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

Discussion in 'Accounting & Tax' started by Terry_w, 9th May, 2019.

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  1. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    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
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.
     
  3. oracle

    oracle Well-Known Member

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    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.
     
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  4. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    would be easier to just add GST to everything
     
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  5. Chomp

    Chomp Well-Known Member

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

    datto Well-Known Member

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

    [email protected] Tax Accounting + SMSF Business Plus Member

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

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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
     
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  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.