Monthly Archive: November 2014

The Way to Travel Claims in Individual Tax Return

Travel Claims in Individual Tax Return

Paying a large chunk of your income to a third party in the form of tax seriously frustrates everybody. Government provides numerous facilities and services as a return for taking tax from residents. On the other hand, people try to find all kinds of ways in order to pay minimum amount of tax on the income earned during a financial year. For this purpose, people pay financial (tax) advisers to help them reduce tax payment at the end of year. Professionals from this field have plenty of knowledge on how to legally reduce tax payments. An individual might know about these methods but details are difficult to understand for a person having no connection with tax or finance field. Contact the Accountants Sydney for assistance, that plays a key role when it comes to implementation.

Today, we are going to help you learn about how to save tax money by making travel claims. It does not mean that you are entitled to make a claim for all travel related expenses on your tax return Sydney. The travel claim can only be made on your work related expenses with travelling. We will be uncovering 4 major travel claim types for your better understanding.

  1. Travel Between Workplaces, also Home and Work
  2. Car Expenses
  3. Award Transport Payments
  4. Other Travel Expenses

Travel Between Workplaces, Also Home and Work

Travelling between two or more work places and work to home or home to work is considered private. However, the ATO allows you to make travelling claims in this case under specific circumstances. If some part of the travelling was for work and remaining portion private then you can only make a claim for the work related travelling. Here is what you are allowed to claim in terms of travelling cost:

  • Direct travelling between two or more workplaces for two different employers in case of two jobs
  • Travelling to another workplace from usual workplace for the same job’s requirements
  • From home to workplace in case you started working at home and went to workplace in order to continue the work of same job
  • In case of job’s nature is shifting places which requires working at more than one place every day before going home
  • Travelling from home to secondary workplace for job work and then going to the daily workplace or home
  • Carrying certain equipment or documents with yourself in case they cannot be left at workplace

 Car Expenses

This type of claim is entirely different from the one we have mentioned above. Using a hired/rented car, leased car or your own car for work purposes come under the term car expenses. On the other hand, direct costs including fuel can be claimed when using anybody else’s car.

When to claim: Performance of tasks by travelling on car required by the job nature as an employee. In any such case the claim can be made.

Leased or owned cars: Expense incurred for using, rented, hired, owned or leased car for work related travelling can be claimed.

Deduction calculation: Many different methods can be used for calculating work related travelling car expenditure. Difference in total calculated amount can incur by using different methods. Go for the one which produces largest total. In case of jointly owned car, there have to be certain adjustments made to the expenditure.

Car owned jointly: You might not be able to implement the specific rules related for jointly owned cars’ claiming expenses. There are certain conditions which have to be met for every claim method.

Award Transport Payments

Receiving a payment from the employer for travel related expenses incurred is known as award transport payment. It has to be included on tax return because it occurs as assessable income. On the other hand, deduction claim can be made for work travel expenses covered by award transport payments.

Specific number of kilometres or miles is set for every award transport payment in the form of reimbursement of car expenditure. Claim on tax return can be made for the miles which you have travelled extra and were not covered by the payment. Using cents per km or logbook method is required in order to provide evidence for the travelling.

Other Travel Expenses

Expenses for incidentals, accommodation and meals during a task related to job work can only be claimed if you are travelling out of town such as attending meeting or seminar in another city.

Deduction calculation: Only actual expenses can be claimed in case you are allowed to use any vehicle other than car or a borrowed car. On the other hand, amount of claim depends on whether you have received any allowance for costs incurred during work related travelling.

Records of travel expenditure: It is not possible for the tax authorities to accept claims from your side in tax return without being able to cross check with evidence. Specific requirements have to be met related to travel expenses which entirely depends on:

  • Travel allowance
  • Travel type; overseas or domestic
  • Travel length
  • Occupation

It is common to consult a professional tax agent Sydney if you often travel because of job’s type. In this way, you will be able to make better claim on your tax return for work related travelling expenses.

