1 00:00:00,600 --> 00:00:04,160 Speaker 1: Already and this is the Daily This is the Daily 2 00:00:04,200 --> 00:00:06,920 Speaker 1: ohs oh, now it makes sense. 3 00:00:14,720 --> 00:00:17,240 Speaker 2: Good morning, and welcome to the Daily OZ. Is Saturday, 4 00:00:17,320 --> 00:00:18,360 Speaker 2: the eighth of June. 5 00:00:18,360 --> 00:00:19,600 Speaker 1: I'm Sam, I'm Billy. 6 00:00:19,720 --> 00:00:22,759 Speaker 2: That's weird you're hearing us on a Saturday, but that's 7 00:00:23,360 --> 00:00:25,759 Speaker 2: because we're here from bonus episode. It's just about to 8 00:00:25,760 --> 00:00:28,160 Speaker 2: be tax time and we're going to try and answer 9 00:00:28,240 --> 00:00:30,840 Speaker 2: some of the questions that you've got about tax. I 10 00:00:30,840 --> 00:00:33,400 Speaker 2: feel like it's one of those topics where you just 11 00:00:33,680 --> 00:00:36,320 Speaker 2: are told that you should know, and it's all of 12 00:00:36,360 --> 00:00:39,360 Speaker 2: this expected knowledge that either you missed a day at 13 00:00:39,440 --> 00:00:41,200 Speaker 2: school where they crammed all of that until you attend 14 00:00:41,240 --> 00:00:43,440 Speaker 2: and you just were sick that day, or you won't 15 00:00:43,440 --> 00:00:45,960 Speaker 2: actually taught it and we all pay tax, so we 16 00:00:46,000 --> 00:00:47,360 Speaker 2: should all learn how it works. 17 00:00:47,440 --> 00:00:49,519 Speaker 1: It feels like it's sometimes in another language. 18 00:00:49,880 --> 00:00:52,120 Speaker 2: Yeah, and so when we put on Instagram this week, 19 00:00:52,280 --> 00:00:54,120 Speaker 2: what do you need to know about tax that you 20 00:00:54,200 --> 00:00:58,120 Speaker 2: currently don't understand? We were swamped with people asking us 21 00:00:58,240 --> 00:01:00,720 Speaker 2: questions and what you and I to do today is 22 00:01:00,760 --> 00:01:03,720 Speaker 2: actually go through some of those questions and answer them. 23 00:01:03,840 --> 00:01:06,360 Speaker 1: And Sam, I'm going to introduce one rule, and that's 24 00:01:06,480 --> 00:01:08,480 Speaker 1: that there will be no silly questions. 25 00:01:08,600 --> 00:01:11,520 Speaker 2: We should write a book that's a good one. No, absolutely, 26 00:01:11,560 --> 00:01:14,000 Speaker 2: no silly questions. Now, just quickly before we get into it, Billy, 27 00:01:14,200 --> 00:01:17,040 Speaker 2: this episode is sponsored by the Australian governments, so they've 28 00:01:17,040 --> 00:01:20,440 Speaker 2: asked for our help in communicating about tax time, especially 29 00:01:20,480 --> 00:01:23,600 Speaker 2: to young Australians. The Government's had no editorial influence over 30 00:01:23,640 --> 00:01:25,640 Speaker 2: the content we're sharing in today's podcast, and this is 31 00:01:25,680 --> 00:01:28,760 Speaker 2: really just about trying to make sure you understand what's 32 00:01:28,760 --> 00:01:29,800 Speaker 2: about to happen to your money. 33 00:01:32,240 --> 00:01:34,479 Speaker 1: So Sam, let's get into the questions. I've literally got 34 00:01:34,480 --> 00:01:35,640 Speaker 1: it in front of me and we're just going to 35 00:01:35,760 --> 00:01:39,240 Speaker 1: go through it. The first one is a very basic one. 36 00:01:39,319 --> 00:01:40,680 Speaker 1: What is a tax bracket. 37 00:01:40,720 --> 00:01:42,840 Speaker 2: It's a good place to start, right, Like, let's actually 38 00:01:42,920 --> 00:01:45,080 Speaker 2: just figure out what we're talking about and the lay 39 00:01:45,080 --> 00:01:48,120 Speaker 2: of the land. So a tax bracket is what determines 40 00:01:48,240 --> 00:01:50,880 Speaker 2: the different rates of tax that apply to different levels 41 00:01:50,960 --> 00:01:54,240 Speaker 2: of income. So someone who's earning two hundred thousand dollars 42 00:01:54,320 --> 00:01:56,800 Speaker 2: is in the top tax bracket and someone who earns 43 00:01:56,920 --> 00:01:59,960 Speaker 2: under eighteen thy two hundred dollars is in the bottom bracket. 44 00:02:00,560 --> 00:02:03,560 Speaker 2: So at a very top level, people who earn more 45 00:02:03,800 --> 00:02:06,640 Speaker 2: pay more tax. Although this isn't always true in practice 46 00:02:06,680 --> 00:02:09,200 Speaker 2: because of deductions other exemptions. We're going to talk about 47 00:02:09,240 --> 00:02:11,960 Speaker 2: that a bit later. But for this reason, we call 48 00:02:11,960 --> 00:02:15,720 Speaker 2: our income tax system a progressive system because you pay 49 00:02:15,800 --> 00:02:17,600 Speaker 2: progressively more as you earn more. 50 00:02:17,639 --> 00:02:19,760 Speaker 1: And so you mentioned they're the bottom bracket, which is 51 00:02:19,840 --> 00:02:22,880 Speaker 1: under eighteen thousand, two hundred dollars, and then the top bracket, 52 00:02:22,919 --> 00:02:25,919 Speaker 1: but there are also other brackets in between there because 53 00:02:25,919 --> 00:02:29,320 Speaker 1: it's a progressive system. So can you explain how is 54 00:02:29,400 --> 00:02:30,720 Speaker 1: tax done progressively? 