Let’s face it, there are more exciting things to discuss with your friends than tax and if you do get a chance to raise it, no one really understands how it works.
Albert Einstein was famously quoted as saying “the hardest thing in the world to understand is income tax”. So where do you go to get the right information about lodging your tax return?
Here to help guide you through this year’s tax season is Thomas Boyd, UC alumni and partner at local accounting firm Vivid Chartered Accountants. Thomas has detailed five of his top tax tips for students to consider before lodging their tax returns
1. Self-education deductions
The main thing I see students missing out on are deductions for their study expenses. In general, the Australian Taxation Office (ATO) will allow you to claim deductions for education costs if you are studying a course that will maintain or improve your skills in your current occupation, for example a student working for an accountancy firm and studying a bachelor of commerce majoring in accounting will likely be able to claim their study expenses. The main deductions you can claim include:
- Course fees
- Travel costs
- Depreciation (on laptops/computers or other assets required)
2. Other deductions
Other expenses that are directly related to your income will also be deductible, some common work-related expenses include:
- Motor vehicle expenses (remember driving to and from work is generally not classified as deductible travel)
- Protective clothing or uniform expenses
- Overnight travel
- Mobile phone expenses (only the portion related to work)
- Home office expenses (if required to work from home)
- Union or professional membership costs
3. Tax File Number declaration
If you found that you received a huge tax refund or a huge tax payable amount last year and your tax return is relatively simple (such as working for one employer) then it is likely that you filled out your Tax File Number declaration form incorrectly. You may prefer to fill this form out again for your employer so they can withhold the correct amount of tax from your wages and save you from the heartache of a huge tax payable amount at the end of the financial year.
4. Overseas students
For overseas students the most important factor that will influence the amount of tax you are required to pay is whether you are classified as an Australian resident for tax purposes or not. This area of the law is a little tricky however if you are in Australia for more than 183 days (does not have to be consecutive) in a financial year you will be considered an Australian Tax resident.
Being classed as an Australian tax resident provides access to the same tax benefits as all other Australians (such as the tax free threshold), the downside is that you will need to declare and pay tax on worldwide income (you will receive a tax credit for any foreign income tax paid), such as interest earned in overseas bank accounts. On the flip side, if you are not classified as an Australian tax resident then you will only need to declare income that is derived in Australia, however the rates of tax you pay on Australian income will likely be higher.
5. Where to get help
The Australian Taxation Office (ATO) have a huge range of valuable resources online. I find googling my issue with ‘ATO’ included generally brings up what I need. For example, “ATO Income tax rates for foreign residents”. If your situation is more complex, I suggest speaking with an accountant who is also a registered tax agent (such as Vivid Chartered Accountants) and they can help guide you through the complexities.
Want more tax tips? Join Thomas for a tax and tacos night at the Social Club in Kingston on Tuesday 18 June from 5.30 – 7.30pm. Click here for more info.