Australians have only two weeks to submit their tax return to get a typical refund of $2,160 and avoid a hefty fine that increases the longer the delay.
Low and middle-income tax offsets and last year’s fast forwarding of tax bracket changes means most workers will receive something good this year.
Those doing their return online themselves have until October 31 to submit their claims via the myGov website.
Halloween is also the deadline to register with an accountant or tax agent to avoid a $222 fine and get an extension to May 15 next year.
The Australian Taxation Office’s ‘failure to lodge’ on time penalty increases by $222 for every 28 days it is late, rising to a maximum of $1,110 over five months.
Australians have until October 31 to submit their tax return to get a typical refund of $2,160 and avoid a hefty fine that increases the longer the delay (pictured is a stock image)
Australia’s three stages of tax cuts
Tax cuts of $255 for those earning between $18,200 and $37,000 were legislated in July 2019
Those earning $48,000 to $90,000 saw their tax cuts double from $530 to $1,080
The government’s tax cuts package, announced in the April 2019 pre-election Budget, had three stages
Stage one increased the threshold for the 32.5 per cent personal income tax bracket from $87,000 to $90,000, over four years until 2022
Stage two increases the 19 per cent personal income tax bracket from $37,000 to $45,000. It also raises the 32.5 per cent personal income tax bracket from $90,000 to $120,000
Stage three would see the 37 per cent tax bracket abolished from July 1, 2024 and a new 30 per cent tax bracket created for all individuals earning between $45,001 and $200,000. The number of tax brackets would be slashed from five to four for the first time since 1984
H&R Block director of tax communications Mark Chapman said low and middle-income tax offsets of up to $1,080 and a fast-forwarding of tax bracket changes, adding another $1,080 in relief, would benefit Australians on median and average full-time salaries.
‘The combination of the changes in tax thresholds announced in last year’s Budget and the extension of the low- and middle-income tax offset means that if you earn between $48,000 and $90,000, you are probably $2,160 better off this year,’ he told Daily Mail Australia.
‘You only receive the low- and middle-income tax offset when you lodge this year return.
‘Quite an incentive to get your tax return done and lodged.’
Low and middle income tax offset
More than 10million Australian workers earning up to $126,000 are receiving up to $1,080 from the low and middle-income tax offset.
As part of this package for 2020-21 tax returns, 4.6million Australians earning between $48,000 and $90,000 will receive $1,080 as another 1.8million workers earning $37,000 to $48,000 get back $255.
Treasurer Josh Frydenberg in the May 2021 Budget extended the low and middle-income tax offset for those earning up to $126,000 at cost of $7.8billion.
Fast-forwarded tax bracket changes
Last year’s October Budget – delayed five months because of the pandemic -brought forward tax cuts to July 2020 that weren’t meant to come into effect until July 2022.
More than 10million Australian workers earning up to $126,000 are receiving up to $1,080 from the low and middle-income tax offset (pictured is a Sydney hairdresser in Double Bay after the 106-day lockdown)
This relief, known as the stage two tax cuts, increased the 19 per cent personal income tax bracket from $37,000 to $45,000 and moved the 32.5 per cent tax bracket from $37,000 to $90,000 to between $45,000 and $120,000.
This change means those earning $45,000 to $90,000 will receive $1,080 in tax relief.
Above-average full-time professionals earning $90,000 to $120,000 will get a $2,430 tax cut.
Working from home
Since the start of the pandemic in March 2020, the federal government has allowed those working from home to claim a flat 80 cents an hour flat rate.
The policy expired on June 30, marking the end of the last financial year.
Last year’s October Budget – delayed five months because of the pandemic -brought forward tax cuts to July 2020 that weren’t meant to come into effect until July 2022 (pictured is Treasurer Josh Frydenberg, right, with Prime Minister Scott Morrison)
Tax relief in two parts
Low and middle-income tax offset
Those earning $48,001 to $90,000 get back $1,080
Those earning $37,000 to $48,000 get back $255
Those earning between $90,000 and $126,000 get back $1,080 minus three cents for every dollar above $90,000
Stage two tax cuts fast forwarded
Those earning $21,886 to $45,000 get up to $1080
Those earning $45,001 to $90,000 get $1,080
Those earning $90,001 to $120,000 get up to $2,430
Those earning more than $120,000 get $2,430
Sydney went into lockdown on June 26, which meant many professionals worked three days at home on the last Monday, Tuesday and Wednesday of 2020-21.
Someone putting in an eight-hour day over three days would be able to claim $19.20 in their tax return.
But professionals can alternatively claim the lower 52-cent an hour rate and manually add up their internet and phone bills, itemising what was work-related.
H&R Block calculated someone who spent all year working from home stood to be able to claim back an average of $1,500 in deductions.
Mr Chapman calculated someone who manually added up their phone, electricity and internet bills was more likely to be able to claim back $2,700, if they relied on the lower 52 cent an hour method.
But he warned the tax office would be strict on those who claimed personal use phone and internet bills on their tax return.
‘In particular, they’ll be looking closely at mobile phone and internet costs with a particular focus on people who are claiming the whole, or a substantial part, of the bill for their personal mobile as work-related,’ Mr Chapman said.
The ATO is also looking out for those who claim rent or mortgage repayments costs, which is not allowed unless someone runs a registered business from home.
The tax office takes about two weeks to process returns and may ask for receipts to verify deduction claims.