to tool-toting tradies
You can claim your handbag or work briefcase if you use it for work https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/tools,-equipment-and-other-assets/
Louis Vuitton tool belt, Gucci Nail holder
As per my post, my tradie friend is back
You can deduct 52 cents per hour for work from home for your utilities (electricity, gas and water), and still claim a portion of your rent, phone and internet, and depreciation on work equipment (e.g. desk, monitor etc). Or you could claim 82 cents per hours for a catch all which will prevent you from claiming any of the above. Tax accountants usually go for option one for their clients.
The 52c method includes furniture within the 52c. You can claim depreciation of equipment such as computer and mobile phone on top of the 52c but not desk or chair.
Last time I looked it worked out better with tbe 52c if you bought equipment (desk etc) but the 82c was better if you were already set up. Edit. Desk/chair were under threshold cost to claim in a chunk not as depreciating assets.
Claiming it as a chunk is still depreciation, it's just depreciating it straight away. There's an example in this article of a chair that's under the $300 limit and they say it can't be claimed. https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/home-office-expenses/?anchor=Examplescomparingmethods#Examplescomparingmethods
Can I claim rent as a WFH employee with a dedicated home office?
Yes. But you can only claim rent for the portion of your home that is your office. If your home is 100m2, and you work out of a room that is 3x3 m2, you can only claim 9% of your rent. Of course, you also then have to further calculate your daily rent rate and figure out days worked from home.
Is there a particular reason tax accountant go for option 1?
If you have an internet bill and some hardware to claim you can usually end up with a bigger deduction by disclosing those all rather than just using the shortcut 82c method The shortcut is ok for some people but if you take the time to work out your deductions it’ll probably be better to go for the 52c way
It gives the best deduction almost always.
Earn less to pay less taxes!
Some tax are not progressive, if you exceed the threshold by $1 you will have to pay the tax. Examples include MLS and Div 293 tax. I learned the hard way on Div 293 as a redundancy payout few years back took me over the limit unexpectedly, as that year my income almost doubled as an one off.
Div293 is progressive It only applies to the amount of super that's above the 250k threshold. For example if wage and super come to $260k, only 10k of your super contributions are taxed at 30%.
In that sense yes. What I meant was it has only one tax rate 30% which applies as soon as income crosses $250k.
it's not progressive because super concessional contribution is capped at 25k - so earning over the div293 threshold means you get less benefit from that 25k. to make this progressive, you'd have to have an uncapped concessional contribution, but tax it more and more as you contribute more; e.g. the 1st 25k is taxed the same for everyone, then the next 25k is taxed at a higher rate, etc.
For it to not be progressive in the way it's being spoken about here earning $250,001 would have the entire super contributions taxed at 30%. It doesn't work like this, in that example only $1 would be taxed at 30% Add to that it's progressive in the traditional definition - earn more pay a higher rate.
you are braindead dude i wouldnt continue posting
Sorry to be harsh, but this is not correct, it is very very wrong on all levels If you earn over $250k Div 293 is applied on your total concessional contributions. SG + any personal concessional amounts. Not sure how to point out the errors in your initial comment as it logically doesn’t make sense.
Well done for being the most confidently wrong person on reddit today https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Division-293-tax---information-for-individuals/?page=3#How_much_your_Division_293_tax_will_be Shows an example of income plus super coming in at $255k, and div293 applied to $5k Well done kiddo, well done.
I’ll accept my ignorance here and admit my fault, you are right. Gotta risk it to get the biscuit sometimes. Learn something along the way! Thanks
Appreciate that and good on you, most people would just have deleted their post and moved on Have a good one
More embarrassed actually as I deal with this stuff a lot of the time. But I think 100% of the time my clients Incomes are well above $250k so the whole amount gets taxed at 30%. Never had it actually apportioned like your example.
I made a similar comment about HECS (noting it's not exactly tax) and MLS above and I'm not sure why I'm getting down voted... This is how these work isn't it?
I don't know why you got downvoted for that either.
repayment income (RI) is taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.
Yes, but my point was the amount you have to pay is applied to your full repayment income. It's not like tax where you pay 34.5% on every dollar over $45k. If you go one dollar into the next bracket, it's not just the $1 that has the new percentage applied.
Register an ABN as a construction company and buy a tonne of Bunnings shit.
Surely you may have to prove a proper intention to generate an income?
Once you’ve sorted through an accounts worth of receipts since July 1st, headings and meanings become what ever they want. Multiply that by 100s and thousands and put in a Bunnings tax time marketing campaign and you’re sitting low key easy days
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New barbecue setting, gazebo, lawn mower, hedge trimmer, gardening tools, cordless drill, few cans of spray paint to tag up the Ipswich line and all while operating at a lose for 20-21. Tax time win like no other!
You can spread your donations over 5 years if you know that your marginal tax rate is significantly higher the next few years. https://www.ato.gov.au/Forms/Election-to-spread-gift-deduction/
Want to reduce your taxable income to zero? Just pay my invoice equal to your taxable income.
Invest in an ESIC and get 20% back as a tax rebate (rebate, not deduction) I'm also exploring the implication of donating in kind to a DGR status charity and the implications on tax deductions. Don't forget any work from home costs. Also, car travel for work can be claimed if it's not too and from the office. Remember capital losses can only offset capital gains.
To clarify ELI5 the ESIC thing: I invest in a small start up say $1,000 and I can take 20% ($200) off my tax bill? Is that right?
Essentially, yes, but you need to make sure the company fits the ESIC status. https://www.ato.gov.au/Business/Tax-incentives-for-innovation/In-detail/Tax-incentives-for-early-stage-investors/ From what I understand, it's not an official title. You have to self assess if the company fits the criteria. There is a section if you do your tax yourself to input the ESIC information. You don't just take it off, you have to input the amount you invested in a special section.
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Why is a dot getting down voted?
There are a number of other ways to keep track of this thread without polluting it.
Branded workwear aka with a logo can claim laundry, even if you just wash at home.