How To Avoid A Tax Debt

Do you want to know more?

Sometimes when you were expecting a nice little tax refund into your bank account and you end up with a tax debit, it can be a little hard to swallow and leave you wondering why!?  If you have been in this position, we have put together a few points on how to avoid this same situation happening next year and how you can prepare in advance!

If your refund is less than you expect, these are the most common reasons which you may not have taken into consideration:

  • The refund amount has been offset against another debt, either another tax debt (previous income tax bill, or activity statement debt), or another government agency debt (Centrelink, or Child Support Agency)
  • Compulsory payments, such as: Higher Education Loan Program (HELP); Trade Support Loan (TSL); VET Student Loan (VSL); or Student Financial Supplement Scheme (SFSS) repayments
  • You need to pay Medicare levy surcharge because you stopped paying private patient hospital cover and your income is above a certain threshold
  • New or amended income tests
  • Excess concessional contributions to a super fund
  • Your employer incorrectly reporting reportable employer superannuation contributions on your payment summary
  • Tax was not withheld from a taxable payment (such as Jobseeker payments) and your total income for the year was more than the tax-free threshold
  • You incorrectly claimed the tax-free threshold.
  • You are an employee and enough tax has not been withheld from the payments made to you by your employer
  • You are a sole trader and have not paid enough tax to the ATO throughout the year
  • Receive other income where no tax was withheld such as Centrelink payments
  • Working for more than 1 employer and have compulsory payments, such as: Higher Education Loan Program (HELP); Trade Support Loan (TSL); VET Student Loan (VSL); or Student Financial Supplement Scheme (SFSS) repayments

TIPS FOR AVOIDING TAX DEBT AT THE END OF THE YEAR

  • Claim tax free threshold only from 1 employer in a financial year
  • If you have HECS debt and you are working for 2 employers, you need to pay extra tax based on percentage of your total income from both employers. Check your HECS repayment rate on https://www.ato.gov.au/Rates/HELP,-TSL-and-SFSS-repayment-thresholds-and-rates/
  • Set up PAYG instalment payments with ATO if you are sole trader
  • Ask Centrelink to withhold tax on any benefits received from Centrelink
  • Seek financial advice if you are planning to contribute a big amount to your super fund.
  • If you are earning more than $90,000 or earning more than $180,000 as a family, seek advice to get private health insurance cover to avoid Medicare levy surcharge
  • Know in advance if you have any debts with ATO or Centrelink or another government agency.

 

Kim Sandhu – Senior Accountant

CPA – B.Com M.Acc

Recent Posts

How A Bookkeeper Can Improve Your Business

Bookkeeping Services How A Bookkeeper Can Improve Your Business – Accountants Geelong l Canny Group Bookkeepers are a little bit like unicorns… magical and amazing creatures that can help you...

Read More

SMSF + Investing In Cryptocurrency

SMSF + Investing In Cryptocurrency l Canny Group Presently Self-Managed Super Funds (SMSFs) are not prohibited from investing in Cryptocurrency.  In fact, cryptocurrency appears to be a fast-growing alternative for...

Read More

The Importance Of Creating A Will

Wills + Their Importance The Importance Of Creating A Will – Online Will l Canny Group Have you ever been in a situation when you suddenly remember that you need...

Read More

NDIS Plan Management vs Self Management

NDIS Plan Management vs NDIS Self Management l Canny Group How are you managing your NDIS Plan?  Are you self-managing your NDIS Plan?  Did you know that you can use...

Read More

All Aboard The Miniature Railway Adventure Park

All Aboard The Miniature Railway Adventure Park l Canny Group Anybody who has children, a grandchild, nieces and nephews, god children or simply children they enjoy spending time with will...

Read More

All In One Support Services

All In One Support Services – Client Insider l Canny Group   In your own words, what is All In One Support Services? All In One Support Services was formed...

Read More