55 00:02:31,000 --> 00:02:34,160 Speaker 2: Okay, So for the first eighteen thousand, two hundred dollars 56 00:02:34,200 --> 00:02:36,359 Speaker 2: you earn, you don't pay any tax. So think of 57 00:02:36,400 --> 00:02:39,000 Speaker 2: everyone exactly, So think of all of these dollars as 58 00:02:39,000 --> 00:02:41,720 Speaker 2: individual dollar coins. So you don't pay any tax on 59 00:02:41,760 --> 00:02:44,440 Speaker 2: those first eighteen two hundred dollars, and that's the bottom 60 00:02:44,520 --> 00:02:48,160 Speaker 2: tax bracket. But then any dollar you earn above that 61 00:02:48,280 --> 00:02:51,720 Speaker 2: point gets taxed. So from July, the tax you pay 62 00:02:51,800 --> 00:02:54,919 Speaker 2: above eighteen thousand, two hundred dollars starts at a rate 63 00:02:54,960 --> 00:02:58,720 Speaker 2: of sixteen percent and it eventually reaches forty five percent 64 00:02:59,000 --> 00:03:02,040 Speaker 2: for every dollar. Think of those coins earned over one 65 00:03:02,080 --> 00:03:05,560 Speaker 2: hundred and ninety thousand dollars. So importantly, let's just say 66 00:03:05,560 --> 00:03:08,880 Speaker 2: that I'm earning eighty thousand dollars and that would be 67 00:03:08,919 --> 00:03:11,960 Speaker 2: in the thirty percent tax bracket. That doesn't mean that 68 00:03:12,000 --> 00:03:15,720 Speaker 2: I'm paying thirty percent tax on eighty thousand dollars. It 69 00:03:15,800 --> 00:03:18,720 Speaker 2: means I'm going to get taxed nothing on the first 70 00:03:18,720 --> 00:03:22,360 Speaker 2: eighteen thousand, two hundred dollars. Then every dollar earned between 71 00:03:22,400 --> 00:03:25,520 Speaker 2: eighteen thousand, two hundred and forty five thousand is taxed 72 00:03:25,520 --> 00:03:28,040 Speaker 2: at a rate of sixteen percent, and then every dollar 73 00:03:28,080 --> 00:03:31,400 Speaker 2: earned between forty five thousand and eighty thousand is taxed 74 00:03:31,400 --> 00:03:33,680 Speaker 2: at thirty percent. Does that kind of makes sense to you. 75 00:03:33,800 --> 00:03:36,520 Speaker 1: Yeah, so as the income goes up, you progressively get 76 00:03:36,640 --> 00:03:39,120 Speaker 1: more tax. But I don't know if you've ever heard 77 00:03:39,240 --> 00:03:42,320 Speaker 1: that misconception that you never want to be earning just 78 00:03:42,440 --> 00:03:44,600 Speaker 1: above a tax bracket. Let's say you never want to 79 00:03:44,640 --> 00:03:47,000 Speaker 1: be earning above or just on the COSP of one 80 00:03:47,080 --> 00:03:49,640 Speaker 1: hundred and twenty thousand dollars, because that means you're going 81 00:03:49,680 --> 00:03:51,720 Speaker 1: to be paying way more tax than if you were 82 00:03:51,960 --> 00:03:54,800 Speaker 1: just below it. But that is completely wrong. That's a 83 00:03:54,840 --> 00:03:56,480 Speaker 1: complete misconception, right exactly. 84 00:03:56,560 --> 00:03:59,200 Speaker 2: And just keep thinking about those dollar coins. So if 85 00:03:59,200 --> 00:04:02,080 Speaker 2: you're just over the tax bracket, you're only paying the 86 00:04:02,160 --> 00:04:05,760 Speaker 2: higher tax rate on that dollar that you're over. Everything 87 00:04:05,760 --> 00:04:08,320 Speaker 2: else underneath is taxed at the appropriate rate. 88 00:04:08,480 --> 00:04:11,280 Speaker 1: Got it. And so the next question we received is 89 00:04:11,320 --> 00:04:14,760 Speaker 1: what does ticking the tax free threshold mean and why 90 00:04:14,800 --> 00:04:17,840 Speaker 1: are second jobs taxed more. Let's answer the first one first. 91 00:04:17,960 --> 00:04:19,560 Speaker 2: So this is part of the form that you fill 92 00:04:19,560 --> 00:04:22,000 Speaker 2: out normally when you get a new job, and if 93 00:04:22,000 --> 00:04:23,880 Speaker 2: you tick a box on the form that says yes, 94 00:04:23,920 --> 00:04:26,680 Speaker 2: I would like to claim the tax free threshold, it 95 00:04:26,720 --> 00:04:28,400 Speaker 2: means you're not going to pay tax on the first 96 00:04:28,480 --> 00:04:31,160 Speaker 2: eighteen two hundred dollars in that job. And so when 97 00:04:31,240 --> 00:04:33,280 Speaker 2: this comes in as important is when you have more 98 00:04:33,320 --> 00:04:35,800 Speaker 2: than one payer, so more than one job, because you 99 00:04:35,800 --> 00:04:39,280 Speaker 2: can only claim the tax free threshold from one payer, 100 00:04:39,480 --> 00:04:41,960 Speaker 2: and usually you claim the tax free threshold from the 101 00:04:42,000 --> 00:04:44,599 Speaker 2: payer who pays you the highest salary. But if you 102 00:04:44,600 --> 00:04:47,200 Speaker 2: do tick both, it means you're most likely going to 103 00:04:47,320 --> 00:04:49,840 Speaker 2: have to pay some money back to the ATO at 104 00:04:49,880 --> 00:04:52,600 Speaker 2: the end of the financial year, because basically you've been 105 00:04:52,640 --> 00:04:56,960 Speaker 2: double dipping on that tax free income offer essentially. 