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Why overseas student can’t claim self-education deduction in tax return?

Individual Tax Return, Frequently Asked Questions

As a tax agency that has been in operation for over ten years, we handle a large volume of tax return cases every year. We have seen a lot of common mistakes made by younger taxpayers, for example, international students incorrectly claiming for self-education deduction.

Content

Requirements of self-education deduction

A Requirement Behind the Rules

More Information

Rules for Claiming Self-education Deduction

You may have a question, as a oversea student, could you claim your university course fee as a self-education deduction? The answer is NO. Here are the some of the basic rules around claiming self-education expenses like university fees as a tax deduction in Australia:

You can claim a deduction for self-education expenses like tuition fees, textbooks, stationery, etc, only if your course is directly related to your current job/business activities. Simply studying a course to get a qualification or maintain/improve your skills is not enough – it must relate to your current income-earning activities.
You cannot claim a deduction if your study is only related to getting a new job or income-earning activities you don’t currently engage in.
You can only claim fees if you paid them in the same income year you are claiming the deduction. Unpaid fees cannot be pre-claimed.

The Requirement of Self-education Deduction Behind the Rules

While these rules may not seem directly relevant to international students, but there is an important eligibility requirement for self-education deductions hiding within:

Specifically, at the time of enrolling in the course of study, you must be legally employed in Australia, and your enrolled course must be highly relevant to improving your skills for this existing job.

This serves to demonstrate that the purpose of your learning is to further develop competencies for your current role, rather than simply to obtain a qualification or find better work in the future. As most student visa holders in Australia do not meet these criteria of current legal employment that is directly linked to their program of study, they traditionally do not qualify to claim any deductions for self-education expenses on their tax return as a consequence.

Student visa intent is to study, not work. The primary purpose for overseas students coming to Australia is to undertake an education program, not earn an income. Although it gives students part-time working rights, however, prior to enrolling and incurring tuition expenses, students can’t prove their intention of improving skills for the current job, as they were not permitted to work or be employed in Australia.

More Information

If you want to know more about self-education deduction in Australian tax return, please check the ATO’s page: https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/education-training-and-seminars/self-education-expenses

24/01/2024

A Beginner’s Guide to Tax Return in Australia

Individual Tax Return

As a newcomer to Australia, filing your first tax return here can feel daunting. This guide will explain the basics of the Australian tax system and tax return process to help you successfully lodge your return.

In Australia, individual taxpayers are required to lodge a personal tax return each financial year (1 July to 30 June) to declare their income and claim eligible tax deductions or credits from the previous year. The lodgment deadline is generally October 31, though some may receive an automatic extension to May 15 if using a registered tax agent.

The tax return form assesses your income tax liability based on resident status and worldwide income earned during the financial year. The starting point is determining your assessable income – this includes employment income like wages, salaries, commissions; income from investments like dividends, interest; government payments; and business or rental income if applicable. You will need to provide income statements like payment summaries and dividends statements to verify amounts declared.

Filling out your tax return allows you to reduce your total taxable income by claiming eligible tax deductions. Common deductible expenses include work-related expenses like a new uniform or tools if required for your job; donations to charitable organizations; interest paid on loans for gaining income; and private health insurance premiums. Keep clear records like receipts to support any amounts deducted.

The tax office will use the information provided in your return to calculate your tax liability for the year. If too much tax was withheld from your pay during the year compared to your actual liability, you are entitled to a tax refund. On the other hand, if not enough tax was withheld you may need to pay the additional amount owed.

There are a few options for lodging your return. We suggest using our online tax return services. It is super friendly to the users who are new to Australian Tax returns. Once submitted, the ATO will process your return within about 2-4 weeks and notify you of the final outcome.

With the right guidance, the tax return process in Australia is straightforward. As a new resident, I recommend familiarizing yourself with the basic tax rates and available deductions so you pay the right amount of tax. Let us know if you need any clarification on how to successfully lodge your first Australian tax return.

13/11/2023

Your Complete Guide to Investment Property Tax Deductions

Individual Tax Return

When it comes to Australian tax returns, there are certain expenses related to investment property tax deductions. In this article, I’ll explain common tax deductions and the documents needed to claim them.

