Practical information on the topics our clients ask about most often — from individual rates to record-keeping and rental properties.
Australia operates a progressive income- system: the more you earn, the higher the marginal rate that applies to each additional dollar above the relevant threshold. Australian residents are ed on worldwide income, with the -free threshold and a series of brackets that climb up to the top marginal rate.
For the most recent year, residents pay no on the first $18,200, then 19% from $18,201–$45,000, 32.5% from $45,001–$120,000, 37% from $120,001–$180,000, and 45% above $180,000. The 2% Medicare Levy is added to able income for most residents.
Foreign residents are ed at different rates with no -free threshold. We can advise on residency status and the impact of dual-residence treaties.
The Australian system is administered by the Australian ation Office (ATO). Most Australians are required to lodge an annual return reporting their assessable income, claimable deductions, and any offsets or rebates that may apply.
Common types of assessable income include salary and wages, business income, rental income, dividends, interest, and capital gains. Deductions are expenses directly related to earning that income — uniforms, work-related travel, self-education, home-office costs, depreciation and more.
The lodgement deadline for self-prepared returns is 31 October following the end of the financial year (30 June). Clients of a registered agent generally receive an extended deadline, often into the following March or May.
To claim a work-related deduction, three tests apply: (1) you must have spent the money yourself and not been reimbursed; (2) the expense must be directly related to earning your income; and (3) you must have a record to prove it.
Failure to lodge a return or activity statement by the due date may attract an automatic penalty — Failure to Lodge on Time (FTL) penalty. The penalty is calculated as one penalty unit for each 28-day period the document is overdue, up to a maximum of five units.
For small entities, multiple late lodgements can compound quickly. If you've fallen behind, we can help you get caught up, negotiate remission of penalties where appropriate, and put a process in place to keep things on track in future.
The ATO may also apply General Interest Charge (GIC) on unpaid debts, which accrues daily and is significantly higher than most commercial lending rates.
You're required to keep written records — receipts, invoices, statements and similar — that explain all transactions relating to your affairs. Records must generally be kept for five years from the date the relevant return is lodged.
Records can be paper-based or electronic, provided they are clearly legible, in English (or readily translatable), and a true and correct record of the transactions. Common items to keep include:
Whether you're treated as a contractor or an employee for purposes depends on the substance of your working arrangement — not the label on the contract. Factors the ATO considers include control, the ability to delegate, who supplies tools and equipment, who bears commercial risk, and how payment is calculated.
Contractors typically need an ABN, may need to register for GST (if turnover is $75,000 or more), and have their own super, PAYG-instalment and insurance obligations. The Personal Services Income (PSI) rules may apply where most of your contract income comes from your personal skills or efforts.
If you're unsure how PSI affects you — or whether you should be operating through a sole trader, partnership, company or trust structure — we can advise.
Rental income is assessable; allowable expenses are deductible. The most commonly claimed expenses include:
If you sell the property, Capital Gains may apply. The main residence exemption can shelter the gain on your home, but the rules are complex if you've rented it out at any point — talk to us before making decisions.
A downloadable checklist of everything you'll need to bring to your -return appointment is on its way — we're refreshing it for the current financial year. In the meantime, give us a call and we'll send you a tailored list based on your circumstances.
Coming soon. For now, please call +61 468 284 922 or email info@sydney-cbd.com.