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FAQ’s

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If you’re an Australian resident, you can apply for a tax file number (TFN) in the following ways, depending on your circumstances. It can take up to 28 days to receive your TFN.

Apply at Australia Post

You can apply for a TFN at a participating Australia Post retail outlet if you’re an Australian resident and able to attend an interview. There is no fee for lodging your TFN application.

If you’re an Australian resident, the easiest way to apply for a TFN is to:

  1. Complete the application form from the ATO link. (Link- Complete the online form)
  1. Print the summary, which will include your application reference number, and take it to your Australia Post interview.
  2. Attend an interview at a participating Australia Post outlet within 30 days of completing your online form. You’ll need to take your printed summary and proof of identity documents to the interview. You’ll need to sign your application at Australia Post when you complete your interview.

Apply at a Services Australia centre

If you’re a Services Australia customer, you can apply at Australia Post for a TFN if you are an Australian resident and then attend an interview.

If you’re unable to use the Australia Post service and you are a Services Australia customer, you can apply in person at a Services Australia centre by completing a paper Tax file number – application or enquiry for individuals (NAT 1432) form.

Apply by post

If you can’t attend an interview at a participating Australia Post retail outlet or you’re not a Services Australia customer, you’ll need to complete a paper Tax file number – application or enquiry for individuals (NAT 1432) form.

You can get a copy of this form by either:

  • Ordering online or
  • By phoning 1300 720 092 

Send your completed TFN application and certified copies of your identity documents to the address listed on the form.

There are 4 Tests of Residence and any one needs to be met to determine whether you are an Australian resident for Tax purpose.

  1. Resides Test:

To dwell permanently or for a considerable time in Australia. Some factors that may help you are:

  • Time Spent in Australia
  • Frequency, regularity and duration of visits
  • Purpose of visits
  • Maintenance and location of assets
  • Family, social and business ties
  • Intention and purpose
  1. Domicile Test:

You’re an Australian resident if your domicile (broadly, the place that is your permanent home) is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.

A domicile is a place that is considered to be your permanent home by law. For example, it may be a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

A permanent place of abode should have a degree of permanence and can be contrasted with a temporary or transitory place of abode.

  1. 183 Day Test:

This test only applies to individuals arriving in Australia. An individual’s residence is Australia if physically present for more than half the income year unless:

  • The individuals usual place of abode is outside Australia
  • The individual does not intend to take up residence in Australia
  1. Superannuation Test:

Only applies to members of super funds for Commonwealth Government employees:

  • Diplomats in a foreign currency
  • Foreign ministers

Employers are required to withhold tax from payments they make to you and send the withheld tax component to the ATO regularly. When you are required to lodge your tax return at the end of the financial year, your tax withheld balance is credited from your tax payable. If your tax liability balance is greater than the tax withheld, then you will have to pay additional tax out of your pocket to meet your income tax liability, however if your tax liability balance is less than the tax withheld by your employer, then you will be subject to a tax refund.

If you are an Australian resident for tax purposes, the first $18,200 is not taxed. Now suppose you have two jobs and in your first job your yearly income is $20,500 and in your second job it is $12,000 for the 2019/2020 period. Your combined income in this situation is $32,500, and even though the income from your second job falls within the tax free threshold, the combined yearly income surpasses that threshold. In this event, you are generally only able to claim the tax free threshold from the payer who usually pays the highest salary or wage. For simplicity purpose lets assume there are no deductions so that your Taxable income= Combined income earned from both these jobs. Because the first $18,200 of the $32,500 is tax free, then you will be required to pay a tax on ($32,500-$18,201= $14,299) at a rate of 19% + 2% Medicare Levy. This would amount to your tax obligation to be $2,717 + $650= $3,367. Furthermore, considering you fall within the Low income tax offset limit and Low and middle income tax offset limit of under $37,000, you may be eligible for a tax offset up to a maximum of $445 and $255 respectively, which would make your tax Liability to $2667.