106 00:04:56,720 --> 00:04:58,960 Speaker 1: Right, But when it comes to the second job, it's 107 00:04:58,960 --> 00:05:01,880 Speaker 1: actually a misconception that you get tax more for a 108 00:05:01,920 --> 00:05:04,880 Speaker 1: second job. Because it's not about where the income is 109 00:05:04,880 --> 00:05:07,360 Speaker 1: coming from, it's just about how much you are earning. 110 00:05:07,480 --> 00:05:09,719 Speaker 2: Yeah, that is that's a misconception, right, And you don't 111 00:05:10,000 --> 00:05:12,320 Speaker 2: pay extra tax for having a second job. So if 112 00:05:12,360 --> 00:05:14,679 Speaker 2: you're earning one thousand dollars a week, it doesn't matter 113 00:05:14,800 --> 00:05:17,480 Speaker 2: if you're earning that money from one job or five jobs. 114 00:05:17,720 --> 00:05:19,719 Speaker 2: You'll be paying the same amount as tax as someone 115 00:05:19,760 --> 00:05:21,880 Speaker 2: who earns it from one. But it may feel like 116 00:05:21,880 --> 00:05:23,960 Speaker 2: you're paying more tax on the second job because of 117 00:05:24,000 --> 00:05:27,120 Speaker 2: how that tax free threshold works. So on one job, 118 00:05:27,400 --> 00:05:30,240 Speaker 2: that payer is not withholding tax on the tax free 119 00:05:30,240 --> 00:05:32,520 Speaker 2: threshold for you, and on the second job they are 120 00:05:32,560 --> 00:05:35,200 Speaker 2: withholding that tax, which means on the second job there 121 00:05:35,240 --> 00:05:37,839 Speaker 2: might be less money in your pay packet. But at 122 00:05:37,880 --> 00:05:39,720 Speaker 2: the end of the day, it comes down to what 123 00:05:39,760 --> 00:05:42,520 Speaker 2: your total income is. So think of your name and 124 00:05:42,600 --> 00:05:45,279 Speaker 2: one figure. That's what the ATO is seeing. And there's 125 00:05:45,279 --> 00:05:48,080 Speaker 2: no penalty at all for having a second job when 126 00:05:48,080 --> 00:05:48,880 Speaker 2: it comes to tax. 127 00:05:49,120 --> 00:05:52,520 Speaker 1: Makes sense. The next question we had is, so it's 128 00:05:52,560 --> 00:05:55,120 Speaker 1: about to be tax time, why do we get some 129 00:05:55,480 --> 00:05:57,920 Speaker 1: money back? Which not everyone gets money back, but for 130 00:05:58,000 --> 00:05:58,800 Speaker 1: those who do. 131 00:05:58,839 --> 00:06:02,239 Speaker 2: Why So in most cases you're going to be taxed 132 00:06:02,320 --> 00:06:04,680 Speaker 2: the right amount by your employer. And if you don't 133 00:06:04,680 --> 00:06:06,400 Speaker 2: have deductions, and we'll get to that in a sec 134 00:06:06,680 --> 00:06:08,440 Speaker 2: you're not going to get anything back in your tax 135 00:06:08,480 --> 00:06:10,680 Speaker 2: return because you've been taxed the right amount by your 136 00:06:10,680 --> 00:06:13,479 Speaker 2: employer and that's all kind of automated for you. But 137 00:06:13,839 --> 00:06:15,599 Speaker 2: if you receive money back at the end of the 138 00:06:15,640 --> 00:06:19,000 Speaker 2: financial year, that's because you've paid too much tax through 139 00:06:19,040 --> 00:06:21,800 Speaker 2: the year, and the ATO calls that a tax refund. 140 00:06:22,600 --> 00:06:24,359 Speaker 2: So if you're working in a full time job, like 141 00:06:24,440 --> 00:06:27,080 Speaker 2: your full time at the daily Os, your employer so me, 142 00:06:27,880 --> 00:06:30,839 Speaker 2: we pay your tax for you throughout the year, and 143 00:06:30,880 --> 00:06:33,240 Speaker 2: that's called the pay as you go tax system. And 144 00:06:33,279 --> 00:06:35,400 Speaker 2: there's a whole heap of reasons then that you could 145 00:06:35,400 --> 00:06:37,480 Speaker 2: then look at your tax return and get some tax back, 146 00:06:37,760 --> 00:06:40,680 Speaker 2: And the most common reason is because of deductions that 147 00:06:40,800 --> 00:06:44,440 Speaker 2: you've claimed for work related expenses. You can also get 148 00:06:44,440 --> 00:06:46,480 Speaker 2: some money back if you change income during the year, 149 00:06:46,600 --> 00:06:48,240 Speaker 2: or there might be some mistakes in the way that 150 00:06:48,279 --> 00:06:51,159 Speaker 2: tax is withheld by your employer. There's a whole variety 151 00:06:51,200 --> 00:06:53,280 Speaker 2: of reasons. The main one is deductions. 152 00:06:53,320 --> 00:06:56,080 Speaker 1: Though you've mentioned that word deductions a few times now, 153 00:06:56,120 --> 00:06:57,960 Speaker 1: can you just explain what do you mean by that? 154 00:06:58,240 --> 00:07:00,719 Speaker 2: So this is something that does lower how much tax 155 00:07:00,800 --> 00:07:04,240 Speaker 2: you have to pay, and it's usually a work related expense. 