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Your Tax Questions Answered

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12 / Jun / 2014

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Here are the questions and answers from ASK MEL on Facebook.  We got some great questions and many of our clients will be interested in the answers.

Q: I started working full time casual in October 2013 after being self employed for 10yrs. My husband is now studying full time after being self employed for the last 10 years with me. What info do we need to provide for you to do our tax returns after 1 July?  Allison

A:  For the 2014 financial year we will need your business income and expenses as well as your payment summaries from working and any work related expenses.  If your husbands study relates to any income he has earned then he can claim the costs associated with studying a well.  Mel

Q:  Can we claim on kids because they can be rather taxing on my nerves?
Brad

A:  You are so right.   My kids do the same to me at times. While getting a tax deduction for the kids and the pets would be great, unfortunately no such luck! The best you can do is the Family Tax Benefit if your income level qualifies. See the Centrelink page for thresholds. Mel
Q:  How much do you know about Family Day Care and what can be claimed?  Keli

A:  We just happen to have the expert in family daycare and taxation matters working at MJ Accountants. Jennifer Holman takes care of several family daycare clients and has developed a comprehensive information pack. If you email jennifer@mjaccountants.com.au she will give you more details.  Mel

Q: I need quick advice. I’m currently a carer and on income support, but there is a chance of being a movie extra, which is my dream.  My concern is Tax.  I believe the pay is £50 per day you work. What can I do to not lose my carers or income allowance?  Andrew 

A: Carers allowance is affected by taxable income. If the movie extra gig is a hobby then it’s not taxable – this would rely a lot on the intention and regularity. See this link https://www.ato.gov.au/…/Getting…/Am.  Mel
Q: I’ve read that deferring income can be a good way to reduce your tax bill. Is this something you recommend?  Dennis 

A: Deferring income saves you paying tax on it until it is received – so if you defer income from 2013 into 2014 you don’t pay the tax until the 2014 tax year. It is a great tactic, but remember it’s just a delaying tactic. You will pay tax eventually.  Mel
Q: I run my freelance business from home – what can I legitimately claim as home office expenses? Thanks!  Sheree

A: In Coffs there are a lot of people doing the same as you. For a comprehensive list of legitimate expenses see: https://www.ato.gov.au.  Mel
Q: I haven’t worked/earnt any money this past tax year, but I have spent a lot on medical bills. I don’t have medical insurance. My husband works full-time. Is he entitled to claim any money back on my medical bills and is he entitled to claim my tax allowance? Thank you.  Madison

A: Ahh, great question – unfortunately the answer isn’t so great. Your tax-free threshold is only yours. So, in essence, yes it’s in the bin – he can’t claim yours, only his own.  Mel

Q: I have been thinking about changing my accounting software. Do I need to do this at the start of the new financial year or can I decide later?   Emma

A: The start of a new financial year is a logical time to change software. So, make the decision now. The important thing is that if you have more than one accounting system in a financial year, your accountant has to piece them together to do your tax return, and that will cost you more.  Mel

Q: Can we claim on our children’s school fees as well as the schools building fund fees?  Thanks.  Craig

A: The building fund is claimable as a donation. The school fees are not tax deductible. If you get any Family Tax Benefit (FTB) you will get the school kids bonus that helps towards these school costs. However, the recent budget has repealed the school kids bonus from 1/4/14.  Mel
Q: If you have to pay capital gains tax on an investment property if you make a profit on it at time of sale, why are you not allowed to claim a loss if you sold an investment property and made a loss on the purchase price?  Paul

A: I know it seems unfair. However, capital losses are only available to offset against capital gains. Whilst capital gains add to ordinary income, capital losses are quarantined. Timing of losses is the key!  Mel

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