Aus tax return - Help!
Jul 12th 2006, 10:32 pm
#16
BE Enthusiast
Thread Starter
Joined: Aug 2005
Posts: 472
Re: Aus tax return - Help!
Originally Posted by ianandhelena
no you don't need to include income derived before you became resident for tax purposes; see section 6 of this ruling.
Thanks, this started to make sense after the fifth go at reading it!
Jul 12th 2006, 10:34 pm
#17
BE Enthusiast
Thread Starter
Joined: Aug 2005
Posts: 472
Re: Aus tax return - Help!
Originally Posted by brisnick
Also note that an Australian Resident and an Australian TAX Resident are two completely different things.
Even as an Aussie, if I leave and go back to the UK and work for more than 6 months, then the day I leave I cease to be an Australian Tax Resident and any income I earn is not subject to Australian Tax when I return. Once I intend to stay in Australia for more than 6 months again, I become a Tax Resident and then any foreigh income is subject to Aussie Tax.
Even as an Aussie, if I leave and go back to the UK and work for more than 6 months, then the day I leave I cease to be an Australian Tax Resident and any income I earn is not subject to Australian Tax when I return. Once I intend to stay in Australia for more than 6 months again, I become a Tax Resident and then any foreigh income is subject to Aussie Tax.
Jul 12th 2006, 11:00 pm
#18
That's Dr Bitch to you
Joined: Feb 2006
Location: Out in the 'burbs of Melbourne
Posts: 925
Re: Aus tax return - Help!
Best of luck with your returns - just done ours and looking forward to receiving a couple of thousands in a few weeks Its great having student deductions
Its great having student deductions
Originally Posted by Bert'n'Stella
I'm going with this!!! I think you are right on the money (after reading all the terminology on the ato site...) Thanks!
Jul 12th 2006, 11:09 pm
#19
BE Enthusiast
Joined: Jan 2006
Posts: 413
Re: Aus tax return - Help!
Originally Posted by cresta57
I don't follow the logic on that scenario 
If I engage the services of an accountant I submit his bill as an expense incurred in the running of my business, therefore the pre-tax profit is reduced by whatever his bill comes to. In other words instead of the ATO getting $100 bucks extra the accountant gets the $100 bucks. I'm no better of financially but I've gained professional advice that's probably saved me money in the long run.
As I understand it if you pay an accountant in one tax year you claim it as an expense the following year.
I'm sure there's a few accountants lurking that would/could clarify.
If I engage the services of an accountant I submit his bill as an expense incurred in the running of my business, therefore the pre-tax profit is reduced by whatever his bill comes to. In other words instead of the ATO getting $100 bucks extra the accountant gets the $100 bucks. I'm no better of financially but I've gained professional advice that's probably saved me money in the long run.
As I understand it if you pay an accountant in one tax year you claim it as an expense the following year.
I'm sure there's a few accountants lurking that would/could clarify.
Jul 13th 2006, 12:46 am
#20
Home and Happy
Joined: Dec 2002
Location: Keep true friends and puppets close, trust no-one else...
Posts: 93,860
Re: Aus tax return - Help!
Originally Posted by geordie downunder
Try this way then,leaving aside medicare levy.You earn $1000 and ATO takes 30%.They get $300 you get $700 ,your taxable income is $1000.You go to a tax agent and pay him $100 to do your tax,your gross income is $1000,minus the $100 tax deduction,a taxable income of $900.You pay $270 tax on your taxable income,you have saved $30 in tax.Whatever you pay out you get back multiplied by your marginal rate.Business or personal is the same,one is wages one is profit.To gain better traction from a business take profit as dividends,corporate tax is 30% max ,personal tax is 45% max but you need to see an accountant to set the structure for you,family trusts can also reduce tax but again see an ac/t.
Jul 13th 2006, 12:54 am
#21
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Aus tax return - Help!
Originally Posted by cresta57
I don't follow the logic on that scenario
If I engage the services of an accountant I submit his bill as an expense incurred in the running of my business, therefore the pre-tax profit is reduced by whatever his bill comes to. In other words instead of the ATO getting $100 bucks extra the accountant gets the $100 bucks. I'm no better of financially but I've gained professional advice that's probably saved me money in the long run.
As I understand it if you pay an accountant in one tax year you claim it as an expense the following year.
