Tax Tip 197: How much can be earned without having to pay tax?

For the 2018 to 2019 tax year the tax free threshold for resident taxpayer individuals is $18,200 per year in taxable income. That means earning under this amount results in no income tax payable.

However, a taxpayer could earn slightly more than this and pay no tax because of 2 rebates that are available:

· The Low Income Tax Offset of $445, and

· The Low Mid Income Tax Offset of $255.



This means that an individual resident individual could actually earn $21,885 per year and not have to pay tax.

However, if the individual is eligible for the Seniors and Pensioners Tax Offset (SAPTO) they could potentially earn up to $33,000 per year and not have to pay tax.



Check out the calcs at https://www.taxcalc.com.au and pay calculator

 

Older Australians may be able to raise their tax free threshold to around $25K each in some cases using the Senior Australian Pension Tax Offset (SAPTO)

Senior Australians

Its a kind of 4x dip for some retirees even with modest shareholdings. They get a elevated tax threshold, tax free super, tax free earnings in the super fund and also refund of franking credits. Its another reason why the ALP policy on franking credits has elements of sense.

 

Why not remove the FREE part and levy a modest tax rate to make it fair instead of tinkering with franking credits which certain people (on high incomes) or retirees with industry super fund can fully utilise but not low income earners and SMSF retirees? Where is the fairness. I think it is highly political and biased policy.

Don't want to derail the thread but I just don't see the fairness in their policy when there are so many loopholes to avoid or get around it.

Cheers,
Oracle.

 

would be easier to just add GST to everything

 

I thought you could earn an extra 5k a year tax free if it was a hobby ?

 

Tax the big companies properly and no body else would need to pay any tax.

 

And this year there is middle income tax offset. I cant even start to think about that one.

 

Wrong. All income is taxable. If its a hobby it may not be income but generally that rule limits deductions to the extent of income.

referees....Hmmm depends if they are professional semi pro or a district ref. The ones who ref kids games are all tax free. But they also cant claim deductions. NRL / AFL refs are usually taxed. World Cup games are taxed but tax free for Olympics.... Who said tax was easy

Scholarships are often taxable. I see that with teachers a bit. They win a scholarship to study or travel and research and whammo. Typically only Uni scholarships are tax free

 

The fairness is in making it a non-refundable offset. Personally it should be same for ALL entities and taxpayers. If a SMSF is a pension fund the refund is denied. If it is accumulation its allowed to the extent of tax due. Shortens backflip on this was sign that he will need to cave on most policies and he will. He will be a puppet. Who knows where this will go.

 

I just reran the numbers for the 2019-20 financial year and the figures are still the same - $21,885 can be earned without needing to pay income tax.

 

Do kids who get a scholarship to a private school also have to report & pay tax on their scholarship? That would be a bit harsh imo.

 

I am not sure - it could be in many instances.

 

The ATO now has a interactive tool to assist to determine if scholarships etc are taxable.

Is my scholarship taxable

 

For the 2020 to 2021 financial year a person could earn $22,800 per year and not pay tax.

 

If the taxpayer qualified for SAPTO they could earn a fair bit more, $33,890 and not pay tax

 

For the 2021-22 financial year the average person could earn $22,801 and not pay tax

 

For those SAPTOers

 

Is the income from reffing domestic basketball for a 14 year old taxable? The kids was asked to complete a hobbies form. Should they receive a EOFY payment summary? Similarly if a kid did a paper round. Do they need to do a tax return?

 

Do I need a Tax File Number (TFN)?

No. There is no tax deducted from your pay. As umpiring is classed as a “sport/hobby” by the ATO there is no need to declare income from umpiring on a tax return.

 

Woot! I'd been looking for ages for the thread that gave me the $20,800 tax free threshold, which I have in my 'how much to concessionally contribute into super to reach tax-free status (and save 4c tax per dollar)' spreadsheet.

(not joking, I really did this).
(that's not the file name of the spreadsheet).
(no, I didn't earn much last fin year )