Tax time is just around the corner. At h&h, we advise students that it is always better to be prepared in life than caught out with a nasty surprise down the track (like a fine for late lodgement). Being organised always puts you a step ahead in life, especially at tax time!
To help you out, we have compiled some top tips, with the help of an accountant, to maximise tax time as a student.
Remember, this is only a guide, so always be sure to seek professional advice from your Registered Tax Agent before lodging your tax return with the ATO.
Do You Actually Need To Lodge A Tax Return AT Tax Time?
Again, check in with your tax agent, but according to CPA Australia, “If your total taxable income for the year ended 30 June 2019 is below the tax-free threshold of $18,200 you may not need to lodge an income tax return. However, if you have had tax withheld from your income during the year and are under the threshold, you must lodge a tax return to have these withholding amounts refunded to you.”
Set Up A MyGov Account
If you’re a student and receiving fee assistance, it’s likely you already have this. A MyGov account is simply a secure way to access government services online with one login and one password.
You can then link government services like Centrelink, Medicare and the ATO, to your myGov account. And, if you choose to lodge the tax return yourself, myTax is accessed through your myGov account.
Keep Records Of Your Expenses
If you spend money on items related to work or study that you think may be eligible to claim as a tax deduction, hold on to the receipts. Show these to your tax agent, who will be able to advise you if the claim is legitimate. You will need to hold on to your receipts for a period of five years, just in case you are picked for a random audit by the ATO.
Think About What You Can Claim
There may be certain expenses and course fees that you will be able to claim, however it’s usually unlikely that your study will be tax deductible while you are gaining your qualifications.
The exception to this, according to the ATO Self-education expenses is when the course you undertake leads to a formal qualification and meets the following conditions:
The course must have a sufficient connection to your current work activities as an employee and:
- maintain or improve the specific skills or knowledge you require in your current work activities
- result in, or is likely to result in, an increase in your income from your current work activities.
You can't claim a deduction for self-education expenses for a course that doesn't have a sufficient connection to your current work activities even though it:
- might be generally related to it – such as undertaking a full-time fashion photography course and working as a casual sales assistant on the weekends
- enables you to get new employment – such as moving employment as a nurse to employment as a doctor.
Be sure to ask your accountant to explain the laws around what you can and can’t claim in detail, as there may be some grey areas.
Do You Have To Pay Tax On Benefits or Fee Assistance?
Typically, the answer to this is no. Although, receiving the fees may impact what you can claim in other areas, so do check this with your accountant. According to CPA, “if you receive Austudy, ABSTUDY living allowance, Newstart Allowance, youth allowance or other taxable Commonwealth government education or training payments, you are eligible for the beneficiary offset. This offset ensures you do not have to pay tax on those payments. You may, however, have to pay tax on other income, such as wages or investment income.”
Now is the time to get things organised, so use your downtime to get bookkeeping in order, check in with your tax agent and lodge your return well before the due date. It’s highly likely you’ll receiver a nice tidy return, which will be a great boost for you in these trying times.