Tax Flashcards
What are is an example of mandatory tax on income?
Medical levy surcharge
What is the difference between tax avoidance vs tax planning?
Largely comes down to intent.
Tax Planning
Organising your tax affairs in the most tax effective way within the intent of the law.
Tax Avoidance
Involve the deliberate exploitation of the tax system.
Who pays tax?
Tax is collected from individuals and businesses
What do individuals get taxed from?
They get taxed on their income (wages, commissions etc.), they pay income tax
What do businesses get taxed from?
They pay tax on profits
What do sole traders get taxed from?
Are taxed within the owner’s tax return.
What do companies get taxed from?
A 30% flat rate as they are an individual legal entity.
Tax File Number
A tax file number (TFN) is your personal reference number in tax return and super systems which does not change over time. Not compulsory, however you have to pay more tax and lose benefits.
Tax Return
A form provided by the ATO on which a taxpayer reports taxable income with permitted deductions and exemptions, and covers their tax liability.
Covers the financial year.
If you lodge your own (not through a tax agent) they are due by the 31st October.
Financial Year
A 12 month period period used for tax purposes.
From the 1st July to the 30th June each year in Australia.
What are types of taxable income?
- Employment income
- Bank Account Interest
- Investment Income (e.g Dividends)
- Centrelink Payments
What are examples of allowable deductions?
- Vehicle/travel expenses
- Clothing, laundry and dry-cleaning expenses
- Gifts and Donations
- Home office expenses
- Interest, dividend and other investment income deductions
- Self-education expenses
- Tools, equipment and other equipment
- Other deductions
What are the requirements to claim a work-related deduction?
- You must have spend the money yourself and weren’t already reimbursed
- The expenses must directly relate to earning your income
- You must have a record to prove it (usually a receipt).