156 00:07:04,440 --> 00:07:06,600 Speaker 2: And the idea here is that if you claim it, 157 00:07:06,920 --> 00:07:10,600 Speaker 2: that expense is deducted from your income and that can 158 00:07:10,800 --> 00:07:12,720 Speaker 2: mean that you might get some money back from the 159 00:07:12,760 --> 00:07:16,000 Speaker 2: tax office. And there are so many categories of things 160 00:07:16,000 --> 00:07:18,840 Speaker 2: you can claim as work related expenses, and the ATO 161 00:07:18,960 --> 00:07:23,160 Speaker 2: on their website actually has occupations specific guidelines for common 162 00:07:23,200 --> 00:07:25,840 Speaker 2: work related expenses. So I looked up what it could 163 00:07:25,840 --> 00:07:27,800 Speaker 2: be for you if you're a journalist, and it could 164 00:07:27,800 --> 00:07:30,000 Speaker 2: be the cost of hiring a camera when we've asked 165 00:07:30,040 --> 00:07:32,000 Speaker 2: you to go and film a piece somewhere exotic. 166 00:07:32,120 --> 00:07:33,880 Speaker 1: It can even be things like if you work from home, 167 00:07:33,920 --> 00:07:36,680 Speaker 1: for example, you can claim a partial amount on the 168 00:07:36,720 --> 00:07:37,640 Speaker 1: internet on your. 169 00:07:37,480 --> 00:07:39,679 Speaker 2: Wi Fi bill exactly. And for all of this stuff, 170 00:07:39,720 --> 00:07:43,120 Speaker 2: I really recommend talking to an accountant or a financial advisor, 171 00:07:43,280 --> 00:07:45,760 Speaker 2: or at the very least reading on the ato's website 172 00:07:45,760 --> 00:07:48,200 Speaker 2: they're guidelines, because it can get a little bit tricky. 173 00:07:48,600 --> 00:07:51,720 Speaker 2: But it's also a misconception. I've heard this from quite 174 00:07:51,720 --> 00:07:54,160 Speaker 2: a few friends that you can get back the full 175 00:07:54,200 --> 00:07:57,480 Speaker 2: amounts that you spend. That's not true. So if you 176 00:07:57,520 --> 00:08:00,960 Speaker 2: spend one thousand dollars on work related expense so deductions, 177 00:08:01,240 --> 00:08:03,880 Speaker 2: and you're in that thirty percent tax bracket, the tax 178 00:08:03,920 --> 00:08:05,800 Speaker 2: benefit is only going to be thirty percent. It's three 179 00:08:05,880 --> 00:08:07,840 Speaker 2: hundred dollars, So you are still going to be out 180 00:08:07,840 --> 00:08:09,560 Speaker 2: of pocket seven hundred bucks. 181 00:08:09,320 --> 00:08:11,880 Speaker 1: Right, And is there a maximum amount that you can claim? 182 00:08:11,920 --> 00:08:14,560 Speaker 2: So you're talking about if you're hiring, you know, thousands 183 00:08:14,600 --> 00:08:16,520 Speaker 2: and thousands of dollars worth of cameras to film the 184 00:08:16,520 --> 00:08:19,120 Speaker 2: piece that we've asked you to film in Tahiti, there 185 00:08:19,160 --> 00:08:19,880 Speaker 2: can be. 186 00:08:20,040 --> 00:08:21,280 Speaker 1: I would go to Tahiti. 187 00:08:21,320 --> 00:08:24,520 Speaker 2: I'm marrying. That's a nice tax deduction. It depends on 188 00:08:24,560 --> 00:08:27,800 Speaker 2: the category and the nature of what you're claiming. For example, 189 00:08:27,840 --> 00:08:30,080 Speaker 2: in terms of the maximum amount you can claim when 190 00:08:30,120 --> 00:08:32,480 Speaker 2: you donate to charity. So donating to charity is a 191 00:08:32,480 --> 00:08:36,040 Speaker 2: tax deduction. You can't claim more than your income. So 192 00:08:36,120 --> 00:08:37,800 Speaker 2: in other words, you can't say that you had an 193 00:08:37,840 --> 00:08:40,559 Speaker 2: annual loss you earned fifty thousand dollars, but you donated 194 00:08:40,559 --> 00:08:43,480 Speaker 2: fifty five thousand dollars because you donated more than you earn. 195 00:08:43,559 --> 00:08:46,280 Speaker 2: So that's just one example, but in every sort of 196 00:08:46,320 --> 00:08:50,160 Speaker 2: category and occupation there's different guidelines, and it's really important. 197 00:08:50,200 --> 00:08:51,960 Speaker 2: I think the most important thing here is you need 198 00:08:52,000 --> 00:08:53,480 Speaker 2: to have proof of what you did. 199 00:08:53,840 --> 00:08:56,640 Speaker 1: But there are often maximums from what I understand, even 200 00:08:56,720 --> 00:08:59,640 Speaker 1: the example I said before about the Internet build, you 201 00:08:59,679 --> 00:09:00,640 Speaker 1: can't all of that. 202 00:09:00,760 --> 00:09:04,600 Speaker 2: So the ATO is given kind of a mathematical way 203 00:09:04,640 --> 00:09:06,719 Speaker 2: to work out how much you can claim. It's the 204 00:09:06,720 --> 00:09:08,640 Speaker 2: same thing as petrol if you're driving a car to 205 00:09:08,760 --> 00:09:09,840 Speaker 2: perform your work duties. 206 00:09:09,920 --> 00:09:12,560 Speaker 1: Yep. Now, next question, can I still get my tax 207 00:09:12,600 --> 00:09:14,440 Speaker 1: return money from a couple of years ago. 208 00:09:14,720 --> 00:09:17,800 Speaker 2: Yes. I'm imagining the moment where this person who asked 209 00:09:17,840 --> 00:09:20,840 Speaker 2: the question on TDA logged into their ATO and saw 210 00:09:20,880 --> 00:09:22,880 Speaker 2: like three or four years of tax returns that haven't 211 00:09:22,920 --> 00:09:25,120 Speaker 2: been done. Maybe they were you need they didn't understand 212 00:09:25,160 --> 00:09:27,640 Speaker 2: that they needed to do it. You actually do have 213 00:09:27,679 --> 00:09:30,520 Speaker 2: a legal obligation to lodge a tax return, even if 214 00:09:30,520 --> 00:09:32,280 Speaker 2: you're not due a refund, you still need to get 215 00:09:32,280 --> 00:09:35,520 Speaker 2: it in and the ATO ideally always wants you to 216 00:09:35,559 --> 00:09:38,559 Speaker 2: file that tax return before the thirty first of October 217 00:09:38,640 --> 00:09:39,280 Speaker 2: of that year. 218 00:09:39,400 --> 00:09:42,040 Speaker 1: So that's four months after the end of the financial 219 00:09:42,120 --> 00:09:42,800 Speaker 1: year exactly. 