To find out more access the ATO link (https://www.ato.gov.au/Individuals/jobs-and-employment-types/Working-as-an-employee/Income-from-more-than-one-job/)

If that property is your ‘main residence’ it is generally exempt from capital gains tax (CGT). The property must have a dwelling and be the main residence throughout the whole of ownership period. The main residence exemption does not apply to a CGT that happens in relation to a land, garage, storeroom or other structure which does not happen to the dwelling. For non-tax resident of Australia, you are likely not able to satisfy the conditions of the main residence exemption. A dwelling is considered to be a main residence if:

  • you and your family live in it
  • your personal belongings are in it
  • it’s the address your mail is delivered to
  • it’s your address on the electoral roll
  • services such as gas and power are connected.

There is no set rule on deciding whether you will be fully exempt from paying tax even if you satisfy the factors of main residence. It is a case by case scenario and may only be eligible to a partial exemption. If a property was previously your principle place of residence, then you will also be exempt from CGT if the property is sold within six years of first being rented out. If you re-occupy that property as your main residence, then the six-year period restarts, however this exemption is only available when no other properties are nominated as your main residence.

In the event that you sell an investment property within one year (not your main residence), you are subject to pay the entire amount of CGT at your marginal tax rate. If you sell an investment property holding it over one year, and it was acquired prior to 21st September 1999, then you can reduce the gains by the indexation method. Any property acquired after 21st September 1999 and held for greater than 12 months can only use the discount method. The taxpayer in this instance is able to get a 50 percent CGT discount. For instance, if the proceeds on the sale of the property held for greater than 12 months was $1 million and the cost base of the asset was $800,000, then the taxpayers gain is $200,000 and the taxpayer is only subject to pay CGT on $100,000 as the other $100,000 is discountable.

To find out more visit: https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/your-main-residence/ & https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/

Visit: https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/rental-expenses-to-claim/ to find out what you can claim on your rental properties.

You make a capital loss when the proceeds on the sale of the investment asset is less than its cost base. In this event, you are not required to pay the CGT, however you can subtract that loss amount from any other gain you may have got from selling another investment asset within that same income year to calculate your net capital gains or losses for the year for tax purposes. If that investment was the only loss for the year, you can carry forward that loss against future year capital gains. You cannot however deduct the capital loss from other income.

To find out more visit: (https://www.ato.gov.au/individuals/capital-gains-tax/calculating-your-cgt/using-capital-losses-to-reduce-capital-gains/)

The tips received from customers during your work shares a nexus (connection) directly with your employment. Even if the tip received is cash, it is a part of your income and thus must be included in your tax returns.

For more information visit: https://www.ato.gov.au/Individuals/jobs-and-employment-types/Working-as-an-employee/Receiving-cash-for-work-you-do/

Lottery winnings are recognized as Windfall gains, and have element of luck induced with it and thus are not part of your taxable income, however if you choose to invest the winnings from that lottery on assets and you realize capital gains, then you will have to pay tax on those gains. 

In the case where you win a lottery or a prize draw from a bank, building society, credit union or an investment body, you must declare the winnings or benefits that you have received.

To find out more visit: https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Other-income/

If the beneficiary of the trust is presently entitled to the income of the trust and are not under a legal disability, then it is the beneficiary’s duty to declare their amount of entitlement to the trust’s income in their own tax return. However, if the beneficiary despite having entitled to the trust income, but has a legal disability, then the trustee is assessed on behalf of that beneficiary. When there is no beneficiary presently entitled, the trustee is assessed on net income of the trust estate. If the income is not distributed by the trustee and is retained by the trust, then the trustee is taxed at the highest marginal tax rate plus the Medicare levy.

To find out more visit: https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Business,-partnership-and-trust-income/

A taxpayer may have received some amounts that they don’t need to include as income in their tax return, however it may still be used as calculations that need to be included elsewhere in your tax return.

