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Yahoo
18-07-2025
- Business
- Yahoo
Reason Aussies are being hit with shock ATO tax bills: ‘Same problem'
Many Australians have been left blindsided after lodging their tax returns and finding that, rather than getting a refund, they actually owe money to the Australian Taxation Office (ATO). An Australian tax accountant said many workers were running into the 'same problem' due to the way the payroll system works. Australians have flooded social media to share the outcome of their 2025 tax returns since the start of the new financial year. While some have been 'boasting' about their hefty tax refunds, others have shared their shock at being hit with a tax bill. Tax Invest Accounting director Belinda Raso told Yahoo Finance she was seeing more people getting tax bills because they worked multiple jobs and no longer had the 'buffer' of the $1,500 low and middle income tax offset, which ended on June 30, 2022. RELATED ATO tax return warning for 2 million Aussies over dangerous act Coles and Costco grocery price comparison 'shocks' Aussie mum Compensation sought for millions of Qantas customers hit in major cyber data breach 'The way our payroll system works is even if you do the right thing and you tick not to claim the tax-free threshold on your second job, that [job] is not withheld at enough,' she said. If you earned more than $45,000 in your first job, for example, you would already be in the 32 per cent tax bracket, including the 2 per cent Medicare Levy. 'When you tell your [second] employer not to claim the tax-free threshold, you're actually going straight onto that first tax bracket, which is 16 per cent plus 2 per cent Medicare levy,' Raso said. 'But if your first job is already $45,000, you need to be paying it at 30 per cent plus 2 per cent, so you are down 14 per cent and this is where people are getting tax bills.' Raso said Aussies in this position should either ask their employer to withhold the additional tax, put it away themselves during the year, or not claim the tax-free threshold on their main job. Otherwise, it's likely to happen again this year. There were 963,100 multiple job-holders in March this year, the latest ABS data found, representing 6.5 per cent of all employed people. Raso said she thinks changes to the payroll system would mean "less disgruntled Aussies" who end up with a tax debt, despite thinking they are doing the right debts can be a factor If you have a HECS-HELP debt, Raso said you'll need to let your employer know about it, or you could end up with a tax debt. If you have reportable fringe benefits or salary sacrifice, this could also be a reason you get a tax debt. That's because HECS repayments are calculated with salary sacrifice added back in and reportable fringe benefits are 'grossed up'. If you work multiple jobs, your combined income may also be enough to push you over the HECS repayment threshold and mean you get a tax debt. The threshold for the 2025 financial year was $54,435. 'If you have two employers, and if you don't reach that HELP debt limit, even though they know you've got a HELP debt, it won't come out of your pay,' Raso said. 'But then, added together, both of them will get you over that threshold and you will end up with the tax debt.' Other reasons you could get a tax debt Raso said the Medicare Levy Surcharge can be another reason you receive a tax debt. Your employer withholds the Medicare Levy, but not the surcharge. For the 2025 financial year, the surcharge applies to singles earning $101,001 or more and families earning $202,001 or more who don't have hospital health insurance cover. You can also get a tax bill if you earned other income during the year. That could include from side hustles, bank interest, investments, rentals and capital gains tax. What do I do if I have a tax bill? If you receive a tax bill, you need to pay it by the due date on your Notice of Assessment. If you can't pay on time, you can ask the ATO to set up a payment plan and break your bill down into smaller amounts. If you have an outstanding amount owing to the ATO after the due date, you will be charged a general interest charge. It is currently 10.78 per cent annually and compounds daily, even if you are on a payment plan.