220 00:09:42,840 --> 00:09:44,960 Speaker 2: So our financial year is ending in a couple of 221 00:09:44,960 --> 00:09:48,560 Speaker 2: weeks on the thirtieth of June, and they want you 222 00:09:48,600 --> 00:09:50,800 Speaker 2: to get it in by the thirty first of October, 223 00:09:51,120 --> 00:09:53,240 Speaker 2: and if you do that, you're one hundred percent going 224 00:09:53,320 --> 00:09:56,079 Speaker 2: to avoid fees or penalties, and that's something we should 225 00:09:56,080 --> 00:09:58,640 Speaker 2: talk about. I mean, the ATO can impose some penalties 226 00:09:58,960 --> 00:10:01,360 Speaker 2: on you if you put in your tax return late, 227 00:10:01,640 --> 00:10:03,240 Speaker 2: but there are also lots of different ways for you 228 00:10:03,280 --> 00:10:06,760 Speaker 2: to ask for ways out of that penalty, explain why 229 00:10:06,840 --> 00:10:08,880 Speaker 2: it took you so long. The ATEO is always ready 230 00:10:09,040 --> 00:10:11,960 Speaker 2: to understand what's been going on. Now, if you go 231 00:10:12,000 --> 00:10:14,720 Speaker 2: to an accountant to help you with your tax return, 232 00:10:15,320 --> 00:10:18,040 Speaker 2: you just need to engage with them before October thirty one, 233 00:10:18,080 --> 00:10:20,160 Speaker 2: So you need to set up your appointment and start 234 00:10:20,160 --> 00:10:23,000 Speaker 2: that process. But you don't actually necessarily need to do 235 00:10:23,040 --> 00:10:25,800 Speaker 2: the filling out of the tax return with your accountant 236 00:10:25,800 --> 00:10:28,120 Speaker 2: before October thirty one. So you get a bit more 237 00:10:28,120 --> 00:10:29,640 Speaker 2: time if you're going with an accountant. 238 00:10:29,720 --> 00:10:31,720 Speaker 1: Right, So, just to be clear, you've got four months 239 00:10:31,760 --> 00:10:33,960 Speaker 1: if you're doing it by yourself, but if you engage 240 00:10:34,000 --> 00:10:36,600 Speaker 1: an accountant, then you have a little bit longer as 241 00:10:36,640 --> 00:10:39,440 Speaker 1: long as you engage the accountant before the four months deadline. 242 00:10:39,520 --> 00:10:41,040 Speaker 2: Yeah, but I think if you're listening to this and 243 00:10:41,080 --> 00:10:43,280 Speaker 2: a little bit confused and you want like a super 244 00:10:43,320 --> 00:10:46,600 Speaker 2: short takeaway answer, just do it by the thirty first 245 00:10:46,640 --> 00:10:48,679 Speaker 2: of October. That if you can do that, you're in 246 00:10:48,840 --> 00:10:51,360 Speaker 2: a safe place. We'll keep going with these questions in 247 00:10:51,480 --> 00:10:53,640 Speaker 2: just a minute, but first here is a message from 248 00:10:53,720 --> 00:10:54,320 Speaker 2: our sponsor. 249 00:10:54,880 --> 00:10:58,080 Speaker 1: I think some people listening will think an accountant sounds great, 250 00:10:58,120 --> 00:10:59,960 Speaker 1: but also we are in the midst of a cost 251 00:11:00,080 --> 00:11:02,400 Speaker 1: living crisis. They also sound expensive. 252 00:11:02,720 --> 00:11:04,240 Speaker 2: Well, there's a couple of things I'd say to that. 253 00:11:04,280 --> 00:11:06,280 Speaker 2: I mean, one is, it's going to be more expensive 254 00:11:06,360 --> 00:11:08,360 Speaker 2: if you get fined, and it's going to cause a 255 00:11:08,360 --> 00:11:11,680 Speaker 2: lot more emotional stress as well. But secondly, an accountant 256 00:11:11,760 --> 00:11:14,679 Speaker 2: can help you identify areas of deductions you might not 257 00:11:14,720 --> 00:11:17,320 Speaker 2: even know about, and they can really help guide you 258 00:11:17,400 --> 00:11:20,520 Speaker 2: through the process. Interestingly, also, the cost of seeing an 259 00:11:20,520 --> 00:11:24,520 Speaker 2: accountant is a tax deduction next year, so it's a 260 00:11:24,520 --> 00:11:26,760 Speaker 2: work related expense in the eyes of the ATO. So 261 00:11:26,880 --> 00:11:29,280 Speaker 2: if you're feeling really overwhelmed and clueless, it is worth 262 00:11:29,280 --> 00:11:32,480 Speaker 2: getting professional advice with this. Obviously, there's a cost to it. 263 00:11:32,679 --> 00:11:35,000 Speaker 2: I know that this is a really tough time for Australians, 264 00:11:35,559 --> 00:11:37,720 Speaker 2: so there's always ways to do it yourself as well. 265 00:11:37,800 --> 00:11:39,120 Speaker 2: But that options there if you can. 266 00:11:39,200 --> 00:11:42,160 Speaker 1: Now, another thing the ATO can do is they can 267 00:11:42,280 --> 00:11:45,800 Speaker 1: conduct an audit. And one person asked, how far back 268 00:11:45,880 --> 00:11:48,679 Speaker 1: can the ATO audit you? But before we get there, 269 00:11:48,720 --> 00:11:50,720 Speaker 1: can you first just explain what is an audit? 