A general overview of common investment property tax deductions

Rental Interest: If you have taken a loan to purchase an investment property, you may be able to claim the interest charged on that loan as a deduction.
Property Management Fees: Agent/Management Fee if you use the services of a property management company
Advertising Costs: Expenses incurred for advertising your rental property, such as newspaper ads or online listings
Insurance: Premiums paid for insuring your rental property, including building and contents insurance
Repairs and Maintenance: Costs associated with repairing and maintaining the rental property, such as fixing plumbing issues or repainting.
Council Rates and Land Tax: These are local government charges imposed on the property
Utilities: If it’s not paid by the tenant, you may be able to claim a portion of utility bills, such as electricity and water

Documents need to keep as proof for investment property tax deduction

To substantiate your investment property tax deduction in tax return, it’s important to maintain accurate records and relevant documents. Here are some documents you should consider keeping as proof of your investment property tax deduction:

Rental Income Records: Such as rent receipts or statements from your property manager or tenants
Expense Receipts: Retain receipts, invoices, or statements for all expenses related to your rental property. For example, receipts for repairs, maintenance, council rates, and etc…
Loan Documents: If you have a loan, keep copies of those documents. For example, statements that reflect the interest charged on the loan.
Utility Bills: Such as electricity bills or water bills, if you are claiming a portion of utility expenses.
Insurance Policies: Retain copies of insurance policies for your rental property.
Depreciation Schedules: If you are claiming depreciation on capital assets within the property.You keep a copy of the depreciation schedule, which is prepared by a qualified quantity surveyor, or relevant documentation related to the depreciation claim.
Bank Statements: a bank statements to show rental income and expenses.
Lease Agreement: Lease agreement or rental contract that outlines the terms and conditions of the tenancy.
Correspondence: Retain any correspondence related to your investment property tax deductions, such as emails, letters, or notices exchanged with tenants, property managers, or relevant authorities.

It’s important to note that the ATO may require you to retain these records for a certain period of time, typically five to seven years, so it’s advisable to keep them organized and easily accessible.

Looking For Investment Property Tax Return?

12/08/2023

Business Tax: How to setup a business in Australia?

Business Service

In Australia, business taxes refers to the various taxes imposed on businesses operating within the country. The primary types of business taxes in Australia include: Goods and Services Tax (GST), Income Tax, Payroll Tax, Fringe Benefits Tax (FBT), Capital Gains Tax (CGT) and Other Taxes. If you want to start a company in Australia, you need to:

How to Setup a Company in Australia?

At least one Australian director/shareholder must be present at the time of establishment.
Company registration fees are $1,050 (Including $506 of ASIC registration fees) and it will be completed in a day. We can also arrange the public liability and work cover insurance upon request. (Fees will be advised on request)

How to Register an Australian Business Name?

You need to register a business name if you conduct business under a name other than your own name or your own company name. A business name, also known as a trading name, is a name or title under which a person, or other legal entity, carries on business.
Our registration fee is $220 (including 3 years of ASIC fee is $82). We can also arrange the public liability and work cover insurance upon request. (Fees will be advised on request)

About ABN Registration

To apply for an ABN number, we may require your Photo ID and Tax File Number.
If annual revenue is over 75,000 or more, you need to register GST and which requires submitting the Business Activity Statements every 3 months to the ATO.
Our ABN registration fees are $110 and it will take about 30 mins.

05/08/2023

Apply For GST Registration – The Ultimate Guide

Business Service

Goods and Services Tax (GST) is a broad-based tax of 10% on the sale of most goods, services, and anything else consumed in Australia. However, not all Australian companies or other business activities need to apply for GST registration.

Content

Apply For GST Registration

GST, Tax Return & BAS Report

Apply For GST Registration

Here is a simple overview of when you may need to register for GST in Australia:

If your business has an annual turnover of $75,000 or more from taxable supplies.
You can choose to register even if your turnover is less than $75,000.
You must register within 21 days after your projected/actual turnover reaches $75,000.
Some businesses like property developers must register regardless of turnover.

GST, Tax Return & BAS Report

If you have registered GST, you will be required to submit quarterly Business Activity Statement (BAS) reporting in tax return. The BAS discloses total tax amounts for the period. Information includes GST collected from sales as well as GST paid on business expenses.

Quarter	Period	Payment and lodgment date
Quarter 1	July, August, and September	28. October
Quarter 2	October, November, and December	28. February
Quarter 3	January, February, and March	28. April
Quarter 4	April, May, and June	28. July

05/08/2023

Easy to Claim Tax Deduction with Online Tax Return System

Individual Tax Return

In Australian tax return, a tax deduction refers to an expense that can be subtracted from your assessable income, thereby reducing your taxable income. By claiming deductions, you can potentially lower the amount of tax you owe.

