Speaker 1: Welcome to the Friends with Money podcast, brought to you
Speaker 1: by Money Magazine, creating financial freedom for Australians since nineteen
Speaker 1: ninety nine.
Speaker 2: Hello and thanks for joining us for another episode of
Speaker 2: Friends with Money, money Magazine's podcast to help you earn, save,
Speaker 2: and achieve your financial goals. My name is Tom Watson,
Speaker 2: a senior journalist here at Money Magazine, and as always,
Speaker 2: it is a pleasure to be with you. Twelve point
Speaker 2: six million. That is the number of individual tax returns
Speaker 2: the Australian Taxation Office, commonly known as the ATO says
Speaker 2: it is a received for the twenty twenty three to
Speaker 2: twenty four financial year as of late January. And I
Speaker 2: know it's hard to believe and frankly some of you
Speaker 2: won't want to hear it, but with the end of
Speaker 2: the financial year nearly upon us, it is time for
Speaker 2: Australian to start thinking about tax again in a serious way.
Speaker 2: So with that in mind, on today's episode, we are
Speaker 2: going to take a look at some of the things
Speaker 2: that tax payers can do before this financial year is
Speaker 2: out and once the twenty twenty five to twenty six
Speaker 2: financial year begins to prepare for tax time. And joining
Speaker 2: us today is a man that always has tax on
Speaker 2: his mind. Or actually, I hope that's not true for
Speaker 2: yours eight Mac, but it is a regular Money contributor,
Speaker 2: friend of the podcast and director of tax communications at
Speaker 2: H and R Blog, Mark Chapman. Mark, welcome back to
Speaker 2: Friends with Money. It is a pleasure to have you
Speaker 2: back on the show.
Speaker 3: No problem, Tom, Thanks very much, It's always a great
Speaker 3: pleasure to be here.
Speaker 2: Mark. To start off, just to give everyone a little
Speaker 2: bit of context, what are some of the I guess
Speaker 2: key tax related dates coming up that Australians will want
Speaker 2: to be aware of.
Speaker 3: Well, the main one is coming up to tax time.
Speaker 3: Hard to believe it's been a whole year, but nevertheless
Speaker 3: we're coming up to the season when people do need
Speaker 3: to prepare their tax returns. So as of July the first,
Speaker 3: basically the AHO will be open for business for people
Speaker 3: twenty twenty five tax returns, so they do need to
Speaker 3: lodge those as of July the first, probably best if
Speaker 3: they wait a couple of weeks to lodge their tax returns.
Speaker 3: You know, if they're relying on pre field data for example,
Speaker 3: that's often not available in the early part of the
Speaker 3: tax season. So we do recommend that people do lodge
Speaker 3: from about you know, the fourteenth of July onwards and
Speaker 3: basically they've got until the thirty first of October to
Speaker 3: actually lodge. That's the deadline for self lodgers. If they're
Speaker 3: using a tax agent, however, they potentially have until the
Speaker 3: fifteenth of May next year, so they have a good
Speaker 3: long time to actually lodge their return. Obviously, if they're
Speaker 3: expecting a refund, as many taxpayers will be doing, we
Speaker 3: do recommend that taxpayers lodge sooner rather than later. So
Speaker 3: you know, in July and August we expect to get
Speaker 3: lots of tax returns producing very large refox.
Speaker 2: Well lots of incentive to are to get organized and
Speaker 2: then to get filing early, although as she said, not
Speaker 2: too early their mark. Before we get into some kind
Speaker 2: of practical things people can do to a to start
Speaker 2: to prepare. Are there any groups of taxpayers that the
Speaker 2: ANTO has I guess put on notice so far this
Speaker 2: year that you know, might get a little bit of
Speaker 2: extra close attention this year.