270 00:11:51,320 --> 00:11:54,240 Speaker 2: So I've seen on TikTok recently, this idea of asking 271 00:11:54,280 --> 00:11:58,000 Speaker 2: for receipts. It's exactly that, it's literally asking for receipts, 272 00:11:58,040 --> 00:12:01,240 Speaker 2: and it's a more intense examination of you as a 273 00:12:01,280 --> 00:12:01,840 Speaker 2: tax payer. 274 00:12:02,000 --> 00:12:03,400 Speaker 1: We have different fyps. 275 00:12:04,160 --> 00:12:07,360 Speaker 2: Deep in dating FYP right happily married, but deep in 276 00:12:07,440 --> 00:12:10,120 Speaker 2: dating FYP. So it's basically asking for receipts to make 277 00:12:10,160 --> 00:12:12,840 Speaker 2: sure that what you've said is a work related expense 278 00:12:12,880 --> 00:12:16,520 Speaker 2: and you've deducted some of your tax for that actually happened. 279 00:12:17,000 --> 00:12:19,160 Speaker 2: So you know, did you spend one hundred dollars on 280 00:12:19,200 --> 00:12:21,240 Speaker 2: the textbook that you said would help you for your 281 00:12:21,320 --> 00:12:23,680 Speaker 2: job when you claimed it as an education expense. Did 282 00:12:23,720 --> 00:12:26,360 Speaker 2: you actually go to Tahiti to film a piece for 283 00:12:26,440 --> 00:12:28,920 Speaker 2: us on climate change or was that a trip up 284 00:12:28,960 --> 00:12:30,720 Speaker 2: the coast? And you're not telling the truth. 285 00:12:30,800 --> 00:12:34,080 Speaker 1: So it's compliance making sure that everyone is complying with the. 286 00:12:34,120 --> 00:12:35,880 Speaker 2: Laws exactly, and if you have done the right thing. 287 00:12:35,960 --> 00:12:37,839 Speaker 2: There's nothing really to be scared of here. Now in 288 00:12:37,920 --> 00:12:39,800 Speaker 2: terms of a time limit, you know, how long should 289 00:12:39,800 --> 00:12:43,040 Speaker 2: you be keeping these receipts for. There's no actual written 290 00:12:43,120 --> 00:12:46,000 Speaker 2: time limit for how far back the ATO can audit you, 291 00:12:46,400 --> 00:12:48,320 Speaker 2: but in terms of how they typically work, you can 292 00:12:48,400 --> 00:12:51,800 Speaker 2: expect to be notified that you've been audited within two 293 00:12:51,960 --> 00:12:54,800 Speaker 2: years of the date of assessment. So that's normally the 294 00:12:54,880 --> 00:12:58,160 Speaker 2: end of financial year. That's for individuals and small businesses, 295 00:12:58,360 --> 00:13:01,480 Speaker 2: and medium to large businesses can ECTP one within four years. 296 00:13:01,679 --> 00:13:01,800 Speaker 1: Now. 297 00:13:01,840 --> 00:13:03,880 Speaker 2: One other really important point. If you get to notice 298 00:13:03,880 --> 00:13:06,439 Speaker 2: that you're being audited, it doesn't mean you've done anything wrong. 299 00:13:06,760 --> 00:13:09,400 Speaker 2: It might be totally random. It might be just, you know, 300 00:13:09,440 --> 00:13:11,840 Speaker 2: you've kind of drawn the lucky number in that year's 301 00:13:11,840 --> 00:13:13,839 Speaker 2: lotto and they just want to go a little bit deeper. 302 00:13:13,960 --> 00:13:17,400 Speaker 2: Think of it as like the RBT exactly. That's a 303 00:13:17,520 --> 00:13:21,040 Speaker 2: really good comparison. And so as a guiding rule, I'd 304 00:13:21,080 --> 00:13:23,600 Speaker 2: keep receipts for five years. I mean, it's pretty easy 305 00:13:23,600 --> 00:13:25,679 Speaker 2: now that most of our receipts are online. So I've 306 00:13:25,720 --> 00:13:27,719 Speaker 2: got a little folder in my Gmail account that's got 307 00:13:27,760 --> 00:13:28,880 Speaker 2: every year's receipts. 308 00:13:29,000 --> 00:13:31,080 Speaker 1: Wow, way to rub it in that you're organized. 309 00:13:31,160 --> 00:13:34,079 Speaker 2: Well, there's a reason that I'm explaining, So I keep 310 00:13:34,080 --> 00:13:36,120 Speaker 2: them for five years after I've lodged a tax return. 311 00:13:36,280 --> 00:13:39,199 Speaker 1: Okay, next question, Now this is a big one. Why 312 00:13:39,240 --> 00:13:42,319 Speaker 1: do individuals pay more tax than some company? 