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Unit 8d Tax returns

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Unit 8d Tax returns Unit 8d Tax returns Presentation Transcript

  • GENC3003Personal Financial Planning
    Andrew Hingstonandrew.hingston@unsw.edu.au
    Unit 8: Tax returns
  • 2
    Preparing a tax return
    The responsibility is yours
    Who has to lodge one?
    Preparing your first return
    What you need before you start
    Calculating Capital Gains
    Tips
    When to get help
  • 3
    Preparing a tax returnThe responsibility is yours …
    Australia works on a “self-assessment” system.
    ATO trusts you to:
    Work out your own tax liability
    Ask for the help of an accountant if needed
    Submit a correct tax return that calculates how much you owe them (or they owe you)
    The ATO then conducts random and also some targeted audits on people / companies.
    ATO imposes heavy fines if you breach their “trust”.
    ATO “monitoring” has improved significantly in recent years with better database systems.
  • 4
    Preparing a tax returnWho has to lodge a tax return?
    You must lodge a tax return if:
    You paid tax during the year
    Your taxable income > $6000 (for residents)
    You received a Centrelink allowance or payment and you had received other income, and your taxable income was more than $6,883
  • 5
    Preparing a tax returnPreparing your first return
    Two options:
    Tax Pack (paper version)
    E-Tax (via software / Internet)
    E-Tax is much easier because:
    You are not inundated with irrelevant information (questions are conditional on previous answers)
    The software calculates totals and checks your answers
    You can click on icons for detailed help on questions
    Refunds are paid quickly
    Can carry forward basic information from year to year
    Download software from ato.gov.au … Individuals.
  • 6
    Preparing a tax returnSections of a tax return
    Income – to calculate assessable income
    Deductions – to calculate allowable deductions
    Losses carried forward
    Tax offsets
    Private Health Insurance
    Medicare Levy issues
    Various Adjustments
    Supplementary sections for some investments
  • 7
    Preparing a tax returnWhat you need before you start
    Copy of last year’s assessment or other documents from ATO to prove your identify.
    Tax File Number
    PAYG Summary Statement(s) from employer(s)
    Centrelink summary statements
    Your June bank statement that summarises interest and fees for the year
    Receipts for any deductions
    Tax summaries for any managed funds
    Buys, sells and dividends for any shares
  • 8
    Preparing a tax returnCalculating capital gains
    When you sell an asset for more than you bought it then the gains are treated as assessable income and taxed.
    Unless it is an exempt asset (eg. Family home); or
    It was purchase before 19 September 1985
    For assets purchased after 21 September 1999 and held for more than 12 months:
    Calculate the gain
    Deduct permitted “costs” associated with investment
    Multiply by 50%
    Add this to your assessable income
    If you hold for less than 12 months then no 50% discount
  • 9
    Preparing a tax returnTax return tips
    Due by October 31!
    But can get extension if you call ATO 1+week beforehand with a good sob story!
    Keep a special tax folder during the year and put any relevant documents in it as you receive them.
    Make sure you have everything before you start your tax return.
    If your spouse or parents prepare your tax return then watch them do it this year and do it yourself next year … it’s an important life skill!
    Keep all records for 5 years
  • 10
    Preparing a tax returnWhen to get help
    Get an accountant if you have:
    Your own business
    Investment properties
    Depreciation calculations
    Lots of tax deductions
    A “questionnaire” from the ATO asking you how you derived your calculations for last year’s tax return (a prelude to an audit).
  • Stop and read
    Now read:
    Chapter 11
    Taxation
    11