Question: Last year the federal government advised (just before EOFY) of changed tax rates, promising reduced tax amounts for different wage brackets.
What happened? I ended up paying tax instead of receiving a refund. We are a single income family (approximately $130k) with school kids – I thought there would be some relief. Will I see it this year?
Answer: There were adjustments made to income tax in the 2018-19 financial year – including the introduction of the ‘low and middle income tax offset’ (LMITO) – and many people did receive a tax refund after they submitted their return.
However, whether you receive a tax refund at the end of the year is dependent on many things, such as Pay As You Go (PAYG) tax deducted during the year, other income you receive on top of your salary, and deductions and offsets that you may be entitled to.
If you ended up paying tax, your employer may not have been deducting enough tax from your regular wages each week or fortnight, or you may have received other income that had no tax deducted from it.
You can check how much tax should be deducted via the ATO’s PAYG page or have a tax adviser/accountant verify this for you.
The net income tax you pay after you submit your tax return for the financial year is the important tax figure.
This is summarised via a ‘Notice of Assessment’ sent by the ATO.
This is an itemised account of the amount of tax you have paid and owe on your taxable income.
When you receive your notice of assessment, you should check that everything is correct.
The government has legislated tax cuts starting in the 2022-23 financial year and is considering bringing them forward as a result of COVID-19, we will have to wait and see when and if this materialises.
Question: Do I have to notify the ATO if I am in a defacto relationship?
Answer: Whether or not you have a spouse – including whether you are in a defacto relationship – affects certain tax rebates, levies and entitlements.
Therefore yes, you are required to notify the ATO when you submit your annual tax return, as there is a compulsory question that asks: ‘Did you have a spouse’ (for the relevant financial year).
Question: I have a pension fund account and an investment account with a superannuation fund.
I’m not happy with the performance of this fund across the years. What are the benefits and risks associated with shifting both accounts to another (industry) fund, and when and how to go about doing this?
Answer: Choosing to have your superannuation and pension money in a high-performing fund can means thousands of additional dollars for your retirement.
In relation to past performance, it is important to look at the long-term performance figures (i.e. 5 to 10 years) rather than looking at shorter time frames, as performance can vary significantly from year to year.
It’s also important to consider any other features you may want in your superannuation and pension fund prior to rollover, such as low fees, easy on-line access and low cost insurance.
For your accumulation (investment) super fund you should also check what insurance you currently have and whether you wish to retain it.
You may be able to transfer the insurance to a new fund or you may receive default insurance cover upon joining a new fund.
If you have any regular contributions going into super, such as employer Superannuation Guarantee (SG) contributions, don’t forget to let them know your new super fund and account number details.
With your pension, you will have to receive a minimum pension payment before transferring it to a new fund.
If you are a Centrelink recipient, it’s important to check with Centrelink if a transfer will have any effect on your existing entitlements.
You can transfer (rollover) funds at any time.
To transfer to a new super fund, you can use your on-line MyGov account if you have the ATO linked to your MyGov account.
Otherwise you can use the ATO form or contact your new preferred fund who can assist.
Craig Sankey is a licensed Financial Adviser and Head of Technical Services & Advice Enablement at Industry Fund Services.
Disclaimer: The responses provided are general in nature, and whilst they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.