313 00:13:42,520 --> 00:13:45,320 Speaker 2: Oh, Billy, this is one that really gets people fired up. 314 00:13:45,440 --> 00:13:46,520 Speaker 1: We often talk about this. 315 00:13:46,760 --> 00:13:50,200 Speaker 2: Yeah, and so there's this idea out there that large 316 00:13:50,200 --> 00:13:54,800 Speaker 2: corporations avoid tax and that they're doing so legally, which 317 00:13:54,840 --> 00:13:57,040 Speaker 2: is a bit weird. I mean, it's not always legal, 318 00:13:57,080 --> 00:13:59,199 Speaker 2: but there is this idea that they've figured out ways 319 00:13:59,240 --> 00:14:02,200 Speaker 2: to get around tax system, a loophole. Yeah, And we 320 00:14:02,240 --> 00:14:04,600 Speaker 2: could honestly spend a whole podcast talking about this. And 321 00:14:04,920 --> 00:14:08,840 Speaker 2: I actually really understand how frustrating it is to look 322 00:14:08,880 --> 00:14:11,040 Speaker 2: out onto these massive companies and see they're not paying 323 00:14:11,080 --> 00:14:14,160 Speaker 2: tax and you're you're earning you know, fifty grand and 324 00:14:14,360 --> 00:14:18,840 Speaker 2: paying tax on that. So essentially, individuals attaxed differently to 325 00:14:19,080 --> 00:14:21,440 Speaker 2: companies like a big bank or a big supermarket, or 326 00:14:21,480 --> 00:14:23,760 Speaker 2: a big mining company or a big tech company. And 327 00:14:23,800 --> 00:14:27,080 Speaker 2: that basically comes down to what the government has decided 328 00:14:27,240 --> 00:14:31,080 Speaker 2: is needed to keep the economy moving, growing and relatively 329 00:14:31,120 --> 00:14:33,960 Speaker 2: fair So companies are taxed at a flat rate on 330 00:14:34,080 --> 00:14:37,640 Speaker 2: their profits, so how much they're making minus how much 331 00:14:37,720 --> 00:14:41,640 Speaker 2: they're spending, and that can be reduced through various deductions, 332 00:14:41,720 --> 00:14:44,320 Speaker 2: tax credits, government incentives, a whole range of things. I mean, 333 00:14:44,360 --> 00:14:47,320 Speaker 2: there's full time jobs dedicated to helping companies lower their 334 00:14:47,320 --> 00:14:49,720 Speaker 2: tax rate. But individuals, on the other hand, are taxed 335 00:14:49,760 --> 00:14:52,040 Speaker 2: on the progressive scale, as we've talked about, based on 336 00:14:52,120 --> 00:14:56,200 Speaker 2: their income, So profits versus income, that's really the difference. 337 00:14:56,000 --> 00:14:58,200 Speaker 1: Right, And the difference there is that profits is once 338 00:14:58,320 --> 00:15:01,800 Speaker 1: expenses are deducted, and if the expense is deducted means 339 00:15:01,800 --> 00:15:04,880 Speaker 1: that you're in negative, then you're not paying tax exactly. 340 00:15:04,960 --> 00:15:07,480 Speaker 2: So if your business makes a loss in a financial year, 341 00:15:07,760 --> 00:15:10,160 Speaker 2: then you won't be asked to pay tax on that loss. 342 00:15:10,200 --> 00:15:13,280 Speaker 1: Got it. Okay, next question, We're moving along quickly. If 343 00:15:13,320 --> 00:15:15,680 Speaker 1: you make a little mistake in a tax return, will 344 00:15:15,720 --> 00:15:16,760 Speaker 1: you end up in jail? 345 00:15:17,080 --> 00:15:20,680 Speaker 2: Oh gosh, I've had sleepless nights thinking about the police 346 00:15:20,720 --> 00:15:24,080 Speaker 2: banging down my door because I've accidentally done something a 347 00:15:24,160 --> 00:15:26,480 Speaker 2: day late or that kind of thing. No, I mean, 348 00:15:26,760 --> 00:15:29,000 Speaker 2: making a more mistake on your tax return is not 349 00:15:29,080 --> 00:15:31,880 Speaker 2: going to land you up in jail. The ATO takes 350 00:15:31,880 --> 00:15:35,480 Speaker 2: an approach that mistakes happen, and even if they do 351 00:15:35,520 --> 00:15:38,280 Speaker 2: find a mistake in your tax return, they typically allow 352 00:15:38,320 --> 00:15:40,640 Speaker 2: you to amend that. They'll give you a notice saying 353 00:15:40,680 --> 00:15:43,800 Speaker 2: we've noticed a discrepancy, would you like to adjust it. 354 00:15:43,800 --> 00:15:47,160 Speaker 2: It's a very different case though, when you're coming across instances, 355 00:15:47,200 --> 00:15:48,560 Speaker 2: and these are the ones that you and I talk 356 00:15:48,600 --> 00:15:52,120 Speaker 2: about in the news, of deliberate tax evasion or fraud, 357 00:15:52,400 --> 00:15:54,520 Speaker 2: and that can result in severe penalties. You can go 358 00:15:54,560 --> 00:15:57,600 Speaker 2: to jail one hundred percent for tax crimes. So the 359 00:15:57,640 --> 00:15:59,680 Speaker 2: golden rule here is if you've been notified of an 360 00:15:59,680 --> 00:16:01,880 Speaker 2: Arab the ATEO, they're not about to come to your 361 00:16:01,880 --> 00:16:04,240 Speaker 2: house and arrest you. You just need to fix the error 362 00:16:04,320 --> 00:16:07,560 Speaker 2: and go about it in the quickest way possible. Then 363 00:16:07,680 --> 00:16:09,720 Speaker 2: you know, if you're in doubt, still go and speak 364 00:16:09,720 --> 00:16:11,840 Speaker 2: to someone. Go and speak to an accountant, because you 365 00:16:11,840 --> 00:16:14,120 Speaker 2: know there might be then a penalty in play. It's 366 00:16:14,160 --> 00:16:15,840 Speaker 2: going to be cheaper, it's going to work out cheaper 367 00:16:15,880 --> 00:16:17,120 Speaker 2: to get some professional advice. 368 00:16:17,360 --> 00:16:19,520 Speaker 1: So what I'm hearing is the big difference there is 369 00:16:19,760 --> 00:16:22,880 Speaker 1: intention Did you intentionally make a mistake, in which case 370 00:16:22,880 --> 00:16:25,080 Speaker 1: you may be in trouble. Obviously, I think you would 371 00:16:25,080 --> 00:16:27,760 Speaker 1: be in trouble. But if you didn't intentionally do it, 372 00:16:28,080 --> 00:16:30,240 Speaker 1: then it's more likely that they will be fine with it. 373 00:16:30,280 --> 00:16:32,120 Speaker 1: And it's just a case of amending it exactly. 