Unit 8d Tax returns


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Unit 8d Tax returns

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