Frequently Asked Questions
You need to check the relevant legislation in your State and Territory, as the rules are different in each jurisdiction.
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What dates are relevant for a financial year?
- For tax purposes a financial year runs from 1 July through to 30 June.
- A tax return for each financial year is due by 31 October of the relevant year.
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How often must Australian residents lodge a tax return?
- Residents whose total taxable income is greater than the tax-free threshold are generally required to lodge an annual income tax return.
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How often must non-residents lodge tax return?
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Will I be penalised if I have not lodged my tax return by the due date for lodgement?
- This depends on your situation.
- The Australian Tax Office (ATO) will apply late lodgement fines for individuals and can charge penalties and interest for any unpaid tax.
- However if you are owed a tax refund interest is not applicable and penalties are usually not applied.
- It is always best to address any late lodgement issues as soon as possible.
- If there are complex issues involved or a number of years outstanding this may be one area where the assistance of a tax professional can assist you with both the outstanding lodgements and correspondence with the ATO regarding penalties or interest. The ATO may exercise their discretion in these areas.
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What does tax deductible mean?
- A general principle of tax in Australia is that costs necessarily incurred in earning income are tax deductible.
- The tax law allows taxpayers to claim (deduct) certain costs or expenses directly related to earning assessable income. This includes:
- the costs of borrowing money for investment provided the investment has been made to produce assessable income;
- vehicle and travel costs if you travel between your primary workplace and another workplace;
- purchase and cleaning costs for occupation specific or necessary protective clothing;
- self education expenses; and
- tools, equipment or other assets purchased to help you earn income.
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What are the essential things that need to be done if you are purchasing a second property with the intention of earning rental income?
- If you have purchased a property for the purpose of investment the income earned will be subject to tax and you will be entitled to claim certain property related expenses as deductions such as:
- interest costs;
- running and maintenance expenses; and
- depreciation expenses.
- The property itself is a capital asset and when sold or disposed of it will be taxable under the Capital Gains Tax (CGT) rules.
- At the purchase date it is important to retain all the purchase documents and documentation of other expenses as written evidence for your future tax affairs and to ensure that you have the necessary information for claiming the allowable deductions in the future.
- You can use our LegalPlan™ membership to ask lawyers for tenders or a Fixed Fee Quote in relation to your investment property needs.
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Can I claim a tax deduction if I have lost my receipt?
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What does negative gearing mean?
- Negative gearing is a principle in tax law used to describe a situation where the gross income generated by an investment is less than the cost of that investment.
- For example a rental property is negatively geared when the rent earned is lower than the cost of the borrowings and related expenses of the property.
- A property is regarded as negatively geared until the costs of the loan no longer exceed the rental income. At this point the investment will generate positive returns.
- If you need more specific information about whether the legislation applies in your situation you can use our free and anonymous Ask a Lawyer service.
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What kind of work related expenses can I claim as deductions?
- Employees are entitled to claim deductions for expenses paid in order to earn their income but cannot claim deductions if the expenses are private or capital in nature.
- The general rule is that if you need to spend the money to earn the income then the expense may be an allowable deduction.
- You will need to show that expense was needed to earn income and that it is not private in nature. You will need to substantiate the claim with written evidence.
- Expenses that are generally regarded as private in nature and therefore non-deductible include:
- childcare expenses;
- personal grooming expenses such as hairdressing, cosmetics; and
- food and living expenses.
- The Australian Taxation Office (ATO) has set out their requirements and outlined the general principles for claiming work related expenses at the following website addresses:
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