374 00:16:32,200 --> 00:16:34,080 Speaker 2: And I know you're a good person, and I know 375 00:16:34,160 --> 00:16:37,880 Speaker 2: that good people like TDA listeners, they always don't mean 376 00:16:37,920 --> 00:16:40,880 Speaker 2: to make the mistakes. So just fix it up and 377 00:16:40,960 --> 00:16:41,280 Speaker 2: move on. 378 00:16:41,640 --> 00:16:44,520 Speaker 1: Okay, last question, and we did touch on this briefly before, 379 00:16:44,640 --> 00:16:47,280 Speaker 1: but someone asked, do you need an accountant? 380 00:16:47,520 --> 00:16:49,160 Speaker 2: Well, I think yeah, So this has come up a 381 00:16:49,160 --> 00:16:51,520 Speaker 2: couple of times in our chat, and it's a weird 382 00:16:51,560 --> 00:16:55,680 Speaker 2: one because yes, an accountant is fantastic their job. They've 383 00:16:55,720 --> 00:16:57,640 Speaker 2: studied for years and years to help you get the 384 00:16:57,640 --> 00:16:59,840 Speaker 2: most out of your tax return. But you don't necessarily 385 00:16:59,840 --> 00:17:01,840 Speaker 2: need one, and especially if you can't afford it, it 386 00:17:01,920 --> 00:17:04,160 Speaker 2: might not be a reality. But if your tax situation 387 00:17:04,280 --> 00:17:06,760 Speaker 2: is complex, so if you fall into that category of 388 00:17:06,800 --> 00:17:09,000 Speaker 2: having a few different jobs, if you have you know, 389 00:17:09,320 --> 00:17:13,240 Speaker 2: different family wealth situations, if there's properties involved this, if 390 00:17:13,280 --> 00:17:16,760 Speaker 2: there's overseas accounts and travel and government allowances and job 391 00:17:16,800 --> 00:17:20,440 Speaker 2: seekers and whatever, it can help to really make sense 392 00:17:20,440 --> 00:17:22,800 Speaker 2: of everything and to work out what you can still claim. 393 00:17:23,280 --> 00:17:25,840 Speaker 2: So when you go and see an accountant, you sit 394 00:17:25,920 --> 00:17:29,040 Speaker 2: down and they make sure that your tax return is accurate, 395 00:17:29,200 --> 00:17:32,040 Speaker 2: but they also then identify where you could perhaps getting 396 00:17:32,040 --> 00:17:34,200 Speaker 2: some more money back, what government programs you might be 397 00:17:34,240 --> 00:17:37,280 Speaker 2: eligible for. And again, as I said, the actual cost 398 00:17:37,320 --> 00:17:40,040 Speaker 2: of going to see an accountant is a tax deduction itself, 399 00:17:40,240 --> 00:17:42,159 Speaker 2: so you can claim that year after and at the 400 00:17:42,240 --> 00:17:43,960 Speaker 2: end of the day. This is not meant to be 401 00:17:44,000 --> 00:17:46,639 Speaker 2: a hugely stressful period of life. It's meant to be 402 00:17:46,720 --> 00:17:48,119 Speaker 2: kind of a form that we have to fill in 403 00:17:48,160 --> 00:17:50,000 Speaker 2: at the end of the year to make sure we're 404 00:17:50,040 --> 00:17:51,320 Speaker 2: part of a growing country. 405 00:17:51,400 --> 00:17:53,440 Speaker 1: Great. I feel so much more informed. This feels like 406 00:17:53,480 --> 00:17:55,640 Speaker 1: a classic example of one of those things that we 407 00:17:55,640 --> 00:17:58,520 Speaker 1: weren't taught in school but definitely should have. 408 00:17:58,440 --> 00:17:59,480 Speaker 2: Been that one hundred percent. 409 00:18:00,359 --> 00:18:02,879 Speaker 1: But it's just crazy that we I just expected to 410 00:18:02,920 --> 00:18:03,280 Speaker 1: know this. 411 00:18:03,520 --> 00:18:06,000 Speaker 2: I do think there's a whole series of examples, like 412 00:18:06,160 --> 00:18:08,720 Speaker 2: a tax return, of things that we just should have planned. 413 00:18:09,119 --> 00:18:11,880 Speaker 1: Sam, thank you so much for explaining. Thanks so much, Billy, 414 00:18:12,119 --> 00:18:14,679 Speaker 1: Thank you so much for listening to today's episode of 415 00:18:14,720 --> 00:18:17,280 Speaker 1: The Daily Os. If you have learned something, press follow 416 00:18:17,359 --> 00:18:20,119 Speaker 1: on Spotify or Apple. It is the best way that 417 00:18:20,160 --> 00:18:22,480 Speaker 1: you can support the Daily Ohs and help us grow. 418 00:18:22,880 --> 00:18:25,000 Speaker 1: Thank you so much and we will see you on Monday. 419 00:18:27,840 --> 00:18:30,119 Speaker 1: My name is Lily Maddon and I'm a proud Arunda 420 00:18:30,359 --> 00:18:35,159 Speaker 1: Bungelung Kalkutin woman from Gadighl country. The Daily oz acknowledges 421 00:18:35,240 --> 00:18:37,399 Speaker 1: that this podcast is recorded on the lands of the 422 00:18:37,440 --> 00:18:40,960 Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres 423 00:18:41,000 --> 00:18:43,919 Speaker 1: Strait Island and nations. We pay our respects to the 424 00:18:43,920 --> 00:18:46,720 Speaker 1: first peoples of these countries, both past and present.