Speaker 3: Yeah, Well, I mean the ato's hit piss as it were,
Speaker 3: is pretty similar to last year, so they're going to
Speaker 3: be paying close attention to work related expenses. You know,
Speaker 3: in terms of those deductions for working for home expenses,
Speaker 3: claims for work related clothing, botor vehicle claims, all of
Speaker 3: that kind of thing. The ATO estimates that there was
Speaker 3: something like an eight point seven billion dollars short for
Speaker 3: between the tax and individuals were were expected to pay
Speaker 3: and the tax they actually are paying.
Speaker 2: Wow.
Speaker 3: And now the ATO believes that that tax gap is
Speaker 3: predominantly related to work related expenses. So the ATO are
Speaker 3: inevitably going to have a very large focus on work
Speaker 3: related expenses. However, in addition, you know, if you own
Speaker 3: a property, you can expect to receive a certain amount
Speaker 3: of ATO scrutiny. The ATO recently announced that in a
Speaker 3: series of audits they found errors in ninety percent of
Speaker 3: return reviewed which were related to properties. So therefore you
Speaker 3: can expect them to particularly focus on investment properties, holiday homes,
Speaker 3: et cetera. You know, all of those sorts of claims.
Speaker 3: And also in relationship of sharing economy, the ATO believes
Speaker 3: that there are lots of people who are operating in
Speaker 3: the sharing economy, you know, Uber, Airbnb, task et cetera,
Speaker 3: all those platforms who simply aren't declaring their income. So
Speaker 3: you know, the ATO does have a real focus on
Speaker 3: the sharing economy and indeed also on crypto currency. Many
Speaker 3: people believe that cryptocurrency provides people with an opportunity to
Speaker 3: buy and sell with some degree of anonymity. They believe
Speaker 3: that the AHO doesn't know what they're doing. Well, the
Speaker 3: HO by and large does know because they're getting third
Speaker 3: party data from cryptocurrency exchanges. Therefore, you know, they are
Speaker 3: going to have a real focus on people who are investing, buying,
Speaker 3: and selling cryptocurrency.
Speaker 2: There's been a lot of people that have been doing that,
Speaker 2: especially in the last year or so, so a good
Speaker 2: little warning there for them and the other people that
Speaker 2: you mentioned their mark. All right, let's get practical. Then,
Speaker 2: are there any last minute deductions or contributions that people
Speaker 2: may want to consider making now before the end of
Speaker 2: the financial year actually comes.
Speaker 3: Yes, well, I mean probably the biggest one is this
Speaker 3: does it right off?
Speaker 1: Now?
Speaker 3: That only applies if you're running a small business. So
Speaker 3: if you're small business has got a turnover of less
Speaker 3: than ten million dollars, as it right off enables you
Speaker 3: to write off the cost of all capital purchases up
Speaker 3: to a limit of twenty thousand dollars per item. You know,
Speaker 3: if you spend the next few weeks purchasing capital items,
Speaker 3: you can write off the full cost in this tax year,
Speaker 3: provided the cost of the acid is less than twenty
Speaker 3: thousand dollars. So this is a really worthwhile scheme. It
Speaker 3: was originally expected to end on the thirtieth of June
Speaker 3: twenty twenty five, has actually been extended now to the
Speaker 3: thirtieth of June twenty twenty six. But nonetheless, in his
Speaker 3: current tax here he does provide a grade incentive for
Speaker 3: small businesses to do some tax planning, particularly last minute
Speaker 3: tax planning around this time of year, So that's only
Speaker 3: applicable to small businesses. If you're employed, you know, there
Speaker 3: are various other things you can look to do, such
Speaker 3: as making a tax deductible super contribution provided to total
Speaker 3: amount of your concessional contributions doesn't exceed thirty thousand dollars.
Speaker 3: You know, this can be a great way to both
Speaker 3: boost your retirement savings and also claim a tax deduction
Speaker 3: for the personal contribution. Now that thirty thousand dollars does
Speaker 3: include any employer's contributions which have already been paid. Nevertheless,
Speaker 3: there might be some some additional contributions you can make
Speaker 3: in order to meet that thirty thousand dollars threshold. So
Speaker 3: if you can, if you've got some spare cash lying around,
Speaker 3: that's well worth looking at.
