FAQs

Your Tax and Super Questions Answered

PERSONAL TAXATION

I’m going overseas for nine months and intend to work while I’m away. Will I have to pay tax in Australia on my overseas earnings?

You have to pay tax on overseas earnings unless you have worked overseas continuously for more than 90 days on a specific Australian government project, or you are deployed overseas as a member of an Australian government agency. You may be entitled to a foreign income tax offset for any foreign tax that you paid.

 

Can a credit card slip be used as a receipt for tax purposes?

Yes, as long as it shows the supplier and date of purchase. We recommend you make a note on your credit card slip indicating the type of goods purchased.

The ATO will also accept BPAY or email receipts if they contain the necessary information (date, supplier, nature of the goods and amount paid).

 

Can I claim work travel?

Travel between work and home is generally not tax deductible, except in certain circumstances. For example, travel between jobs on the same day and travel for work (i.e. visiting clients, doing pick-ups or deliveries) is deductible. If you use public transport for this type of travel, keep your receipts and/or make a diary to record your travel.

 

If you use your own car then we recommend that you keep a log book of all business mileage and all expenses including petrol, repairs, registration, insurance and interest on a car loan.

 

There are two different methods we can use to claim work-related motor vehicle expenses. If you maintain a log book for a minimum of 12 weeks we can choose the method that provides the best claim for you.

Rental property investing

What is negative gearing?

Negative gearing occurs when an investor borrows money to buy an asset (usually a property) but the income from the asset doesn’t cover the interest on the loan.

 

Tax deductions are available for people with negatively geared properties. This is sometimes used as a strategy to reduce tax while investing.

 

What tax deductions can I claim for my rental property?

If you have a rental property then you can claim tax deductions for expenses related to owning and maintaining the property. Deductions typically include:

  • advertising for tenants
  • bank charges
  • body corporate fees
  • bookkeeping and secretarial fees
  • borrowing expenses
  • cable TV
  • cleaning
  • construction expenditure for newly constructed properties
  • council rates
  • depreciation of assets
  • electricity and gas
  • garden maintenance
  • insurance
  • interest
  • internet fees
  • land tax
  • legal costs
  • mortgage discharge expenses
  • pest control
  • prepaid expenses
  • property agent fees and commission
  • quantity surveyor fees for newly constructed properties
  • repairs and maintenance
  • security patrol fees
  • servicing costs
  • stationery and postage
  • tax-related expenses
  • telephone expenses
  • water charges.

 

Do I need a tax depreciation report if you own a newly constructed rental property?

If you own a rental property you should obtain a tax depreciation report from a professional valuer (e.g. a quantity surveyor) to maximise your tax deduction for depreciation.

 

If you don’t have a depreciation report you may miss out on the opportunity to legally reduce your rental profit or increase your rental loss. The tax depreciation report will show the following:

 

  • address
  • property type
  • construction date
  • construction costs
  • asset values
  • settlement date.

 

The tax depreciation report shows the depreciation you are entitled to on a year-by-year basis for each deductible item in your rental property. You are also entitled to a tax deduction for depreciation on items in common areas.

 

Are there tax deductions for construction costs?

A tax deduction for construction costs is only permitted with regard to the purchase of newly constructed properties.

Business taxation

I’ve started my own business. Do I need to register for GST?

Businesses with an annual turnover of $75,000 or more are required to register for GST. If your business has a lower turnover you are not required to register, but you may do so if you wish.

You will only be required to charge your customers GST if you are registered.

It is now compulsory for taxi drivers and Uber drivers to be registered for GST, irrespective of turnover


I run my own business. How can I minimise my annual tax bill?

If your turnover is less than $10 million you are classed as a small business entity (SBE). This means you can access a number of small business concessions.

An SBE can use simplified depreciation rules for a full deduction of the whole cost of depreciating assets that cost less than $30,000 and have been first used (or installed ready for use) from 7:30pm on 2 April 2019 to 30 June 2020. Most other assets are pooled and depreciated at a higher rate.

Businesses that are SBEs or have a net asset value of less than $6 million can also benefit from certain capital gains tax concessions.


What are the tax laws related to Christmas parties and staff entertaining?

Generally entertainment is not tax deductible unless you have paid fringe benefits tax (FBT).