Type of Tax Deduction

Deductions for costs incurred in running your business are allowable, provided the expenses are not of a private, domestic, or capital nature. You may be able to claim deductions for your business expenses.

– Accounting Fee

– Advertising Fee

– Bank Fee

– Other Fee

– Rent

– Sub-Contractors

– Salary & Wages

– Superannuation

– Work Cover

– Insurance

– Public Liability Cover

– Business Trip

– Staff Training Exp

– Freight & Cartage

– Leasing & Hiring

– Fuel

– Parking

– Registration

– Repairs & Maintenance

– Internet Expenses

– Printing & Stationery

– Postage

– Repairs

– Rubbish Removal

– Telephone

– Office Equipment

– Tool Replacements

– Uniform/Prot. cloth

– Electricity Expense

– Material Purchase

– Closing Stock

– Other Purchase

– Car Purchase

05/08/2023

How investment property benefits in tax return?

Individual Tax Return, Frequently Asked Questions

In Australia, you can generally claim deductions for expenses related to your investment property against the rental income you receive.

Investment Property

You can claim a deduction for your rental property-related expenses for the period your property is rented or is genuinely available for rent.

If you use your property for both private and income-producing purposes, you can only claim a deduction for the portion of any expenses that relate to the income-producing use.

Property rented or genuinely available for rent

You can claim a deduction for rental expenses you incur, if you use your property for income-producing purposes.

You can only claim a portion of your expenses if any of the following apply to you:

– Your property is only genuinely available for rent for part of the year.

– Your property is used for private purposes for part of the year.

– Only part of your property is used to earn rent.

– You rent your property at non-commercial rates.

– Your investment loan is partially used for private purposes.

1. When you can claim

You can claim expenses for periods when your property is either:

rented out not rented out but is genuinely available for rent, which means the property is advertised, giving it broad exposure to potential tenants considering all the circumstances, tenants are reasonably likely to rent the property.

If these don’t apply, it’s likely that you can’t claim all your expenses as you don’t have a genuine intention to earn income from your property.

2. Factors that indicate genuine availability

Property is genuinely available for rent when it is:

– advertised in ways that give it broad exposure to potential tenants

– having regard to all the circumstances, tenants are reasonably likely to rent it.

Factors that may indicate a property isn’t genuinely available for rent include:

– you advertise in ways that limit your exposure to potential tenants – for example, if you only advertise

— at your workplace, or by word of mouth

— outside holiday periods, so it is less likely to be rented out

– the location, condition of the property, or accessibility of the property means it is unlikely tenants will seek to rent it

– you place unreasonable or stringent conditions on renting out the property that restricts the likelihood of the property being rented out, such as

— setting the rent above the rate of comparable properties in the area

— placing a combination of restrictions on renting out the property, such as requiring prospective tenants to provide references for short holiday stays and having conditions like no children or no pets

– you refuse to rent out the property to interested people but you don’t give adequate reasons.

All or part of your property is used to earn rent

If only part of your property is used to earn rent, you can claim only that part of your expenses that relates to the rental income. As a general guide, apportion your expenses on a floor-area basis – that is, based on the area solely occupied by the tenant, together with a reasonable figure for their access to the general living areas, including garage and outdoor areas if applicable.

Property available for part-year rental

If your property is only available to rent for part of the year, you can’t claim a deduction for the portion of any expenses that relates to your private use.

For example, if you have a holiday home or time-share unit, you can’t claim a deduction for any expenses related to those periods when you, your friends or your family used the home or unit for private purposes.

You may need to decide which expenditure is private in nature. For example, council rates paid for a full year would need to be apportioned based on the total time the property was rented out and genuinely available for rent during the year as a proportion of the total year.

However, it may not be appropriate to apportion some of your expenses on the same basis. For example, expenses that relate solely to the renting of your property are fully deductible and you would not apportion them based on the time the property was rented out. Such costs might include:

– real estate agents commissions

– costs of advertising for tenants

– phone calls you make to a tradesperson to fix damage caused by a tenant

– the cost of removing rubbish left by tenants.

05/08/2023

How to Register a Business – Sole Trader or Company?

Business Service

Before you invest time and money into setting up your business, you need to register a business for the right business licenses, make sure you put together a business plan and carefully consider how viable your business is.