Speaker 2: Yeah, great point. Always always love the idea of making
Speaker 2: extra contribution. If, as you said, do you have the
Speaker 2: cash to spare harm, that could be really useful. Mark,
Speaker 2: just a bit of a follow up on this one.
Speaker 2: How can people ensure that they're actually, you know, claiming
Speaker 2: the deductions that they're entitled to without getting in trouble
Speaker 2: with the ideo.
Speaker 3: Well, the best plan here is really to get a
Speaker 3: tax agent. A good tax agent will be able to
Speaker 3: stiff out some additional deductions that you may not have
Speaker 3: realized that you're actually titled to. But equally, a good
Speaker 3: tax agent will be able to say that no, you
Speaker 3: can't actually claim this deduction. So you know, they do
Speaker 3: earn their fees in both directions, and of course the
Speaker 3: tax agent's fees itself deductible in next year's tax return.
Speaker 2: And still on the kind of pre end of financial
Speaker 2: year to do lists or perhaps kind of moving into
Speaker 2: a post as well, are there any documents or records
Speaker 2: that people may want to start putting together, you know,
Speaker 2: to make life easier when they actually start thinking about
Speaker 2: preparing their tax return in the months to come.
Speaker 3: Yes, well, in terms of asociation of your deductions, it
Speaker 3: is necessary to have all of your invoices or your receipts,
Speaker 3: so it is worthwhile spending the time to pull together folder,
Speaker 3: either in an electronic form or in paper, for of
Speaker 3: all of your receipts to support the deductions you tend
Speaker 3: to claim, even if you're not sure whether it's going
Speaker 3: to be claimable, you get the receipt or the invoice,
Speaker 3: take it along to your tax agent and they will
Speaker 3: be able to tell you whether you can claim it
Speaker 3: or not. You know, now is a really good time
Speaker 3: to do that. Obviously, if you can't find a copy
Speaker 3: of the receipt or the invoice, you have the option
Speaker 3: of potentially going back to the retailer and obtaining a copy. Otherwise, unfortunately,
Speaker 3: you won't really be able to claim a deduction for
Speaker 3: at that particular item if you can't substantiate it. So,
Speaker 3: in other words, if you can't produce the invoice or
Speaker 3: the receipt, there are certain circumstances where you might be
Speaker 3: able to get away with the bank statement to a
Speaker 3: credit card statement but that isn't guaranteed. So we always
Speaker 3: say that an invoice or the receipt is the primary
Speaker 3: form of substance. So it is essentially we're going to
Speaker 3: tax time, you know, with a comprehensive file of it
Speaker 3: voices or receipts for all of our clients.
Speaker 2: Don't know to pat myself on the back too much, year,
Speaker 2: but one of my kind of financial New Years or
Speaker 2: financial New years the resolutions last year was to to
Speaker 2: keep a proper folder in my Gmail and chuck all
Speaker 2: my kind of work related expenses and receipts in there.
Speaker 2: So I've got a nice tidy folder ready to go
Speaker 2: for tax time this year. And I've actually followed that,
Speaker 2: So yeah, well done me. I don't know why I
Speaker 2: bought that up, but yeah, I think it's a I
Speaker 2: think it's a good idea. Anyway, Mike, let's move on
Speaker 2: to the new financial year. Then after July one, when
Speaker 2: the new financial year begins and people can, as you
Speaker 2: said in theory, start to think about the tax returns.
Speaker 2: Is there anything they should consider or you know, straight
Speaker 2: out shouldn't consider doing to you know, make life easier
Speaker 2: or not.
Speaker 3: Well, I mean thinking forward to next year's tax return.