Yahoo
16-07-2025
- Automotive
- Yahoo
$4,400 tax deduction update sparks warning for millions of Aussies: 'Kick in the teeth'
The Australian Taxation Office (ATO) has confirmed it will not be increasing the motor vehicle cents per kilometre deduction rate for the new 2025-26 financial year. Taxpayers can claim 88 cents per kilometre under the method, up to 5,000 kilometres per year, which works out to a maximum deduction of $4,400. An ATO spokesperson told Yahoo Finance the cents per kilometre rate would not be increasing this financial year. The rate is updated to reflect recent average operating costs for cars and the annual movement of the private motoring subgroup of the Consumer Price Index. 'The cents per km rate will not increase and the Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 will remain effective at 88 cents per kilometre for the 2025/26 year,' the spokesperson said. RELATED ATO tax refund warning as Aussies boast about big $4,000 cash boosts Aussie tradie loses $110,000 house deposit due to small detail $105,000 superannuation warning over growing 'mini-retirement' trend Tax Invest Accounting director Belinda Raso said the decision not to increase the rate was a 'kick in the teeth' for taxpayers and she had expected an increase to at least 92 cents. 'With fuel skyrocketing, it doesn't even allow people to cover their costs. It's going to force people to actually keep a logbook because the cents per kilometre method is just not going to be worth it for anyone,' she told Yahoo Finance. 'Even if you're travelling less than 5,000 kilometres, my advice is to keep a logbook because you may find that it's actually going to be better for you, just purely with the cost of fuel, let alone repairs and everything else.' The ATO increased the set rate to 78 cents per kilometre in the 2023 financial year, 85 cents per kilometre in 2024, and 88 cents per kilometre in 2025. Car-related travel claims made up the bulk of work-related claims in the 2023-24 financial year. Some 3.6 million people claimed about $10.3 billion in car expenses. There are two methods that you can use to claim motor vehicle expenses for work-related use of your car — the 'cents per kilometre method' and the 'logbook method'. The cents per kilometre method lets you claim up to 5,000 kilometres at a set rate of 88 cents per kilometre. It covers all car expenses, including registration, insurance, maintenance, repairs and fuel costs. While you don't need to keep a logbook, you need to keep track of where you've gone, why and how often. The cost of driving to your workplace cannot be claimed. The logbook method lets you claim more than 5,000, but you need to keep a logbook for 12 weeks straight of the income year. You need to track all kilometre use, both personal and work use. You also need to keep all your running costs for the year, including registration, insurance, services, repairs and fuel (which can be estimated over a four-week period). Raso said Aussies should start their logbooks now, as this method would likely give them a better tax deduction than the cents per kilometre method. 'Unless we're talking under 1,000 kilometres, you should really get a logbook going now,' she told Yahoo Finance. 'It goes for 12 weeks straight [so] right now is the best time to actually get that going.' Raso said you needed to have a starting and ending odometer reading. The logbook will be valid for five years as long as you don't change cars, jobs, the usage of the car or your home or workplace address. If you use an app for your logbook, such as Driversnote, or if you use a book you can also claim this cost on your tax return. 'Any costs associated with managing that logbook will be deductible,' Raso in retrieving data Sign in to access your portfolio Error in retrieving data
News.com.au
15-07-2025
- Business
- News.com.au
‘Never that high': Why so many Aussies have a tax debt this year
If you are one of the Aussies who has copped a bill after lodging their tax return this year, then you are not alone, with an accountant revealing she has witnessed a significant rise in the number of debts being issued. We are now half way through July and the number of people taking to social media after being told they owe money to the Australian Taxation Office (ATO) has been steadily rising. The tone of their posts range from disappointed to outright furious, but it is clear a significant number of Australians are really unhappy this tax time. Tax Invest Accounting director and tax agent Belinda Raso told she has seen an explosion in people being hit with tax debts, with numbers rising since the end of the low and middle income offset in 2022. Previously, Ms Raso said, people who received a tax bill predominantly knew they were going to be getting one. For example, people who forgot to tell their employer about their HECS-HELP loan, claimed the tax free threshold twice, people with side hustles or those with a positively geared investment property, would be unsurprised by the arrival of a tax bill. But now plenty of unsuspecting Aussies are being hit with unexpected debt. 'Since 2023, I'm not exaggerating, I'm looking at 20 to 30 per cent of clients that are ending up with the tax debt. It was never that high,' the tax agent said. Ms Raso shares a lot of content on social media around tax time and has this year been inundated with messages from people who have no idea why they have received a tax debt. On TikTok alone she says she can get about 20 messages a day from people who owe the ATO money. 'I could be speaking to 30 or 40 people daily that are not even clients, that are begging for help,' she said, adding that she always works to help these people as much as she can. 'It is so prevalent and it's just ordinary Aussies that are employees, and they're wondering, 'Why the hell? What's going on?'' Looking at the comments on some of Ms Raso's videos, you can see just how many people are struggling with tax bills this year. 'My estimate says a $1.9k debt. Can't work out for the life of me why, there's no way I can pay that,' one person said. Another commenter said they got a $1500 bill despite having the same job as previous years where they received refunds. 