Many businesses fail when these things aren’t considered. Get in touch with the Office of the NSW Small Business Commissioner or an industry association to get advice specific to your area.

1. Set up as a sole trader

Operating as a sole trader is the simplest and cheapest business structure you can set up. You control and manage the business, and although you ‘trade’ on your own, you can still employ people to work for you.

2. Register a company

If you’ve decided a company structure is best for your business, you’ll need to register your company with the Australian Government.

3. Register a limited partnership

If you’ve decided a limited partnership structure is best for your business, you’ll need to register the limited partnership with the NSW Fair Trading’s Registry Services.

4. Set up a trust business structure

A trust is an obligation imposed on one person or entity – the trustee, to hold property for the benefit of another – the beneficiary. The trustee can be an individual or a company, the latter providing some asset protection.

5. Register a co-operative

If you’ve decided a co-operative is best for your business, you’ll need to register the co-operative with NSW Fair Trading’s Registry Services.

Starting a business(Q&A)

Register an Australian Business Number (ABN)

You don’t have to register for an ABN, but an ABN will let you claim Goods and Services Tax credits, energy grants credits, register an Australian domain name, plus more.

Apply for an Administrator AUSkey

An AUSkey is a unique secure login linked to an Australian business number (ABN), which allows you to access and send business information to the government online.

Register a business name

You’ll need to register a business name, unless you’re a sole trader or partnership and your business name is exactly the same as your or you and your partner’s first and last names. You’ll need an ABN or ABN application number to register your business name.

Register your business for Goods and Services Tax (GST)

You must register your business for GST if

– Your GST turnover is $75,000 or more

– You provide passenger transportation services (e.g. Ola, Uber, Didi)

Apply for a business Tax File Number

The Australian Taxation Office (ATO) will automatically issue your partnership, company or trust with a business TFN when you apply for an Australian Business Number (ABN).

Apply for an individual Tax File Number

If you’ve decided a sole trader structure is best for your business, you’ll need to apply for an individual Tax File Number.

Register for PAYG withholding

You’ll need to register for PAYG withholding if you need to withhold tax (on behalf of the Australian Tax Office) from payments you make to employees, contractors, or other businesses that haven’t supplied you an ABN.

Get liability insurance for your business

You can choose to take out public liability, professional indemnity, or product liability insurance. Public liability insurance protects you and your business against the risks of damage or injury to people or property. While it’s not mandatory, it’s essential for a business.

Register for fuel tax credits

You may be eligible to register for fuel tax credits for the fuel used by your business.

05/08/2023

A Quick understanding of Self Managed Super Funds (SMSFs)

Individual Tax Return

Self managed super funds (SMSFs) are a way of saving for your retirement. The difference between an self managed super funds and other types of funds is that the members of an SMSF are usually also the trustees. This means the members of the self managed super funds run it for their benefit and are responsible for complying with the super and tax laws.

If you set up a self-managed super fund (SMSF), you’re in charge – you make the investment decisions for the fund and you’re held responsible for complying with the super and tax laws.

It’s a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings.

It’s best to see a qualiﬁed, licensed professional to help you decide the Australian Securities and Investments. A self managed super funds must be run for the sole purpose of providing retirement benefits for the members or their dependents. Don’t set up an self managed super funds to try to get early access to your super, or to buy a holiday home or artwork to decorate your house. These things are illegal.

SMSF Setup

Individual trustees	Corporate trustees
Maximum of four members	Maximum of four members
Each member of the fund must be a trustee, and each trustee must be a member of the fund (except for single-member funds – see below).	Each member of the fund must be a director of the company, and each director of the corporate trustee must be a member of the fund (except for single-member funds – see below).
A member cannot be an employee of another member (unless they are relatives).	A member cannot be an employee of another member (unless they are relatives).
———————–Single-member funds———————–	———————–Single-member funds———————–
There must be two trustees. One trustee must be a fund member.	The trustee company can have one or two directors, but no more. The fund member must be either the sole director or one of the two directors.
If the fund member is an employee of the other trustee, the fund member and the other trustee must be relatives.	If there are two directors and the fund member is an employee of the other director, the fund member and the other director must be relatives.

Rollover existing super funds / Investment / Insurance

1. Rollover existing super funds

A SMSF trustee, you can accept contributions and rollovers for your members from various sources but there are some restrictions, mostly depending on the member’s age and the contribution caps. You need to properly document contributions and rollovers, including the amount, type and breakdown of components, and allocate them to the members’ accounts within 28 days of the end of the month in which you received them.