Tax Issues When Dealing With Australians Working Overseas

Tax Issues When Dealing With Australians Working Overseas

Australian Tax Office has defined all tax rules and regulations clearly enough for citizens to understand them easily. However, sometimes the situation is a bit complex where “ifs” and “buts” create confusion in the mind of tax payer. Today, we will be discussing the commonly faced tax issues by Australians who work aboard. An individual must have clear idea of how the taxation rules are going to apply when looking forward to work overseas.

Below we have mentioned some of the basic tax issues and circumstances which you need to be aware of if you work outside Australia permanently or temporarily:

  • If your status has become “foreign resident” from Australian resident during financial year then you are required to:

      Answer “yes” on tax return’s question that are you an Australian resident

      Claim for number of days during a financial year when you weren’t Australian resident for tax return for purpose of Medicare levy exemption days

      Get tax offset claim reduced for any dependant spouse if the spouse and you were not Australian residents by mentioning the time period

  • Lodge the early return if leaving Australia
  • Be aware of CGT obligations if you are retaining assets in Australia while being a resident before leaving
  • Liable to pay surcharge of Medicare levy in case the income is surplus of relevant Medicare levy surcharge threshold only if you have cancelled private health insurance while going abroad
  • Take care of obligations if you have taken Student Financial Supplement Scheme or Higher Education Loan Programme or the debt will keep indexing every year until completely paid. Making voluntary repayments is an option.

Superannuation Obligations For Australians Working Overseas

In multinational companies, it usually happens that the employer sends employees abroad temporarily for work reasons. In this case, the employer is obligated to pay your super payments in Australia on your behalf. On the other hand, your employer and you don’t have to pay any super payments in the other country if these conditions are met:

  1. Having bilateral social security agreement with Government of Australia
  2. Being covered with super guarantee in Australia
  3. Employer gaining Certificate of coverage for employee from the ATO

It is a must for you to get the copy of Certificate from employer while travelling abroad. It can be shown to other country’s authorities if any issue comes up. You can apply for the Certificate of Coverage over the internet.

International Taxation Obligations Within Australia

Tax Residency – The tax situation cannot be understood till your residency is not clear. You should be an Australian resident for the ATO’s rules to be applied in your case. Every individual is taxed on the total worldwide income generated from every source.

Overseas Living – Tax affairs can only be sorted out if you take care of certain things whether you are an Australian resident or not. For all Australians working abroad, it is a must to declare their worldwide income for the purpose of Australian tax return. It is applicable in that case even if tax has been paid in the other country where you earned the income.

Investing Abroad – Income earned from renting property abroad, selling assets overseas and interest gained from any source in another country. All these factors add up when you declare the worldwide income. In Australia the foreign income tax offset could be claimed if the tax has already been paid in other country for earnings mentioned above.

More On Tax Obligations For Australians Working Overseas

It is important to provide information on worldwide income if you are an Australian resident and working abroad. The worldwide income includes; exempt foreign employment income and assemble income. It has to be declared even if the tax has been taken by the other country for income you earned.

  1. Foreign Employment Income: Irrespective of whether it is exempt or assemble, you must report it to ATO.
  2. Foreign Income Tax Offset Claim: Double taxation will no more exist if you make a claim for foreign income tax offset in case you have paid tax in the other country for earning there.
  3. Lump sum & Allowances Payments: There are certain allowances which are taxable such as employer paying expenses for you living away from home.
  4. Coverage for Double Superannuation: If you don’t have a bilateral superannuation agreement then double superannuation coverage has to be paid by employer in Australia and the country where employee is working.
  5. Abroad Police, Defence & Other Official Service: Members of certain departments or organizations which work abroad to provide aid are exempted from paying any tax on foreign income such as Australian Police.

Information For Individuals About To Leave Or Have Left Australia

There are 3 major aspects which we recommend you to look at if you have left or about to leave Australia.

  1. Tax Residency: In case you are going to stay Australian resident then lodge the tax return after declaring world income as mentioned above. On the other hand, tax obligations will change completely if residency changes.
  2. Advance Tax Return Lodging: In case you have to leave Australia before financial year ends then you will be allowed to lodge tax return earlier.
  3. Outside Australia Tax Return Lodging: While being outside Australia, you could lodge the tax return online via e-tax during July 1 – October 31.