Tax Tips for Students
Are you a student and have a Tax File Number?
If you are, then you are required to lodge a tax return with the ATO. Even if you did not earn any income within the financial year, it is a good idea to let the ATO know that you are not require to lodge a tax return for a particular financial year.
Completing your tax returns is more than just filling out income and expenses.
Read through the below to understand a bit more on what it is all about.
Employment & Tax
If you work more than one job this year, make sure that you include all income received in your tax return.
When you first started work, your employer would have asked you to complete a Tax File Number (TFN) declaration and Super Choice Form.
The TFN declaration will ask you whether you have a HELP debt or if you wish to claim the tax-free threshold.
Please note that tax-free threshold is to be claimed through one employer at a time. If you work multiple jobs, then claim the tax-free threshold from the employer who you will be earning the most income from.
If you claim tax-free threshold from multiple payers or if you do not declare to your employers that you have a HELP debt, you may be required to pay tax at the end of financial year after you lodge your tax return.
A Super Choice form is an ATO document that allows you to choose a super fund that your employer superannuation contributions will be paid into.
If you are eligible to receive super contributions, your employer must deposit your entitlement into your nominated superannuation fund.
Superannuation is calculated at 9.5% of your ordinary time earnings and you are eligible to receive super is you earn $450 or more in a month and are aged 18 or older.
If you’re under 18 then on top of the above, you must also work more than 30 hours a week to be able to receive super on your wages.
Any income from Gig Economy or Side Hustles?
Gig economy is a labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.
This includes, doing odd jobs, giving tuition, selling products, driving people around, running social media accounts, etc.
Note that the ATO is receiving data from accommodation/ride-sharing platforms such as Uber & Airbnb as well as online market platform such as eBay.
If you are receiving these types of income then the ATO will know about it. Make sure you are correctly reporting your income (and any eligible expenses) so you don’t get caught out.
If you are getting money from selling products you make like jewellery, paintings, candles, baked goods or you’re a musician that gets money by performing at an event or two, then it’s a good idea to work out if what you are doing is considered a hobby or a business.
If your activity is classified as business then you will have to report the income on your tax return.
The following link will help you to determine this: https://start.business.gov.au/
Know your deductions
You can claim deductions for certain expenses that are directly related to the income you received.
The types of deductions include uniforms & protective clothing, work-related mobile and internet costs, union fees, subscriptions, and travel expenses between work sites.
Just because a deduction is available, does not mean that you can make the claim. The expense you paid must not be reimbursed and you will need to keep the necessary documentation to support your claim.
Deductibility of Self-education expenses
To be eligible to claim self-education expenses, the study must have a sufficient connection with your work activity.
If your study is directly related to maintaining or improving your skills in your current occupation or could increase your income from your current employment then you may claim expenses such as course fees, textbooks, stationery and depreciation of assets such as laptops and printers.
If the connection is too general then you will not be able to claim the self-education expenses.
To check if you are eligible, the ATO has a tool to help you determine this: https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Education-and-study/
If you are eligible, please note that you cannot claim your course fees if they are part of your Higher Education Loan Program (HELP) debt. HELP debt repayments are not tax deductible. If you pay course fees with your own funds, then you may be able to claim a deduction.
Not all donations are deductible. Did you know that you can search the charity’s ABN to see if your donation will be tax deductible or not? The ABN lookup website https://abr.business.gov.au/ will tell you whether or not a charity is registered as a DGR (Deductible Gift Recipient). If the charity that you donated to is listed, then you can make the donation claim on your tax return.
Lodging tax returns can be a bit daunting, especially if you are unsure what you can or can’t claim.
Luckily the ATO has made lodging simple tax returns a breeze through their myTax software and this is accessed through your myGov account.
However, if you do choose to use a tax agent, as well as getting great advice, you can claim the tax agent fees as a deduction on next year’s tax return.
Tax rules can be complicated so it is a good idea to use a tax agent to lodge your tax return.
If a deduction is not legitimate and denied by the ATO, you might end up paying extra tax, penalties and interest.
Don’t be fooled by tax agents offering low fixed fees with promises of large refunds.
A good tax agent will spend time with you, will ask lots of questions and make sure you stay on the right side of the ATO.
Contact CrossCorp if you need help with your tax return this year!