Money Doesn’t Come Without Guidance ...
This article will focus on how taxpayers should approach income tax return to make the process more familiar. If you are often left entirely not sure where to start your tax return towards the end of the financial year, changing your viewpoint slightly might be helpful.
The first thing to ask, how have your life been last 1 year since your last tax return? In other words, what was your major event during the financial year? This question would be a good start line to ask. The truth is what changes in your life, changes your financial, too. Asking yourself this question before assessing your tax return or meeting your tax agent help to discover the part might have been affected.
Here are some simple case studies for understanding.
Case study - See the example from differences influence your tax return.
1. Taxpayer A – She is single in during the financial year 17-18, became a university student. She was working in hospitality for a full-time employee last financial year but, now she’s working as a part-time employee and receives government allowance. Due to her role in her work, she has been using her mobile for business quite often.
What might have affected her tax return? Due to decreased working hours, she didn’t earn as much as previous tax year. However, now she has another income source which is, income from the government. On top of that, she has been using her mobile for business purposes. Hence, she can claim the business portion of the bill as her work-related deduction.
2. Taxpayer B is working as a full-time software engineer. She successfully graduated her degree with HELP program and was hired by a multi-national company during the financial year. Last financial year, she worked as a part-time employee at a retail store where she hengias to wear protective clothing but, her current job doesn’t have a policy for dress code, and she wears smart-casual most of the time.
Taxpayer B most likely has to pay her HELP repayment. For her tax file number declaration, she would have to make a debt declaration, and her employer would have started taking off an extra amount of PAYG for the purpose of repayment on top of the regular amount of tax withheld. Also, last financial year, she would have been able to claim the cost of protective clothing bought for her part-time job but, now she can’t claim a deduction for clothing anymore.
3. Taxpayer C is a trader working on a casual basis in several companies. At the end of financial year, he realised that his total income had gone up from $75,000 from $99,000 due to long working hours his improved skills. His income next financial year is expected to be similar.
Taxpayer C will be charged for Medicare levy surcharge as his income exceed the threshold. At his current income level, he will be charged extra 1% for Medicare levy surcharge. Currently, he doesn’t have private hospital cover but, now he might want to consider his options.
Tax payer’s occupation, relationship status, work patterns, many factors could influence their tax return. Indeed, there are more things to consider as people move toward in life. Start making a list of changes in life might effectively narrow down to the points where taxpayer should look at to make a declaration regarding income, expenses and entitlements. It will also help if taxpayers using tax services, too. Rather than ask a broad question such as, ‘What is the best way to reduce my tax?’, ask questions based on changes in your life, for instance, ‘How will my new job affect my tax return?’ Or ‘How will my spouse affect the income tax return?’ might lead the better answer for the everyone’s end goal, ‘maximising the refund’.