DFK Gooding Partners

October 22, 2024

It’s tax time again, which usually means either the welcome news of a tax refund, or less than welcome news of tax owed. In nearly all instances of tax being payable, there are proactive steps that can be taken to ensure you minimise, or remove the amount payable.

The ATO has recently given individual taxpayers some proactive steps to assist with avoiding an unexpected tax bill by ensuring the correct amount of tax is being put aside throughout the year. In addition, we suggest paying any general interest charges (GIC) on overdue tax debt immediately, due to recent changes at the ATO resulting in a tightening of leniency towards interest charges being delayed or removed.

HECS or HELP disclosure

Letting their employer know if they have a study or training support loan, such as a HECS or HELP debt. Under the pay as you go (‘PAYG’) withholding system, employers should generally withhold an additional amount from salary and wage income to cover any compulsory repayments.

Claiming the tax-free threshold from one employer

Check they are only claiming the tax-free threshold from one employer. Usually, taxpayers claim the tax-free threshold from the payer who pays them the highest salary or wage.

Medicare Levy Surcharge review

Consider whether the Medicare Levy Surcharge may affect them this financial year. If a taxpayer, their spouse and any dependent children (including newborns) do not have an appropriate level of private patient hospital cover, and the taxpayer earns above a certain income, they will have to pay a surcharge of up to 1.5% of their total taxable income. The Medicare Levy Surcharge is not generally covered in tax withheld by an employer (unless a PAYG variation is submitted by an employee to their employer).

Income tier is correct

Check their income tier is correct for their private health insurance rebate. By updating their income with their private health insurer, individual taxpayers can ensure they do not receive too much rebate, which would need to be repaid when they lodge.

PAYG instalments and pre-paying tax

Taxpayers who earn business or investment income may consider voluntarily entering PAYG instalments and pre-paying tax throughout the year to avoid a large bill at tax time. If they are earning regular income through multiple sources, prepaying their tax through PAYG instalments will help them smooth out their cashflow and give them the flexibility of spreading out the payments if they expect to owe tax on their income.

If you still incur a general interest charge (GIC), pay this immediately

If you do end up with a tax bill, it’s important to ensure you pay this on time to avoid paying interest on any overdue amounts. General interest charge (GIC) is applied to unpaid tax liabilities and is worked out daily on a compounding basis.The ATO may apply GIC if an amount of tax or some other liability remains unpaid after the date it should have been paid. This includes where:

  • there is a tax shortfall because of an amendment or correction
  • an instalment of tax is underestimated
  • a return is lodged late.

The due date for payment for taxpayers who lodge their own return is 21 November, regardless of when they lodge. The due date for payment may be later when using a registered agent.

Recent changes to General Interest Charge (GIC) remission requests

Historically the ATO has allowed remission of charges in appropriate circumstances, and has provided some leniency with payment. However the ATO is now increasingly focused on collecting tax debt and as a result is tightening access to payment plans and general interest charge (GIC) remissions.

The change in the ATO’s approach means that when requesting a remission of GIC, the ATO will follow the parameters set out in PS LA 2011/12 in assessing the request. Furthermore, individuals (and businesses) should note that in the instance the ATO decides not to remit GIC (ie pursues interest charges on overdue tax debts), no objections can be lodged. If you disagree with the Commissioner’s decision, you will have a seek a review of the decision by the Federal Court of Australia under the Administrative Decisions (Judicial Review) Act 1977.

When are tax returns due?

The due date for payment for taxpayers who lodge their own return is 21 November, regardless of when they lodge. The due date for payment may be later when using a registered agent.

Additional tax planning resources

  • The ATO has a raft of resources online to assist individuals and families with tax planning: ATO Tax Resources
  • Check our annual Tax Planning Tips articles, updated each year with the latest details

Tax Planning for 2023-24
Tax Planning for 2022-23

Contact us for assistance on your tax return

Complete the quick contact form below with your details and one of our team will be in touch to discuss your requirements. Alternatively, you can call us (08) 9327 1777 or email info@dfkgpca.com.au.

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