I'm sure there's a few accountants lurking that would/could clarify.
If I engage the services of an accountant I submit his bill as an expense incurred in the running of my business, therefore the pre-tax profit is reduced by whatever his bill comes to. In other words instead of the ATO getting $100 bucks extra the accountant gets the $100 bucks. I'm no better of financially but I've gained professional advice that's probably saved me money in the long run.
As I understand it if you pay an accountant in one tax year you claim it as an expense the following year.
I'm sure there's a few accountants lurking that would/could clarify.
If you don't pay for an accountant, out of your initial $1000, the tax man gets $300 and you get $700 in your pocket. However, if you pay for an accountant, the tax man gets $270, the accountant gets $100 and you get $630 in your pocket. All told, you still end up paying for the accountant, the tax man just helps by giving back the tax on the amount charged by the accountant and not the whole amount.
PS: Please note that the tax man will go on to tax any profit the accountant makes on the $100.
Last edited by MartinLuther; Jul 13th 2006 at 12:57 am.
Jul 13th 2006, 1:22 am
#22
BE Enthusiast
Joined: Aug 2004
Location: Raleigh, NC, USA (Region 2)
Posts: 607
Re: Aus tax return - Help!
This is essentially the difference between a "tax deduction" which lowers your taxable income (and hence the tax you pay based on your maginal tax rate) and a "tax credit" which would be taken directly from the tax you owe. Most expenses like tax preparation fees are tax deductible rather than tax credits.
Cheers,
Brian
Cheers,
Brian
Originally Posted by MartinLuther
Just to clarify (following on from geordie's example).
If you don't pay for an accountant, out of your initial $1000, the tax man gets $300 and you get $700 in your pocket. However, if you pay for an accountant, the tax man gets $270, the accountant gets $100 and you get $630 in your pocket. All told, you still end up paying for the accountant, the tax man just helps by giving back the tax on the amount charged by the accountant and not the whole amount.
PS: Please note that the tax man will go on to tax any profit the accountant makes on the $100.
If you don't pay for an accountant, out of your initial $1000, the tax man gets $300 and you get $700 in your pocket. However, if you pay for an accountant, the tax man gets $270, the accountant gets $100 and you get $630 in your pocket. All told, you still end up paying for the accountant, the tax man just helps by giving back the tax on the amount charged by the accountant and not the whole amount.
PS: Please note that the tax man will go on to tax any profit the accountant makes on the $100.
Jul 13th 2006, 11:19 am
#23
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Aus tax return - Help!
Originally Posted by brian0
This is essentially the difference between a "tax deduction" which lowers your taxable income (and hence the tax you pay based on your maginal tax rate) and a "tax credit" which would be taken directly from the tax you owe. Most expenses like tax preparation fees are tax deductible rather than tax credits.
Cheers,
Brian
Cheers,
Brian
Jul 13th 2006, 4:49 pm
#24
A former regular of BE
Joined: Oct 2004
Location: Carramar, Perth
Posts: 6,241
Re: Aus tax return - Help!
Originally Posted by Pollyana
I had the same query the first year I was here.
What happens is, you work your way through the online tax thing, quoting the figures from your AUSTRALIAN wages. At some point it asks you if you have been an Aus tax resident for the whole year. If not, then you enter the date on which you became one (ie, the date you arrived here). The only UK income they are interested in is that which you earn AFTER your arrival (ie after you become a tax resident). You don't need to include the wages you earned before you emigrated.
The same applies to Medicare - it calculates from the date you arrived.
What happens is, you work your way through the online tax thing, quoting the figures from your AUSTRALIAN wages. At some point it asks you if you have been an Aus tax resident for the whole year. If not, then you enter the date on which you became one (ie, the date you arrived here). The only UK income they are interested in is that which you earn AFTER your arrival (ie after you become a tax resident). You don't need to include the wages you earned before you emigrated.
The same applies to Medicare - it calculates from the date you arrived.
Jul 13th 2006, 10:38 pm
#25
Home and Happy
Joined: Dec 2002
Location: Keep true friends and puppets close, trust no-one else...
Posts: 93,860
Re: Aus tax return - Help!
Originally Posted by worzel
That's correct (I am an accountant and checked this). But you DO have to declare UK income from 1st July to the date of arrival for Family Tax Benefit claims.
