AVOID A TAX TIME SHOCK

At Hills Accountants in Hobart, we are committed to keeping our clients informed with the latest updates from the Australian Taxation Office (ATO). As part of this commitment, we are sharing important information provided by the ATO to help you avoid any unexpected surprises come tax time.

The ATO has outlined several key steps to ensure that you are well-prepared and can avoid an unexpected tax bill next financial year. Assistant Commissioner Rob Thomson explains that there are various factors that might impact your tax assessment. In simple terms, if you don’t receive a refund or a bill, it means you’ve paid the correct amount of tax throughout the year. However, if you do receive a bill, it could indicate that you didn’t pay enough due to several possible reasons.

To avoid a tax bill, the ATO recommends the following steps:

• Notify Your Employer of Study or Training Support Loans: If you have a HECS or HELP debt, make sure your employer is aware so they can withhold the correct amount from your salary to cover your compulsory repayments.
• Claim the Tax-Free Threshold from Only One Employer: Usually, this should be from the employer who pays you the highest salary. Claiming the threshold from more than one employer can result in underpayment of tax.
• Consider the Medicare Levy Surcharge: If you and your family don’t have private hospital cover and your income exceeds a certain threshold, you may be liable to pay this surcharge.
• Check Your Private Health Insurance Rebate Income Tier: Make sure your income details are up to date with your insurer to avoid owing money when you lodge your return.
• Pre-Pay Tax on Business or Investment Income: If you have additional sources of income, consider PAYG instalments to spread out your tax payments and smooth out your cashflow.

Rob Thomson emphasizes, "Remember that if you have multiple sources of income, you may end up with a tax bill as your combined income pushes you into a different tax or study loan repayment bracket."

‘Before you lodge your return this year, we encourage you to check your details are correct – if you need to make any updates like advising of your study or training support loan you can do this while you’re there,’ said Mr Thomson.

‘If you receive a bill after lodging your return it is important that you don’t ignore it, but most tax bills are not due as soon as they are received.'

If you lodge your own return, the due date for payment is 21 November, regardless of when you lodge. If you are using a registered agent your due date may be later. For taxpayers who can pay, paying by the due date means you avoid the ATO, or even an external debt collection agency, chasing you for payment. Paying on time also means you pay less, with interest accruing daily once overdue.

‘People mistakenly think the interest rate on your tax debts is lower than the typical rate on a home loan. This is not the case,’ said Mr Thomson.

For taxpayers facing financial difficulties or hardship, reach out to the ATO or registered tax professional early to discuss the support that is available including payment plan options.

Important Note: This article is provided for general information purposes only. For advice tailored to your specific circumstances, please consult with a registered tax professional or reach out to Hills Accounting Hobart.

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