Many Happy Tax Returns
Australia has some of the most complex tax laws in the world, which means it's important to review your tax strategy each year to keep up with the latest changes. Here are some facts and tips to help you lodge your 2009-10 tax return.
Income Tax Rates
From 1 July 2009, the 30 per cent income tax threshold for individuals was increased from $34,001 to $35,001 and the 40 per cent tax rate was reduced to 38 per cent.
From 1 July 2010, the 30 per cent threshold will be increased again to $37,001, and the 40 per cent tax rate will be reduced to 37 per cent. The top marginal rate remains at 45 per cent. If you have an investment property, the income derived from your property is taxed at the individual tax rate unless the property is part of a company (then the company owns the property and not the individual). Your tax liability can be reduced by claiming the costs incurred in earning an income from your rental property.
Many tax payers forget they are entitled to claim for deductions like motor vehicle expenses, clothing, telephone costs, tax agents, gifts and donations. Currently $300 can be claimed for work related expenses or the cost of managing tax affairs without needing documentation and this will be increase to $500 effective 1 July 2012. (Expenses above this amount must be substantiated with receipts).
The claimable expenses on your rental property include: advertising for tenants, bank charges, body corporate fees, council rates, decline in value of depreciating assets, gardening, insurance, legal expenses, pest control, maintenance, stationery, phone and water charges.
The ability for a super fund to borrow money to invest was introduced in September 2007. The good news is that it is now possible to "gear" your superannuation savings, and thereby gaining exposure to an asset that your fund would not otherwise have been able to afford.
From 1 July 2009, the concessional superannuation contribution cap was halved, which means you can now only contribute $25,000 to super from before-tax earnings.
As announced in the 2010-2011 Federal Budget, From 1 July 2012, if you are aged 50 and over with a super balance of less than $500,000 the concessional super cap will be maintained at the $50,000 level.
If you have school age children, be sure you take advantage of the education tax refund, which entitles you to claim 50% of eligible education expenses up to the maximum claimable amounts.