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Frequently Asked Questions
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Question:
What are the general rates of tax for resident individual taxpayers?
Answer:
Tax rates 2007-08
| Taxable income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $30,000 |
Nil + 15% of excess over $6,000 |
| $30,001 - $75,000 |
$3,600 + 30% of excess over $30,000 |
| $75,001 – $150,000 |
$17,100 + 40% of excess over $75,000 |
| $150,000 + |
$41,100 + 45% of excess over $150,000 |
Tax rates 2006-07
| Taxable income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $25,000 |
Nil + 15% of excess over $6,000 |
| $25,101 - $75,000 |
$2,850 + 30% of excess over $25,000 |
| $75,001 – $150,000 |
$17,850 + 40% of excess over $75,000 |
| $150,000 + |
$47,850 + 45% of excess over $150,000 |
The above rates do not include the Medicare levy of 1.5%.
Tax offsets reduce the tax payable. Tax offsets based on taxable income levels apply to:
- individuals on low incomes below $27,475
- individuals who receive certain Australian government allowances and payments
- senior Australians.
Other tax offsets apply to people with dependants, those living in remote areas and those who receive particular types of income or incur particular expenses.
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Question:
When is my Tax Return due?
Answer:
The due date for an individual taxpayer’s Income Tax Return for the year ended 30 June is 31 October. However, as Tax Agents, we enjoy a lodgement programme with the ATO, which enables us to lodge tax returns over a longer period. Please contact us to confirm the final date for your Return to be lodged.
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Question:
How much superannuation do I have to pay on behalf of my employees, and when?
Answer:
Under the superannuation guarantee, employers need to provide a minimum level of superannuation for eligible employees or pay the superannuation guarantee charge to the Australian Taxation Office (ATO). The amount payable is 9% of an employee’s earnings base; and the relevant earnings base is usually specified in the superannuation fund trust deed, an industrial award, a law of the Commonwealth, a State or Territory, or an agreement made with the employee.
An employer does not need to provide superannuation support for some limited categories of employees. Some of these include employees:
- paid less than $450 in a month
- aged 70 years and over
- under 18 years of age and working for not more than 30 hours a week
- performing work of a domestic or private nature for not more than 30 hours a week e.g. part-time nanny or housekeeper for non-business employer.
A full list of people that employers do not need to provide superannuation for is included in the Australian Taxation Office guide Superannuation Guarantee - How to understand and meet your SG obligations (NAT 1987)
There is a maximum limit on any individual employee's earnings base for each quarter of any financial year, and the employer does not have to provide the minimum support for the part of earnings above this limit. For the 2007/2008 year, that quarterly limit is $36,470.
Employers are required to make superannuation contributions on behalf of all their eligible employees to a complying superannuation provider at least once a quarter. Failure to do so may result in the employer being liable for the superannuation guarantee charge.
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Question:
What motor vehicle expenses may I claim, and how do I justify the amount?
Answer:
Motor vehicle expenses are allowable deductions when they are incurred in the course of deriving assessable income, or in the course of a business. These include petrol, oil, repairs, cleaning, servicing, tyres, lease charges and interest on car loans. In order to be deductible, most expenses incurred by an employee or a self-employed person must comply with special substantiation rules. There are four methods by which a claim for motor vehicle expenses may be calculated, being the cents per kilometre method, 12% of original value method, one-third of actual expenses method, and the logbook method; and these methods are briefly summarised below.
Method 1 — Cents per kilometre method
- Your claim is based on a set rate for each business kilometre.
- You are able to claim a maximum of 5,000 business kilometres.
- You do not need written evidence, but you may need to be able to show how you worked out your business kilometers.
Method 2 — 12 per cent of original value method
- Your claim is based on 12 per cent of the original value of the car
- The value is subject to luxury car limits
- Your car must have (or would have) travelled more than 5,000 business kilometres
- You do not need written evidence.
Method 3 — One-third of actual expenses method
- Your claim is based on one-third of each car expense
- Your car must have (or would have) travelled more than 5,000 business kilometres
- You need written evidence or odometer records for fuel and oil costs
- You need written evidence for all other car expenses.
Method 4 — Logbook method
- Your claim is based on the business use percentage of each car expense.
- You need a logbook to calculate the business use percentage
- You need odometer readings for the start and end of the period you owned or leased the car
- You can claim fuel and oil costs based on odometer records
- You need written evidence for all other car expenses.
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Question:
Can you recommend a software package for electronic record-keeping?
Answer:
We are happy to discuss your record-keeping needs prior to purchasing any software. We are a licenced re-seller of MYOB products; and consider that MYOB offers various excellent options for small businesses, and recommend their packages accordingly. We also note that the Australian Taxation Office offers a free electronic record-keeping product for small business, which includes a cash book, summary, bank reconciliation, a summary of income and expenses to assist in preparing tax returns, and a facility to lodge activity statements online. If you consider that this may be useful to you, it is available through the following link:
http://www.ato.gov.au/businesses/content.asp?doc=/content/39649.htm&pc=001/003/003/02/001/&mnu=6871&mfp=001&st=cy=1
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Question:
How long do I have to keep my tax records?
Answer:
Business Records
Every taxpayer carrying on a business must keep records explaining all business transactions and any other matter which may affect their tax liability. With self-assessment, and particularly for companies paying tax with their return, it is essential that sufficient records are available to verify the tax due.
The general rule is to keep records for at least 5 years (s.262A(4) ITAA36).
Keeping records in excess of 5 years is particularly relevant in respect to the cost base of assets subject to capital gains tax and losses, where the loss is not applied for several years.
Individual Records
Tax records should be kept for at least the period in which the ATO may amend or taxpayer may self amend.
The periods of review are:
Assessments pre 2003/4 4 years
Assessments from 2004/05 2 years
CGT Records
Every entity that is registered for GST must keep records for 5 years. This includes tax invoices by suppliers, tax invoices to support claims for input tax credits and
those issued by the recipients of supplies (ie. Recipient created invoices).
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Question:
What is the period of time in which the ATO can amend my assessment or I can self amend?
Answer:
This is referred to as the period review.
| Type of Taxpayer |
Period of Review |
Period of Review |
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Assessments before 2003/04 |
Assessments from 2004/05 |
| Individuals |
4 years |
2 years |
| Small business entity taxpayers |
4 years |
2 years |
| Non-small business entity taxpayers |
4 years |
4 years |
| Nil and loss taxpayers |
Unlimited |
4 years |
| Income from partnerships and trusts that are not small business entity taxpayers |
4 years |
4 years |
| Anti-avoidance cases (Part IV A) |
6 years |
4 years |
| Fraud and evasion |
Unlimited |
Unlimited |
Note: Records may need to be kept for a period beyond the period of review for non tax reasons (ie Corporations Law, or State Laws for retention of records).
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