taxable income Archives - Advice on Australian Tax Returns & Online Tax Advice on Australian Tax Returns & Online Tax

Tag: taxable income

Posts Tagged ‘taxable income’

The GST and Low Value Goods

What is the GST?

The ATO has announced a new tax law on the goods and services tax (GST) before the 2018 tax season. You may be wondering, what is the GST? The GST is a tax of 10% on most goods, services and other items that companies or other entities sell to Australia. We actually consume most of these goods!

New Tax Law

From 1 July 2018, the GST will affect businesses that sell low-value goods who import to consumers in Australia. Low-value goods have a customs value of A$1,000 or less when the price is under the agreement with the customer. However, any tobacco products or alcoholic beverages do not have the GST tax since they will be charged at the border.

Here’s the breakdown of the changes.

Read the rest of this entry »

Online Tax Return Tips – Part III

The best ways to save money when you lodge your tax return online

For the several days E-Lodge has been running a series on the best ways to save time and money when you lodge your return. You can access part one here and part two here. Here for your viewing pleasure is part three:

11. Give your TFN to your employer

Many employees – especially young ones – either forget to give their tax file number (TFN) to their employer or don’t realize that they have to. If your employer doesn’t have your TFN, they are required by law to withhold taxes from your wages at the maximum rate of 45% when it’s likely that you actually deserve to have taxes withheld at a much lower rate. You’ll get this money back in the form of a really big tax refund, but wouldn’t it be better to have this money throughout the year? If you don’t have a TFN, get one.

12. Claim the tax-free threshold

When you give your employer your TFN, you should also claim the tax-free threshold – unless you already claim it from another employer. The threshold is currently set at $18,200, which means that every Australian resident does not have to pay tax on their first $18,200 of income. Yay! But in order to receive this considerable benefit you have to claim it from your employer. Otherwise taxes will be withheld at too high a rate. If you have multiple employers, you can only claim it from one of them, generally whichever pays you the most. Read the rest of this entry »

Tax Tips: Assessable Income and Taxable Income

Did you know the type of income you have could affect how much tax you pay?

How do I pay less in tax? How do I get a bigger tax refund? Spiffy questions that always get tossed around during the tax season. But they’re not quite the same thing, right?

Simply put, you get more of a refund if you owe less tax than was taken from your pay. Which does not, by itself, say much about the tax amount you actually owed.

After all, you could be paying the same overall amount in tax every year and yet get a larger refund at tax time than previously because, well, more tax was withheld from your weekly earnings that year.


How do I pay less tax?

So, of these two related but unequal questions the one to focus on is the first: how do you get to owe, and therefore, pay less tax as a share of your income for this and in future years?

Now, don’t get me wrong! Taxes have obvious benefits, and if you’re fine with more of your money landing in the government’s capable hands, you need read no further.

But if you’re concerned that taxes are making too much of a dent in your pocketbook, you will want to pay attention, for starters, to the difference between your assessable and your taxable income.


What is assessable income?

Your assessable income is all the income you’ve earned during the financial year, whether from wages you’ve collected  or allowances you earned, from rental property you own or assets you sold. This amount, in all likelihood, got reported in full to the ATO.


What is taxable income?

Your taxable income, on the other hand, is your assessable income minus any deductions you choose to claim and, of course, qualify for. Tellingly, if you take zero deductions, your assessable and taxable income are one and the same.
Your taxable income is also, as its name indicates, the income which determines your actual tax liability and the tax bracket you fall into. Simply put, more income equals more tax owed, less income equals less tax. That’s the basic rule of progressive taxation: the greater your income, the higher your effective tax rate, the larger your tax burden.


Decrease assessable income or increase deductions

It follows that you basically have two avenues to reduce the tax you owe, outside of being eligible for a tax offset which directly reduces your tax.

  1. decrease the amount of your assessable income; or
  2. increase the number of deductions you claim so as to minimize your taxable income.

In the first case, assuming it’s unlikely you’d merely opt to bludgeon about and make less money, you can reduce your assessable income through such measures as deferring income to the next financial year, for instance by delaying collecting on some invoices, or through salary sacrifice arrangements.

The catch here is that any such strategies to reduce assessable income must be effective prior to the start of tax season. If you were thinking to defer income as you read this now think again to next year.

With the second case scenario, you can pay full attention to the wide array of deductions the tax office makes available at tax time, starting with the near automatic deduction for work related expenses adding up to less than $300 which requires no written evidence, only a fair estimate, to make the cut.


Once the decision is made, its time to lodge

And we can help! Regardless of whether your assessable income is high or low, you’ll need to lodge your tax return for the year. With E-Lodge, you’ll save yourself the cost of paying a private accountant while still achieving a quality experience.




Updated 27 July, 2016

Tax Tips: Deductions vs. Offsets

They’re so much alike, yet oh so different on your tax return.

Deduction or offset? These two tax terms tend to get confused but they’re pretty simple to set apart. Let’s take a look at why they’re similar and what actually sets them apart.

What is a tax offset?

Read the rest of this entry »