There are three categories of amounts received that the taxpayer doesn’t need to include under income:

  • Exempt income
  • Non-assessable, non-exempt income
  • Other non taxable amounts

To find out more about these in detail visit: https://www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/amounts-you-do-not-include-as-income/

If you are considered an Australian resident for tax purpose, you will still be required to lodge an Australian tax return and declare all your foreign income, even if you have some portion that is exempt. If you have paid tax in an overseas country, you may be eligible to claim a foreign tax offset though you may still be required to pay tax in Australia on the income that you earned overseas. Suppose that for your income level, you are taxed in Australia at 30% but only were only taxed at 23% in the UK for that income bracket whilst you worked there, then you will need to pay that additional 7% in the Australian tax return. If you earn more than the Medicare levy income threshold, you will be required to pay tax on that too.

For more information visit: https://www.ato.gov.au/Individuals/coming-to-australia-or-going-overseas/

If you receive an asset, that is non-taxable unless you dispose of it later on. The income treatment derived from that asset is a little more complex. If You want to find out more on deceased estate tax implications visit: https://www.ato.gov.au/individuals/deceased-estates/if-you-are-a-beneficiary-of-a-deceased-estate/#Receivingassets.

An Australian resident will be taxed on income from all sources. If you’re not an Australian resident for tax purposes, you are only taxed on your Australian-sourced income. You generally don’t need to declare income you receive from outside Australia in your Australian tax return. Some general factors that would be regarded as a real source of income are:

  • Location of which the trading activities took place
  • Location of the sale of property other than a trading stock
  • Where the services took place
  • Place where the contract on interest received was created
  • The place where the company derived its profits from and where the dividends were distributed
  • Location of the intellectual property from which the royalty flows

To find out more access this link: https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Income/Foreign-income-of-Australian-residents-working-overseas/

Travel expenses can be broken up into three categories:

  1. Travel between home and work

Generally, the travel between home and the normal place of work is not deductible. The taxpayer can claim travel expenses between home and work if the expenses directly connected with their work. The instances when they may be able to do this are:

  • When the taxpayer has worked outside of normal work hours where work at home has started prior to undertaking travel.
  • If the taxpayer are itinerant workers. In these instances, the taxpayer had a shifting place of employment and the expenses incurred to get to these places may be claimable.
  • By taxpayers who are required to carry bulky tools or equipment that they used for work and incurred expenses to carry those tools or equipment around. However, these items are not deductible when the taxpayer carries them as a matter of convenience only.
  • When the taxpayer had to travel to an alternate place of work on a temporary basis. In this situation, the taxpayer may be able to claim expenses such as meals, accommodation, and incidental expenses while travelling for overnight work (e.g. conference). If the travel does not involve an overnight stay, the taxpayer cannot claim for meals even if they received a travel allowance.
  1. Travel between two places of work

The taxpayer may be able to claim the cost to travel between two places of work where the two places are related to some income producing activity.

  1. Car related travel expenses

If you use your own car in performing your work-related duties (including a car you lease or hire), you may be able to claim a deduction for car expenses, however if the travel expense was partly private, you cannot claim that. There are two main methods to calculate car related travel expense and any one can be used:

  • Cents per kilometre methodà Using a single rate, you can claim certain amounts for your car per kilometre used for work purpose. The maximum claim is up to 5,000 business kilometres per car per user if the two users use the same car for separate income producing purpose. You may need to show how you worked out your business kilometres.
  • Logbook methodàYour claim will be based on the business-use percentage of the expenses for your car, where the expenses include the running costs and decline in value but not capital costs. To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period. The logbook period is a minimum continuous period of 12 weeks. You can claim fuel and oil based on actual receipts or the estimates of the expenses based on the odometer readings from the start and the end of the period you had the car during the year. For other expenses you need written evidence.

To find out more about travel expenses and what can be claimed and what cannot, visit:

You can claim a deduction for the cost of buying and cleaning occupation specific clothing, protective clothing and distinctive work uniform. Certain clothing items that are expected to last a number of years such as a barrister’s wig may be capital and subject to depreciation. To claim a deduction, you may need written evidence of the purchase of clothing and diary/receipts for the cleaning costs. If your claim amount for clothing purchase is greater than $150 and the total claim for your total work-related expenses are greater than $300, you are required to keep the written evidence for at least one month. You may also receive an allowance from your employer for clothing, uniforms, laundry or dry-cleaning. If you do, make sure you show the amount of the allowance on your tax return as it is assessable income. You can only claim a deduction for the amount you actually spent.

