Good News for hard working individuals
Depending on income, the legislation passed on Thursday 4th July 2019 will give individuals a tax cut between $255 and $1,080 (up to the tax amount you already paid). Please note that you are NOT required to do anything to be eligible for the tax cut. The tax returns we prepare will already have those covered.
If you earned:
- Under $37,000 – you will get $255 tax cut.
- Between $37,000 and $48,000 – $255 tax cut plus 7.5% of what is over $37,000 (so that’s between $255 and $1,080).
- Between $48,000 and $90,000 – $1,080 tax cut, flat. No calculations needed.
- Between $90,000 and $126,000 – $1,080 tax cut but minus 3% of what is over $90,000 (so between $1,080 and $0).
- Over $126,000 – zero tax cut.
Some examples:
- A person earning $35,000 gets $255 tax cut
- $45,000 gets $855 tax cut
- $55,000 gets $1,080 tax cut
- $80,000 also gets $1,080 tax cut
- $100,000 gets $780 tax cut
- $120,000 gets $180 tax cut
ATO Targets this year
As always, we take measures in ensuring our clients are in safe hands. As part of the process, we would like to draw your attention to the targets of the ATO this year. You should be particularly careful if you have the following:
Laundry Expenses
- Everyday clothes you bought to wear to work (eg, a suit or black pants), even if your employer requires you to wear them.
- A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
*The ATO has flagged that it will be checking taxpayers who take advantage of the exemption from keeping receipts for people who spend less than $150 on laundry expenses – the ATO believes too many people are claiming this without actually incurring the expense.
Car & Travel Expenses
- Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel.
- Car expenses for transporting bulky tools or equipment, unless: (you need to use your bulky tools to do your job, your employer requires you to transport this equipment or there is no secure area to store the equipment at work.)
- Car expenses that have been salary sacrificed.
- Meal expenses for travel, unless you were required to work away from home overnight.
- Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.
Self-Education Expenses
- Higher education contributions charged through the HELP scheme.
- Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
Other Work Related Expenses
- Private use of phone or internet expenses – only the work-related portion counts.
- Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.
- Deductions for home office use, including claiming for “occupation” costs like rent, rates and mortgage interest, which are not allowable unless you’re actually running a business from home.
Rental Expenses
- The ATO has announced it will be paying close attention to excessive interest expense claims, such as where property owners have tried to claim borrowing costs on the family home as well as their rental property.
- They will be looking at holiday homes that are not genuinely available for rent.
- They will be keeping a close eye on incorrect claims for newly purchased rental properties. The costs to repair damage and defects existing at the time of purchase or the costs of renovation cannot be claimed immediately. These costs are deductible instead over a number of years.
Black (cash) Economy
The ATO deals with these aspects of Australia’s black economy:
- The under-reporting income and over-claiming expenses.
- Ensuring businesses meet their employer obligations — so they don’t pay employees or contractors cash in hand, underpay wages, fail to withhold tax or not contribute to super. From 1 July 2019, payments made to contractors where the contractor does not provide an ABN and the business does not withhold any tax will also not be tax deductible.
- Addressing illegal phoenixing (together with Phoenix Taskforce partner agencies)
- Liquidating and reforming businesses to avoid obligations
- Preventing tax fraud
- Dealing with illicit tobacco, duty and excise evasion