Happy New Year
Welcome to the Personal Tax Specialists 2011 Tax Time Update.
Your 2011 tax return
It’s hard to believe that another tax year has passed already and its time to start getting your records together again. We will be emailing your ‘2011 Quick Update Form’ to you early next week to make sure that we have all of your details up to date. On this form you can also indicate which month you would like us to get started on your tax return this year.
$25 thank yous
Over the past 12 months we have received lots of new clients through referrals from our current clients. We appreciate your support and the confidence you show in us when making these referrals. So this financial year, rather than spending our marketing budget on advertising, we have decided to use it to say thank you instead.
For each new client you refer to us this financial year, we will give you a $25 credit. This credit will reduce the fee you are charged for the preparation of your next tax return.
And as an extra thank you, we will also give the person you referred a $25 credit to use towards their first tax return fee with us. Just make sure you ask anyone you refer to us this year to mention your name when they fill in their ‘New Client Form’ and we will do the rest.
Major tax changes in 2011
This year there have been lots of changes in the tax world. Some that you might need to be aware of are:
1. Self education and job seeking expenses are deductible – for a limited time only
Thanks to a recent court case, the Tax Office will have to allow a tax deduction for self education and job seeking expenses for individuals who have received certain Centrelink payments this year.
If you were studying during the year and received AUSTUDY, ABSTUDY or Youth Allowance payments from Centrelink then you will be entitled to claim for expenses you paid to attend your course. This can include: course fees, textbooks, stationery, computers, USBs, internet connection fees and phone calls.
If you received Newstart Allowance during the year, then you will be able to claim for any expenses that directly relate to you looking for work and meeting the requirements of your Employment Pathway Plan. This can include: travel to job interviews, training course costs, phone calls and resume preparation costs, provided you haven’t been reimbursed for these expenses.
Unfortunately, the government have announced they will pass new legislation that will remove the entitlement to claim these expenses from the 1st July 2011, so this is the last year these deductions will be allowed.
2. Paid parental leave
The new paid parental leave (PPL) system started on the 1st January this year, which will be a great financial help for many new parents. The main features of the new system are:
- Either parent can claim for PPL for up to 18 weeks within the first 12 months of their baby’s birth or their adoption
- The amount you receive will equal the minimum weekly wage
- The payment is taxable, so tax should be deducted and the amount you receive will need to be shown on your tax return
- A work test must be satisfied before a claim can be made
- No baby bonus can be claimed for that child if you receive the PPL
- No Family Tax Benefit Part B payment can be claimed while you are receiving the PPL
Depending on how long you plan to take off work, how many other children you have and whether you receive any other income during the year, you may still be better off under the old system. So it is important that before you make a claim for PPL, you make sure you work out which system will be the best for you. Once you make the decision, it cannot be changed.
The Family Assistance Office has some helpful information on their website at http://www.familyassist.gov.au or you can speak with us about which option may be best in your personal situation.
3. Dependent spouse offset is being phased out
If you have a dependent spouse, whose adjusted taxable income is below $9,426, you may be entitled to claim a tax offset of up to $2,286 this year, provided they were born before 1st July 1971. If your spouse was born after this date, in most situations you will no longer be entitled to the offset.
Also, the dependent spouse offset can only be claimed by couples who don’t have any dependent children. Unfortunately, the government are making it harder and harder to access these tax benefits.
4. Excess super contributions may be refundable – but for 1 year only
Over recent years the amount you can contribute to super without paying excess contributions tax has been reducing. This year if you are under 50, the maximum tax deductible (or concessional) contributions you can make into your super fund are $25,000, and if you are over 50, the maximum is $50,000. These limits include any compulsory superannuation contributions made by your employer or salary sacrificed contributions you make.
If your concessional contributions exceed these limits, you are required to pay a total of 46.5% tax on the excess contributions.
From the 1st July, the government has announced that if your concessional super contributions exceed the relecant cap, you will be able to withdraw up to $10,000 from your super fund and include this amount in your personal tax return instead. The only catch is you can only do this once. So in future years, if you continue to exceed the cap, you will have to pay the excess contributions tax.
If you think this might affect you and you have any questions, just let us know.
5. Flood levy starts on 1st July
In January 2011, the government announced that they would introduce a Flood Levy for the 2011-12 financial year to raise funds to assist communities to recover from the recent floods.
The levy of 1% will be paid by all taxpayers who have taxable income over $50,000 in the 2012 year, unless they were impacted by the floods themselves. If you were affected, you need to make sure you give a ‘Flood levy exemption declaration’ form to your employer so they don’t deduct the levy from your pay.
Many people also made donations following the natural disasters in Australia and the earthquake in New Zealand this year. If you have made any donations, don’t forget you can claim a deduction in your tax return as long as you have kept records to prove the donation. Alternatively, if you donated up to a maximum of $10, you can make a claim without having to keep any receipts.
This year’s audit targets
This year the Tax Office will be paying close attention to tax returns lodged by:
- Flight attendants,
- Real estate employees,
- Earth moving plant operators, and
- Building and construction employees, including apprentices
as well as anyone who has large or unusual tax deductions for their occupation.
So what does this mean for you and your tax return? The most important thing is that if you want to claim for your work expenses, you must have the right records in case the Tax Office wants to check them.
At the very minimum, the records you need to keep for your work expenses are:
- receipts for all work expenses costing $10 or more
- a diary record of any minor work expenses (costing $10 or less and up to a total of $200 for the year) where you haven’t kept the receipt
- a diary record of any work related trips you have made in your personal car
- a diary record of your internet use for work for one month during the year
- a diary record of your telephone use (mobile and home) for work for one month during the year
If you are unsure about what expenses you can claim for in your occupation have a look at the updated ‘what deductions can you claim’ page on our website or organise a time to speak with one of our accountants on the phone or via Skype.
If you know of anyone who might find any of the information in this email useful, please feel free to forward it on to them. And don’t forget to tell them to mention your name if they become a client so you both benefit from our $25 thank you this year.
Thanks for your support over the last year and as always, if you have any tax related questions, please just ask. We look forward to catching up with you over the next few months.
The Personal Tax Specialists team
Personal Tax Specialists Pty Ltd
Your time and tree friendly tax accountants
Phone 1300 335 675 – Email email@example.com