Speaker 3: It might seem that we're a long way from that point,
Speaker 3: but doing what you did, you know, storing documents as
Speaker 3: you go through the course of the year will always
Speaker 3: make life easier come tax style. You know, it's all
Speaker 3: very well scrabbling around trying to find invoices in June
Speaker 3: that relate to you know, last July or August, but
Speaker 3: it's so much easier if you've actually had the forethought
Speaker 3: to actually pull together all of those invoices at the
Speaker 3: time which you spend the money. So therefore it is worthwhile,
Speaker 3: you know, preparing a file and actually filling it with
Speaker 3: invoices or receipts as you go, rather than trying to
Speaker 3: do it all at the last minute in June, when
Speaker 3: there's a good chance that you won't be able to
Speaker 3: find a receipt for a particular invoice, you know you're
Speaker 3: potentially missing out. That is probably the number one key,
Speaker 3: you know, think ahead and plan accordingly, and keep your
Speaker 3: receipts and invoices as you actually spend the money.
Speaker 2: Follow my advice to your listeners, not that I give
Speaker 2: any personal much for financial advice, sid it's only general advice.
Speaker 2: Mark a final question for me and with the caveat
Speaker 2: that things could, you know, always change between when we're
Speaker 2: recording this episode and the start of the new financial year.
Speaker 2: But are there any new tax related changes kicking in
Speaker 2: from July one that that people may want to know about.
Speaker 3: Yes, well, the rate of the lowest rate of big
Speaker 3: tax is actually coming down from the first of July.
Speaker 3: That won't be make a huge difference. It'll know about
Speaker 3: to about five dollars a week for most taxpayers, so
Speaker 3: therefore it'll pay for a cup of coffee. But it's
Speaker 3: worth while bearing your mind. But other than that, basically
Speaker 3: things are carrying on much as we're expected to the
Speaker 3: new financial year. There aren't really any major changes to
Speaker 3: the financial system tax system. Obviously, with the caveat that
Speaker 3: things can change. With the economic climate the way things
Speaker 3: are at the moment, you know, things may well change,
Speaker 3: but as we speak today, there aren't really any dramatic
Speaker 3: changes to the tax system that people need to be
Speaker 3: aware of.
Speaker 2: Well, given the turbulence so we've been witnessing over the
Speaker 2: past couple of weeks and even months, I think everyone
Speaker 2: would like a little bit of stability, even if that
Speaker 2: means nothing too exciting. The on the tacks right in
Speaker 2: terms of changes for in July one. Mark, I think
Speaker 2: that's probably an excellent place to wrap things up for today.
Speaker 2: So thank you so much for joining us as always,
Speaker 2: and I'm sure we'll look forward to hearing your voice
Speaker 2: on the podcast again very soon.
Speaker 3: It's a pleasure. Thanks Tom.
Speaker 2: And before I forget, if you'd like another quick tax
Speaker 2: fix and you haven't listened to it already, can I
Speaker 2: recommend our episode with Mark on Inheritance and Tax episode one.
Speaker 2: It is a thoroughly engaging episode and it's had a
Speaker 2: great response so far, so we very much appreciate everyone
Speaker 2: that's given that a listen, and of course Mark himself
Speaker 2: for doing such a stellar job on that episode. Anyway,
Speaker 2: it is a time for me to stop talking because
Speaker 2: that is it for this episode. But don't forget. You
Speaker 2: can always jump on our website moneymag dot com dot
Speaker 2: au for your daily dose of financial news. We can
Speaker 2: go grab yourself a copy of the led edition of
Speaker 2: Money Magazine in all good news agents. As always, Friends
Speaker 2: of Money will be right back in your podcast for
Speaker 2: you next week. So until then, my name is Tom Watson.
Speaker 1: Goodbye for now, thanks for listening to the Friends with Money. Podcast.
Speaker 1: For credible, independent, and easy to understand financial commentary, visit
Speaker 1: moneymag dot com dot au. Please remember that the views
Speaker 1: and opinions expressed in this podcast are general in nature
Speaker 1: and further independent advice and research based on your personal
Speaker 1: circumstances should be sought before making an in investment decision