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working for half of the year

Discussion in 'Accounting & Tax' started by ellejay, 23rd Aug, 2015.

  1. ellejay

    ellejay Well-Known Member

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    I seem to remember leaving a job around Christmas a few years ago and getting a decent PAYE tax refund. I'm planning to leave my job in December this year and take the summer off, living off rental income. Just wondering if I'd be likely to get a nice tax refund?
     
  2. Hodor

    Hodor Well-Known Member

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    Possibly. Tax is witheld based on the same rate over the entire year.

    Other things to consider
     
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  3. bob shovel

    bob shovel Well-Known Member

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    If your current weekly income (or pay cycle) is in the top or high tax bracket you'll be paying tax at that rate. Then if you only work half the year it will half your annual income which means you were paying to much tax each pay cycle. Thus resulting in a refund.

    Check the ato tax tables. If your on a regular income it may be better the to do 5 months work for a lower income but better tax outcome. Or vice versa
     
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  4. ellejay

    ellejay Well-Known Member

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    Thanks Bob. My salary is low $90s so yes, I'm wondering if working half the year, and then getting a refund plus some rental income to last for the remainder of the year would be a good move for me.
     
  5. bob shovel

    bob shovel Well-Known Member

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    There are a number of online tax calculators, have a play with different scenarios. Start with yearly income to seewhat you are currently paying per cycle. Then adjust for half the salary.

    That's a rough guide, the bean counters may have more precis ways to do it
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You'll almost certainly get a refund of some degree unless your rental income is quite substantial.

    The worst case scenario: You're currently anticipating paying extra tax due to that rental income, this amount would reduce significantly if you only work half the year. Odd are you'd still get a refund.
     
  7. ellejay

    ellejay Well-Known Member

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    Thanks Peter. Most of our rental income is in hubby's name and he's on a casual contract so would not be earning for some of the year either. I guess I'll try this as an experiment and see how far the refund helps support my summer mini retirement.
     
    Last edited: 23rd Aug, 2015
  8. drg86

    drg86 Well-Known Member

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    I work seasonal (7 months) and have previously received a nice refund at tax time. As said above you get taxed as if you earned that same pay every week of the year.

    With increased rental income and less depreciation I'm not expecting as good return this year :(
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Fairly easy to project

    Use YTD values for payslip and project that to December. Allow for unused leave of course which would also be taxed as normal income). Then allow 12months of rental - Look at your 2015 tax return and allow for new IP / sales etc. Even allow for non-cash deductions like depn etc.

    Then when you have an idea of total projected income...Estimate the tax due : http://www.taxcalc.com.au/

    Compare estimate (including Medicare + HELP Debt etc) with actual tax withheld year to date on payslip. That should indicate what sort of refund.

    Then wait 6 months to claim it in July 2016.
     
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