2. Investment

All investments by your SMSF must be made on a commercial ‘arm’s length’ basis. The purchase and sale price of fund assets should always reﬂect true market value, and the income from fund assets should always reﬂect a true market rate of return.

3. Insurance

Tax deductible insurance policies can also be purchased to protect members. The self managed superfund can obtain the following tax deductible cover for members:

– life and TPD insurance, and

– income protection insurance

Tax / Tax return and audit

1. Tax

The income of your self managed super funds is generally taxed at a concessional rate of 15%. To be entitled to this rate, your fund has to be a ‘complying fund’ that follows the laws and rules for SMSFs. For a non-complying fund, the rate is the highest marginal tax rate. Capital gains will be taxed at a rate between 10%~15%. When your SMSF is funding your pension (in the pension phase), all income and capital gains on the pension account will be subject to zero tax.

2. Tax return and Audit

As an self managed super funds auditor, it’s your role to carry out the annual financial and compliance audit of an SMSF’s operations. The trustees must appoint you as their SMSF auditor no later than 45 days before the annual return is due to be lodged and provide you with all relevant documentation to conduct and finalize the audit. If you request more information from the trustees, they must provide it to you within 14 days of your written request. You’re required to complete the audit and provide the Independent auditor’s report (IAR) to the trustees within 28 days of receiving all relevant documentation. A financial and compliance audit must be completed before a fund’s SMSF annual return can be lodged.

Q&A

SMSF Setup

You can engage other SMSF professionals, such as accountants and SMSF financial advisers, to help you set up and run your fund. An accountant can help prepare your fund’s accounts and its annual financial position and operating statements. A tax agent can complete and lodge your SMSF annual return, provide tax advice and represent you in your dealings with us.

Bare Trust Setup

The Declaration of Custody Trust (Bare trust) for the SMSF borrowing needs a company as its trustee. That company must be a different company from the one that is the SMSF trustee for bank loans.

Finance/Loan Consultation

Normally banks loan amounts from $200,000 to $2,000,000, giving you the potential to acquire property worth more than your SMSF is available cash funds. You can use rental income and employee/employer/personal contributions to assist with repayments. Borrow up to 70% of the property value.

SMSF Tax Return

You need to lodge an annual return once the audit of your SMSF has been finalized. The SMSF annual return is more than an income tax return. It is also used to report super regulatory information, member contributions and pay the SMSF supervisory levy.

SMSF Audit

You must appoint an approved SMSF auditor to audit your fund each year, not later than 45 days before you need to lodge your SMSF annual return. The auditor examines your fund’s financial statements and assesses your fund’s compliance with super law. Approved SMSF auditors have a critical role in helping to maintain the health and integrity of the SMSF sector through the annual audit of each SMSF.

SMSF Fees

Individual SMSF Setup	$880
Corporate SMSF Setup (Company trustee)	$1890
Bare Trust Setup (Custodian company trustee)	$1750
Annual SMSF Tax Return + Audit by auditor(simple)	$650 – $1200
Annual SMSF Tax Return + Audit by auditor (1 investment property)	$1000 – $1800

05/08/2023

A Simple Guide to Tax Deductions for Australian Businesses

Business Service

Tax deductions for an Australian business are expenses that can be deducted from the business’s assessable income to reduce the amount of income tax payable in tax return. Here are some common tax deductions for Australian businesses:

Operating expenses:

This includes expenses such as rent, utilities, insurance, and office supplies.

Wages and salaries:

The cost of wages and salaries paid to employees, including superannuation contributions, can be deducted.

Depreciation:

Businesses can claim deductions for the decline in value of their assets, such as equipment, vehicles, and buildings.

Bad debts:

If a business is unable to collect payment for goods or services that it has provided, it can claim a deduction for the amount of the debt.

Travel expenses:

Businesses can claim deductions for travel expenses incurred in the course of doing business, such as airfare, accommodation, and meals.

Marketing and advertising expenses:

The cost of advertising and promoting a business, including website development and maintenance, can be deducted.

Professional fees:

Businesses can claim deductions for fees paid to accountants, lawyers, and other professionals for advice and services related to the business.

It is important to keep accurate records of all business expenses and ensure that they are legitimate and directly related to the business. Businesses should seek professional advice from an accountant or tax agent, such as TAX123, to ensure that they are claiming all eligible deductions and meeting their tax obligations.

26/07/2023