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Income Tax Guide for Financial Year 2024

Key Changes for 2024

Key Areas to Focus on To Prepare Your Tax Returns in 2024

  1. Proof of Identity Requirements
    Confirming your identity is crucial for security and compliance purposes.

    • Relevant Documentation: Driver's license, passport and other government-issued ID. 

    • Verification Process: Your tax agent will verify your identity using these documents. Ensure all documents are current and valid.

  2. Tax Residency Status
    Your residency status determines your tax rates, deductions, and obligations.

    • Determining Residency:

      • Resident for Tax Purposes: You usually live in Australia, have a permanent home here, and your personal and economic ties are stronger in Australia.

      • Non-resident: You do not usually live in Australia and do not have significant ties to Australia. You are only taxed on your Australian-sourced income.

      • Temporary Resident: You are a temporary visa holder and are generally only taxed on income from Australian sources, with some foreign income exempt.

    • Relevant Documentation: Travel records, visa details, and documents showing your ties to Australia.

  3. Income Documentation

    • Salary and Wages: PAYG summaries from all employers.
      ✅ This includes regular wages, overtime, bonuses, allowances, and any other payments received.

    • Allowances, Tips, and Gratuities: Detailed records or statements showing all additional income.

    • Lump Sum Payments for Unused Leave: Statements from your employer detailing these payments.

    • Employment Termination Payments: Payment summaries for any termination benefits, including redundancy payments.

    • Government Payments: Statements from Centrelink or other government agencies detailing benefits received, such as JobSeeker or Youth Allowance.

    • Annuities and Superannuation Income Streams: Annual statements from your superannuation fund or annuity provider showing the amounts received.

  4. Deductions and Offsets

    • Work-related Expenses: Such as uniforms, protective clothing, tools, travel expenses related to your job.

      • Documents: Receipts, invoices, and detailed records. Ensure you only claim expenses directly related to your work and that you have not been reimbursed by your employer.
        🚨 Tax Alert: New rules for claiming home office expenses. Make sure to keep detailed records of hours worked from home and related expenses.

        • Example: If you purchased a new laptop for work, keep the receipt and a note on how it is used for work purposes.

    • Self-education Expenses: Such as course fees, textbooks, stationery, and travel expenses if the education directly relates to your current job.

      • Documents: Receipts and enrolment confirmations. You can only claim if the education maintains or improves the skills required in your current employment.
        ✅ Tax Tip: Plan to take courses that directly enhance your job skills to maximise your deductions.

        • Example: An accountant taking a course on advanced tax law can claim the cost as a deduction.

    • Donations to Charities

      • Documents: Receipts from registered charities showing the date and amount donated. Ensure the charity is a deductible gift recipient (DGR).
        ✅ Tax Tip: Donate before June 30 to claim the deduction in the current tax year.

        • Example: Donating $500 to a registered charity can reduce your taxable income by the same amount.

  5. Investment Income

    • Interest Income: Documented by bank statements showing interest earned.

    • Dividend Income: Documented by statements from companies or brokers detailing dividends received, including any franking credits.

    • Rental Income: Documented by lease agreements, statements of rent received, and details of expenses incurred (e.g., property management fees, maintenance costs).
      🚨 Tax Alert: Ensure all rental expenses are properly documented and only claim allowable deductions.

      • Example: If you spent $1,000 on property repairs, keep all invoices and payment receipts.

    • Capital Gains/Losses: Records of asset sales, including purchase and sale dates, and amounts. This includes shares, real estate, and other investments. Calculate capital gains or losses by subtracting the cost base (purchase price plus associated costs) from the sale price.
      🚨 Tax Alert: Be aware of the 50% CGT discount for assets held for more than 12 months.

      • Example: If you sold shares that you held for 18 months, you only pay tax on 50% of the gain.

  6. Foreign Income

    • Reporting Requirements: All foreign income must be reported, including wages, interest, and rental income.

    • Specific Rules for Temporary Residents: Certain foreign income may be exempt, but you need to understand the rules and document any exemptions.

    • Documents: Foreign bank statements, pay slips, rental agreements, and any other relevant records.
      ✅ Tax Tip: Convert all foreign income to Australian dollars using the exchange rate at the time the income was received.

      • Example: If you received $5,000 USD in interest, convert it to AUD using the ATO's exchange rate on the day it was received.

  7. Tax Rates: Ensure you have all income documented and classified correctly to determine the correct tax rate.

    • Residents

      • Rates: Progressive from 0% to 45%, depending on income. Ensure you know your total income and the applicable tax rate.