Staff entertaining at Christmas may involve gifts, entertainment, a party on or off-site, food and drink, or recreation such as a band. Depending on which of these factors apply, there are different income tax, FBT and GST implications. The tax implications also depend on the cost (per gift/per head) and whether gifts are provided just to staff or to others (e.g. staff members’ spouses).

Follow these tips to get the most out of the tax rules related to staff entertainment:

  • Provide gifts not considered ‘entertainment’ (e.g. hampers, legs of ham, bottles of wine, pen sets, gift vouchers and flowers).
  • Ensure the cost is <$300 per head/gift as this may entitle you to an exemption from FBT.
  • Use the actual method for valuing meal entertainment for FBT purposes where possible. This may entitle you to exemptions (such as for Minor Benefits and for holding the party on business premises) that aren’t available under the 50/50 method.
  • Consider only using the 50/50 method for valuing meal entertainment where entertainment is mainly staff entertainment which is greater than $300 per head (unless you wish to save administrative time and effort in applying the actual method). Note that client entertainment is caught when applying the 50/50 method.

Personal superannuation

Can I withdraw my super before age 55?

There are certain circumstances in which you can draw on your super early. These include:

 

  • severe financial hardship
  • compassionate grounds (due to illness or the possibility of losing your house)
  • in the event of permanent disability
  • when you permanently leave Australia (if you are not a resident)
  • if your preserved super benefit is less than $200.

 

Is there a limit to the amount I can salary sacrifice to super?

You can salary sacrifice any amount of your income to your super, and there’s an annual limit under which these contributions are taxed at a lower rate (currently 15%).

 

Your annual limit includes the compulsory contribution your employer pays (9.5%).

 

Currently, employees can contribute up to $25,000 of their pre-tax income to be taxed at the lower rate.

 

If you choose to contribute more than your annual limit, these extra contributions will be charged at your normal tax rate.

 

Can I claim a deduction on extra super contributions?

For extra super contributions made before 1 July, 2017, you generally can’t claim a deduction. However, you may be eligible for a co-contribution from the government.

 

From 1 July 2017, most people will be able to claim deductions for extra super contributions up until age 75. If you’re aged between 65 and 75 you’ll need to meet the government’s ‘work test’ to be eligible.

Self-Managed Superannuation Funds (SMSFs)

What are the advantages of an SMSF?

An SMSF allows you to be in control of investment decisions including:

 

  • What assets to invest your super in (shares, term deposits, managed funds, direct property etc.).
  • How to manage the costs with greater certainty.
  • To borrow from your SMSF to buy property.
  • To do in-specie transfer of listed shares or business real property from yourself to an SMSF.
  • To implement more flexible tax strategies.

 

What tax strategies can I use in an SMSF?

There are many strategies available, including:

 

  • Transferring listed shares in your own name into super without increasing your personal tax liability.
  • Transferring funds that would otherwise be taxed at your own personal marginal tax rate into a tax-free environment.
  • Using the government’s ‘transition to retirement’ policy to maximise your super balance after you retire.
  • Borrowing to buy residential or commercial property.

 

What does ‘salary sacrificing into super’ mean?

Salary sacrificing into super means converting some of your gross salary into a concessional super contribution.

 

Here’s an example of the benefit of salary sacrificing $10,000 into super:

No salary sacrifice Salary sacrificing $10,000 into super
Gross salary $120,000 $110,000
Personal tax $34,150 $30,300
Extra personal tax paid $3,850 Nil
Extra super contribution Nil $10,000
Extra super tax (paid by super fund) N/A $1,500
Benefit of salary sacrificing
$10,000 into super (This is the extra saving you have, but it is held in your super find.)
N/A $2,350

Other tax questions

My father died. Is his tax return required?

Yes, it is necessary to complete a tax return to date of death if a return has been lodged in past years. This return, marked final, must show all income received to the date of death.

 

I’m going overseas. Do I need to lodge a tax return before leaving?

No, it isn’t necessary to complete a return before leaving unless you will not be back before the due date for lodgement of your return (31 October).

 

If you won’t be back until after that date, contact the ATO or a registered tax agent to apply for an extension of time to lodge.

 

I got married during the year. What effect does this have on my tax return?

You may be eligible to claim a carer or spouse super contributions tax offset for your spouse, which will depend on your combined adjusted taxable income. A Medicare reduction may also be available.

 

You will need to know your spouse’s income before and after marriage. If your spouse has earned income during the year, they will also have to lodge their own return.