'Nothing has changed. I made a bit more money this year worked more. But how do I get $1000 returned last year, and now I owe $1500?' they asked. Another said: 'I have two jobs only claim tax free threshold on one and now I owe $1800!' A quick scroll on TikTok will also show dozens of videos of young people expressing lament after their dreams of a healthy tax refund were dashed. One user, Kenneth, said he spent 'five hours, 47 tabs, three breakdowns doing (my) tax return, just to find out I owe $4000 to the ATO'. In the caption of the video he added: 'The only return I got was emotional damage.' Another young worker shared an image showing she owed almost $5800 to the ATO, asking 'wtf is this' and 'no one speak to me'. A nurse made a video revealing his $3404 debt, while another TikToker, Elaya, was hit with a $1733 bill. Another user revealed they owed close to $9000, writing, 'Any accountants wanna help me?' Ms Raso said there are a few main reasons people are copping debts this year, with one of the key culprits being the rise in people taking on multiple jobs. Australian residents are entitled to the tax-free threshold, which means you pay no tax on the first $18,200 of your income. However, it can only be claimed for one job, and for any additional jobs Aussies must inform their employer they will not be claiming the threshold. But the accountant warned that for people with multiple jobs, this is often not enough to avoid being hit with a tax bill at the end of the financial year. 'If your main job is earning $45,000 or more per year, when you tell that employer at your second job that you don't want to claim the tax free threshold, you go to that first tax rate, which is sitting at 16 per cent plus Medicare levy, that automatically defaults to that,' Ms Raso explained. 'So the employee has done the right thing, the employer has done the right thing, but if you're earning $45,000 or above in that main job, you're already sitting at 30 per cent tax rate, plus 2 per cent Medicare levy, so straight up, you've got a 14 per cent difference.' Ms Raso said this hasn't been as significant an issue previously, because fewer people were working multiple jobs and there was the buffer of the low and middle income tax offset. The tax agent sees thousands of people a year and says she is having conversations on this subject almost every day. She said it is 'distressing' when people are having to get second or third jobs just to get by and they think they are doing the right thing in terms of their tax, only to be hit with a bill. 'No one's done anything wrong, but there is no option for them to actually get that extra tax withheld,' Ms Raso said. 'For most people, our tax system is complicated enough. If they have to go and manually work out another 14 or 15 per cent, that's unfair.' Another common issue has to do with HECS-HELP debt. The repayment income threshold is currently sitting at $56,156, meaning you'll only start seeing payments come out of your pay if your salary ticks over that amount. But, if you are earning under the threshold for both jobs, then neither employer will be withholding those repayments. However, the ATO looks at your total taxable income, so if your combined income is above the threshold and you haven't been making repayments, you are going to be hit with a debt. Another situation Ms Raso sees revolves around salary sacrifice, novated leasing and reportable fringe benefits. She said many people don't realise that those reportable fringe benefits get grossed up by 1.88 times, which is going to impact how your HECS-HELP repayments are calculated, with them being repaid at a higher rate. Ms Raso said those are the three main reasons for tax bills she sees every year, and warned people who cop a debt this year are likely to find themselves in the same situation next year, unless they figure out why. 'If it's not addressed, the same thing is going to happen next year. And if you're one of the people that go may not have had a tax debt this year, but have gotten a second job, you'll end up in that situation next year,' she said.
Daily Mail
21-06-2025
- Business
- Daily Mail
I'm a tax accountant and these are the four biggest mistakes you're making on your returns - and it's costing you money
Australians are forgetting to claim work-related expenses and often select the wrong work from home deduction in their tax returns. That's according to a leading taxation accountant who has singled out the top five errors taxpayers make as tax time approaches on July 1. Belinda Raso from Tax Invest Accounting said taxpayers are missing out on hundreds of dollars by making little mistakes. 'They just rush in and lodge way too early and usually don't claim what they are entitled to,' Ms Raso said. WFH deductions One of the most common tax mistakes involves deductions made for working from home. Ms Raso said people who WFH do not always apply for the maximum deductions they can receive. Work from home expenses can be worked out via two different methods: the fixed rate 'shortcut' method of 70 per cents per hour, or the actual cost method, where they calculate their total expenses. 'It is very important that you work out both methods to ensure that you're getting the largest possible deduction,' she said. 'Another thing that people forget to do is, if they are going by that fixed rate method of 70 cents per hour... they're forgetting to claim everything else, and this includes computer equipment, it includes furniture, it includes software, the list is endless.' Medicare levy surcharge The next mistake Australians often make is incorrectly recording their liability for a Medicare levy surcharge - the additional charge on taxpayers who do not have private health insurance. Ms Raso said that the tax office will change the return if they have proof workers are liable for the levy. Australians forget to work out the most savings-efficient method for determining their claimable work-from-home expenses, Ms Raso warned 'It is up to you to understand when you are and when you're not liable for this,' Ms Raso said. Work related allowances The experienced accountant said some Australians make a huge mistake by failing to claim work-related expenses, such as claiming goods that they use for both personal and work use. 'As an example, one of the most common ones is a computer or laptop,' Ms Raso said. 'You sit there and think, "well, I use this for both personal reasons and for work, I can't claim it then". That's not true. 'Any expense that you're claiming, you can apportion a personal element to it and just claim whatever percentage is for work. It doesn't mean that you can't claim it.' Logbook Her final tip was for Australians who use a personal vehicle for work purposes. She said workers should ensure they are recording their usage accurately in a logbook. 'If you are travelling over 5,000 kilometres for work, for actual work-related travel, you should be keeping a logbook,' Ms Raso said. 'But this is more than just tracking your kilometres in a logbook.' Workers should also keep records of their fuel and oil costs, or odometer readings. They will also need evidence of other car expenses.