Types of Clothing that can be claimed:

Occupation specific clothing – Identifies the wearer as a person associated with a particular line of work, occupation or calling. For instance, a chef’s hat.

Protective clothing – Clothing that protects the wearer from a real risk of exposure to illness of injury. For instance, fire-resistant and sun-protection clothing.

Uniform – Must be sufficiently distinctive to an observer as clearly identifying the employee as working for a particular employer. You can claim compulsory work uniform, though if the taxpayer wants to claim non-compulsory uniform, their employer must have registered the design with AusIndustry.

Cleaning of work clothing:

You can claim costs of washing, drying, dry cleaning or ironing work clothes that are deductible, even if supplied by your employer. If these expenses however are reimbursed or cleaned by your employer, then you cannot claim them as a deduction. You must have written evidence, such as diary entries and receipts, for your laundry expenses if both:

  • the amount of your claim is greater than $150
  • the amount your total claim for work-related expenses exceeds $300 – not including car, meal allowance, award transport payments allowance and travel allowance expenses.

Self education expenses are deductible when you gain a formal qualification which allows you to gain or produce income in your current work activities. If the commerce course helps you to improve your current skills or knowledge in the accounting industry, and is likely to help you earn higher income or improve prospects of promotion in your current career as an accountant, then you may be eligible to claim some self-education expenses. However, if you are undertaking work which does not have sufficient nexus with your education, then those expenses are generally not claimable.

To find out more on which self education expenses you can and cannot claim, visit https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Self-education-expenses/

Travel expenses relating to self-education may be deductible when travel relates to income-producing activities. Some factors that may help determining deductibility are:

  • Whether there is employer support for travel
  • Clear evidence that the travel was devoted to upgrading information relating to income producing activities and whether this travel will help you to get a promotion and/or more income

Although you are attending a work-related seminar that will help you to upgrade your information to your current income producing activity and gain more income and/or promotion, visiting your family overseas is not work-related. In this case you will have to apportion some expenses between private purpose and work-related expenses. Private purpose expenses whilst you are travelling will not be deductible.

If you’re an employee who works from home, you may be able to claim a deduction for expenses you incur relating to that work. These can be additional running expenses such as electricity, the decline in value of equipment or furniture and phone and internet expenses.

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

In some cases, if your home is your primary place of business and you have a genuine home office that is exclusively for business activities, you may be able to claim the expenses incurred from running your home office, however you cannot claim deductions for private costs. Some examples that may allow you to determine whether your home is considered a place of business include:

  • a small business operator whose main office is in their home
  • a tradesperson or craftsperson who has their workshop at home
  • a doctor or dentist who has their surgery or consulting room at home.

To find out more on home-office expenses visit: https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/working-from-home-expenses/



 

Interest accruing on borrowed funds may be able to be deducted if the negative gearing purchase was a business asset or an investment rental property. To claim interest deductions, the income generated from the asset must have a nexus to income producing properties, and the reason for negative gearing must be a genuine one, then only will interest deductions able to apply.

A taxpayer can claim an immediate deduction on individual tools and equipment each worth up to $300 for business use. A laptop is generally worth more than $300, so it needs to be depreciated until for its useful life. Because some portion of the laptop is used for private use, it is important to apportion only the business use that is deductible. You should keep a logbook to monitor your private and business use for a period of at least four weeks, so that you can determine what portion is claimable.

You can only claim tax deductions on donations made to a deductible gift recipient (DGR). Donations made to non DGR charities are not deductible. To claim a deduction on a donation, the value of the donation must be greater than $2 and you do not receive a material benefit in return. Where you do receive a material benefit, it is called a contribution and for a contribution to be tax deductible:

  • be made to a DGR
  • be in respect of an eligible fundraising event
  • be an eligible contribution
  • comply with any extra conditions that apply to some DGRs.

Only individuals may be able to claim deductions on a contribution if it satisfies the criteria.