      • Tax-Free Threshold: The first $18,200 of your income is tax-free if you are an Australian resident for tax purposes.

    • Foreign Residents

      • Rates: Starting at 32.5% for incomes up to $120,000, and higher rates apply for higher incomes. Foreign residents do not benefit from the tax-free threshold.

      • Documents: Ensure you have all income documented and classified correctly to determine the correct tax rate.

  8. Medicare Levy

    • Rate: 2% of your taxable income.

    • Exemptions/Reductions: You may be exempt or qualify for a reduction based on your income level, specific circumstances (e.g., low-income earners), or if you hold a Medicare levy exemption certificate.

    • Documents: Income statements to calculate the levy and any exemption or reduction documentation.
      ✅ Tax Tip: Check if you are eligible for a reduction or exemption to potentially lower your tax liability.

      • Example: If your income is below the low-income threshold, you may qualify for a reduction or exemption from the Medicare levy.

  9. Private Health Insurance

    • Rebate Eligibility: You may be eligible for a private health insurance rebate, which can reduce your tax liability.

    • Documents: Statements from your private health insurance provider showing the premiums paid and any rebate received.

    • Tax Planning Point: Consider getting private health insurance to avoid the Medicare levy surcharge.

      • Example: If you earn above the Medicare levy surcharge threshold and don't have private health insurance, you will pay an additional surcharge.

  10. Spouse and Dependents

    • Impact on Tax: Your tax return may be affected if you support a spouse or dependents.

    • Documents: Spouse income details, dependent information, and any relevant support documentation.
      ✅ Tax Tip: Declare all relevant spouse and dependent information to ensure you receive the correct offsets and rebates.

      • Example: If you have a dependent child, you may be eligible for the dependent tax offset.

  11. Child Support Payments

    • Impact on Tax: Child support payments can affect your taxable income.

    • Documents: Payment records, including amounts paid and received.
      ✅ Tax Tip: Ensure all child support payments are accurately recorded to avoid discrepancies.

      • Example: If you pay or receive child support, keep detailed records and documentation to report accurately.

  12. Superannuation Contributions

  • Tax Benefits: Superannuation contributions may be tax-deductible, reducing your taxable income.

  • Types of Contributions: Concessional (before-tax) contributions, such as employer contributions and salary sacrifice, and non-concessional (after-tax) contributions.

  • Documents: Statements from your superannuation fund showing contributions made.
    ✅ Tax Tip: Consider making additional concessional contributions to reduce your taxable income.

  • Example: Salary sacrificing into superannuation can reduce your taxable income and increase your retirement savings.

    Tax Rates for Financial Year 2024

Income Range

Tax Rate            

$0 - $18,200

0%

$18,201 - $45,000

19%

$45,001 - $120,000

32.5%

$120,001 - $180,000

37%

$180,001 and above

45%

Cryptocurrency

As a crypto investor you need to consider Capital Gains Tax (CGT) when you dispose of your cryptocurrency (CGT Event). Dispose doesn't just mean sell; in general we can think of a disposal as any time your crypto trades ownership. This could include:

  •  Selling crypto for AUD or another fiat currency.

  • Swapping crypto for crypto, including stablecoins and NFTs.

  • Spending crypto on goods and services (if not seen as a personal use asset).

  • Gifting crypto.

It is recommended you acquire an online capital gain complete report for Crypto currency transactions for the financial year 2024 from Koinly or any other service providers.

What you need to bring to your tax appointment

Here is a brief general checklist of things to prepare for your tax return appointment. Not all of the following will be relevant for everyone, but will depend on your own circumstances. This checklist it should help you tick off what you do or don’t have in preparation for your next visit.

◻️ Proof of identity documents
◻️ PAYG payment summaries
◻️ Allowance, tip, and gratuity records
◻️ Lump sum payment details
◻️ Termination payment details
◻️ Government payment statements
◻️ Annuity and superannuation income stream documents
◻️ Investment income statements
◻️ Records of capital gains/losses
◻️ Foreign income records
◻️ Receipts for all deductions
◻️ Private health insurance statements
◻️ Spouse and dependent information
◻️ Child support payment records
◻️ Superannuation contribution statements
◻️ Understanding of applicable tax rates
◻️ Medicare levy exemption/reduction documentation (if applicable)

For more details and examples refer to the guides below.

Allowable Deductions

Offsets & Rebates