ATO Tax Claim

Good day

My wife and I have just been hit with 4.5k tax bill for our tax returns. We own a property overseas and declared 22k AUS. Collectively we earn approx 170k a year.

1. Why was our bill so high.
2. What could we do to mitigate such as high charge in the future.

Thanks in advance for your comments

 

impossible to say without knowing your details, but that works out to be around 20% tax on $22k income

 

1. Because the ATO calculated you have a pretty good income and taxed you accordingly.
2. Don't earn so much.

 

Wow, how do you do that.? Not meaning to be flippant, but you work and get paid for your work.

 

Where do you start?

• Is $4500 your combined tax payable for the year on $170k or is it the shortfall between what you've paid and what is due?
• Income earned overseas is not tax free (If you haven't paid tax elsewhere on it)
• Is there any tax due on interest earned? Shortfall on Franking credits?
• Why is your tax bill so high? Most tax bills comprise two or three pages, I can't see why they have used more pages for you and it should be the same height as everyone else's bill.

And you pay tax on the income.

Individual income tax rates

 

Self assessment ? In which case you signed and lodged so its self evident. If its not then seek tax advice. This could review and explain the key issues and strategies. I suspect the ATO will help avoid the issue in the next year by welcoming you both to the PAYG instalment system.

ATO amended to include undeclared income ? Could be wrong ?

Typically a tax debt arises when the amounts of tax paid to date are less than the final sum due based on the return/s submitted.

 

Um, I haven't been in the workforce or employed for years. I still pay tax however. I've no objections in doing so.

 

Could be changes in the exchange rate?

 

1. It is combined
2. we do a tax return overseas as well so its not tax free
3. no interest earned
4. we went to a ITP type firm

 

It was lodged through a ITP type company not via self assessment

 

A bargain tax agent, did you expect a different outcome?

 

Income tax is not assessed on the combined incomes of the spouses. Spouses are separate legal and tax entities.

 

I reckon if I had a complicated tax situation (and owning properties overseas would complicate things) I would not go to the cheapest tax agent I could find.
Did the tax agent suggest you explore the possibility of claiming depreciation on that property?

 

Go back to the original place where your tax was done and ask them to have another look at it.
Maybe get someone else in the office to have a look..
Like any organisation , some staff are a lot more qualified than others and might pick up a mistake that someone else had made and get an amendment done.
In Australia companies like H&R block and ITP will hire extra staff just for the tax season .
Or it could be as simple as not putting enough money aside from profit to pay for the tax component.
Sub contractors do it all the time ,if they dont set aside enough money from their jobs and then get a big tax bill at the end of FY.

 

Must be good service if you walked away unsure why tax was payable.
I would ask - Why ? Its a reasonable expectation to understand you own issues. I would be horrified it it was my client. Esp if they posted on a forum.

When its due. What strategies to defer it (maybe too late - They mention 15th May ?)
When its lodged you can also expect new instalments to start...Was that discussed ? Or another surprise coming ?

I do find a correlation between franchised tax firms and mistakes. Doesnt mean they are all bad at all. Just reflects that may have to employ cheap to cover the real low prices. Often only owner is qualified and others lack knowledge and experience and have to rush to do work for the price. Mistakes will happen. My best I found was $300K in errors in ONE year - Unbelievable. Now a great client. He learned what a $199 tax return with 5 Ips was worth. It had enless mistakes they argued with. They had NO idea.

These franchised firms are the domino's of the tax industry and a stain on our industry. Shouldnt be allowed. Imagine if you found your dentists did a short evening course.

Any US tax is creditable here of course.

 

Ok, I've made a mistake. Could I go to another firm and get them to look at it?

 

I don't mind paying tax, bu as I said to the person that jointly having 20k, and being taxed 1/5 seems high. Moreover my wife who earns under 80 k was taxed 3.5 k, i earn about 10k more with 6k deductions was taxed less.

 

Yes. A 20% marginal tax rate may be considered low.

 

You can definitely have another firm look at it

 

Gone online in Brisbane H &R Block. What online search other than Google should I go to?