To find out more on deductions related to gifts and donations visit: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Gifts-and-donations/

Fees paid to a registered tax agent to manage your tax affairs are deductible. You can also claim costs associated with travel to the tax adviser.

For more information on deductions relating to cost of managing tax affairs visit: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Cost-of-managing-tax-affairs

GST of 10% is chargeable if on supplies when they are taxable supplies. No GST is charged to customers when it is a GST free supply such as fresh foods or on items that are considered input taxed supplies.   

Your business must register for the GST if it has annual turnover of $75,000 or more if your business is a for profit organisation and an annual turnover of $150,000 or more if it is a not-for-profit organisation.Registering for GST is optional if your business or enterprise doesn’t fit into one of these categories. If you choose to register, generally you must stay registered for at least 12 months.

To find out more if your business is required to register for the GST visit: https://www.ato.gov.au/Business/GST/Registering-for-GST/#Whentoregister1

If you provide taxi or limousine travel or passengers (which includes ride-sourcing), you must register for the GST regardless of your income turnover. Drivers of an uber or any other ride hailing company must register for the GST no matter their income levels.                         

To find out more if your business is required to register for the GST visit: https://www.ato.gov.au/Business/GST/Registering-for-GST/#Whentoregister1

Generally, a business needs to keep most records for five years and in some instances even more. A business is legally required to keep records of all transactions relating to its tax and superannuation affairs from its start, operations or when its sold or closed. Records that are expected to be kept are:

  • Documents relating to the business’s income and expenses
  • Documentation of the businesses’ tax and super affairs including the basis of the estimate, determination or how it was calculated

There are also minimum requirements for the information a business must keep on its record and they include:

  • The date, amount, and character (i.e. sale, purchase, wages, rental) and the relevant GST information for the transaction
  • The purpose of the transaction
  • Relationships between parties to the transactions if relevant

To find out more about what records you must keep when running a business visit: https://www.ato.gov.au/business/record-keeping-for-business/overview-of-record-keeping-rules-for-business/?anchor=Whatisarecord1#Whatisarecord1

There are many business related concessions available to business owners with structures such as sole traders, partnerships, trusts and companies. Each structure may has different eligibility criteria’s in the types of concessions they may be able to get and is generally based on their turnover levels. If you want to find more in detail about your eligibility criteria for certain concessions, give us a call or visit one of our offices and we will be happy to help

When an employer provides fringe benefits to their employees, the tax is levied on the employer and not the employee. The Fringe benefits tax (FBT) is a separate calculation from income tax and the employer must self-assess their FBT liability. The FBT year is calculated between 1st April to 31st March, and certain items which are considered as fringe benefits may be:

  • Allowing an employee to use a work car for private purposes
  • Giving an employee a discounted loan
  • Paying an employee’s gym membership
  • Providing entertainment by way of free tickets to concerts
  • Reimbursing an expense incurred by an employee, such as school fees
  • Giving benefits under a salary sacrifice arrangement with an employee.

Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the FBT they pay. Employers can also generally claim GST credits for items provided as fringe benefits. To find out more about the FBT visit: https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/

In order to be qualified for fuel tax credits, you must be registered for GST and for fuel tax credits when you lodge the claim. Fuel credits are given to businesses that’s included in the price of fuel used in machinery, plant, equipment, and heavy vehicles. Your business vehicle is defined as a heavy vehicle as it is above 4.5 tonnes and may be eligible for a fuel credit. The amount of the fuel credit depends on when you acquire the fuel, what fuel you use (i.e. some fuels such as LPG are not included) and the activity you use the fuel in. Your fuel credit claim must be made on the most recent business activity statement (BAS) that you are going to lodge.

To find out your eligibility criteria and your claim amounts visit: https://www.ato.gov.au/Business/Fuel-schemes/Fuel-tax-credits—business/

An employer generally has to pay an employee super on top of their wages when they pay more than $450 or more before tax in a calendar month to that particular employee.

To find out more about Employer super requirements visit: https://www.ato.gov.au/Business/Super-for-employers/

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