Yahoo
12-06-2025
- Business
- Yahoo
Common tax mistake costing Aussies $1,000 on ATO refund: 'Out of pocket'
The biggest mistakes Australians make "every single year" on their tax returns have been revealed. Tax time is just weeks away, and Aussies are being warned these easy mistakes could cost them hundreds on their refund. Tax Invest Accounting director Belinda Raso told Yahoo Finance she sees taxpayers getting caught out by these mistakes every year. This could be because they have rushed their tax return and done it as soon as July 1 hits, or simply because they don't have all the information at hand. 'A big one is that we automatically go for a shortcut and a shortcut is never in taxpayers' favour,' she said. RELATED Major ATO change just weeks away as taxpayers warned over new rules Centrelink cash boost coming from July 1 for millions of Aussies Aussie teen's job paying $300 per hour without a uni degree Here are the top five mistakes to watch out for. If you are claiming work from home deductions, most Aussies forget to work out both methods to ensure they get the biggest possible deduction. The fixed rate method lets you claim 70 cents for each hour worked from home. The actual cost method requires you to calculate the additional expenses you incur when working from home. It is more onerous, but could give you a better deduction. Raso said people who claimed the fixed rate method often forgot they could make separate claims for expenses the method doesn't cover. The method only covers internet, mobile, electricity, gas, stationery and printing costs. 'So all of your computer equipment, the hardware, the software, your cords, cables, extensions, powerboards, your furniture, everything in that home office is going to be claimable,' she said. 'People that are working from home, even if they are hybrid, are losing hundreds of dollars per year on this alone.' Taxpayers report to the ATO whether they are liable for the Medicare Levy Surcharge. The ATO will also change people's tax returns if they are liable and don't declare it. For the 2024-25 financial year, the threshold to pay the surcharge is $97,001 for singles and $194,001 for families. Raso said she sees mistakes with people saying they are liable for the surcharge, when they actually aren't. This is usually single parent households who think they are classified as singles, but are actually classified as families even if their child isn't living with them. 'The average person could end up paying an extra $1,000 by not actually understanding these rules,' Raso said. Taxpayers can amend their returns if they have made a mistake and they have up to two years less one day from the notice of assessment. The third biggest mistake is made by Aussies who get a reimbursement or allowance from their work. This is particularly for people who have a motor vehicle kilometre allowance. While you can't claim a deduction on reimbursements, your employer might call it a reimbursement when it is technically an allowance. 'A reimbursement when you give an employer a receipt for fuel and they pay that in full. But if they are paying you a kilometre allowance, even if they say it's a reimbursement, it's not, it's just to cover your kilometres,' Raso said. 'If that kilometres is seen on your income statement, you're paying tax on it, so then you should be claiming the deduction against it because otherwise you're going to be claiming tax and just be out of pocket. You can claim what you have actually spent. Other common examples include mobile phone allowances and laundry allowances. Another mistake is not claiming expenses that people use for both work and personal purposes, such as a laptop or computer. Raso said some people mistakenly thought they couldn't claim a tax deduction at all, when in reality, they can apportion the personal use. 'We apportion what percentage we use for personal use and what's work use, and we claim that,' she said. For example, you can state you use a laptop 60 per cent of the time for work and 40 per cent of the time for personal purposes. The final common mistake is not keeping a correct logbook if you use your car for work. If you are travelling over 5,000 kilometres for work, Raso said you should be keeping a logbook. The ATO has two ways to claim deductions for motor vehicle expenses: the logbook method and the cents per kilometre method. The cents per kilometre method allows you to claim up to 5,000 business kilometres per car, per year. The logbook method allows you to claim more than 5,000 kilometres. 'You need to have a valid logbook for 12 weeks straight, which covers all of your motor vehicle usage. Then you need to have all your running costs as well,' Raso said. This needs to be done in the financial year you are claiming, so if you haven't already started on your logbook it would be too late to do in retrieving data Sign in to access your portfolio Error in retrieving data
