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Tax Deductions

Tax Deductions

Tax Deductions   How do tax deductions work?  The basic Australian income tax formula is: Tax rate x taxable income = tax payable. Taxable income = assessable income less deductions. So, tax deductions reduce tax payable in an indirect way. Example:John’s tax...

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Tax Refund & Tax Payable

Tax Refund & Tax Payable

Tax Refund & Tax Payable How does a tax refund or tax payable happen?   The basic tax refund formula is: Tax withheld less tax payable = tax refund. Example:John’s employer withholds $32,000 of tax from his pay.John’s tax payable is $30,000.John’s tax refund...

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Trust Tax

Trust Tax Introduction Trusts evolved in England in response to representations for a Court of Chancery. This court brought in a new doctrine of fairness called equity and established the concept of property being held on behalf of or on trust for someone eg. a child,...

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Pet Sitter Tax Tips

Pet Sitter Tax Tips

Pet Sitter Tax Tips  As a pet sitter in Australia, you need to be aware of any tax obligations you might have. The first issue you should consider is whether your pet sitting is a hobby or a business. If it’s a hobby, then you won’t have any tax payment or reporting...

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Company Tax

Company Tax

Company Tax - Introduction For taxation purposes, a company is defined at section 995-1 of Income Tax Assessment Act 1997 (ITAA 1997) to include body corporates and any other unincorporated associations or bodies of persons. Partnerships are excluded from the...

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Travel Tax Deductions

Travel Tax Deductions

Travel Tax Deductions Employees’ travel expenses The Australian Taxation Office (ATO) has issued taxation ruling TR 2021/1 which discusses when deductions may be allowable for employees' travel expenses. The ruling states a travel expense is an expense relating to:...

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Entertainment Tax Deductions

Entertainment Tax Deductions

Entertainment Tax Deductions Division 32 of the Income Tax Assessment Act 1997 (ITAA 97) contains the rules relating to the deductibility of entertainment expenses.  The Division provides that expenditure on entertainment (which includes food, drink and...

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Car Tax Deductions

Car Tax Deductions

Car Tax Deductions Deductible travel – self-employed and employees Motor vehicle expenses incurred in the course of deriving assessable income or in carrying on business are allowable deductions under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 97),...

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Investment Property Tax

Investment Property Tax

Investment Property Tax Introduction When investing in an investment property, it is essential to realise that tax isn’t the most important factor. The tax "tail" should not wag the investment "dog" - it should be the other way around. The most important factor is to...

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Company carry forward tax losses

Company carry forward tax losses

Company carry forward tax losses Company losses cannot be distributed to shareholders.  They must be carried forward in the company and offset against assessable income in subsequent years.  There are two major tests that determine whether such losses can be...

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Commercial debt forgiveness

Commercial debt forgiveness

Commercial debt forgiveness The commercial debt forgiveness rules are contained in Division 245 of the Income Tax Assessment Act 1997 (ITAA 1997). The rules do not treat the debtor as having received a gain when a commercial debt is forgiven. Instead, they apply the...

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Company carry forward tax losses

Borrowing expenses

Borrowing expenses When borrowing money, there are often many expenses incurred. These expenses may be tax deductible if the borrowed money is used to produce assessable income. For example, section 25-25 of the Income Tax Assessment Act 1997 (ITAA 1997) is a section...

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Taxable Income

Taxable Income

Taxable Income In our tax system, tax is levied on ‘taxable income’ received during the income year. The income year is generally 1 July to 30 June. ‘Taxable Income’ = ‘Assessable Income’ less ‘Deductions’. Assessable income includes ordinary income (income according...

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Property Renovation Tax

Property Renovation Tax

Property Renovation Tax Property Investing vs Property Renovating Business If you're renovating one or more properties, the most important tax issue to consider is whether you are an investor or whether you are carrying on a business of renovating properties. If...

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