TAX INFORMATION

[FAQ]

Disclaimer-The information obtained from the interview in between Michael Hung & Taxation Office on Vietnamese television C31 Australia. Therefore we however, cannot guarantee that every document will appear in the correct tax year, should check the content of all documents returned by this web site in response to your query and seek independent advice before embarking on a transaction.

Tax Time

There has been a lot of coverage in the media about the baby bonus. I know a lot of families will be entitled to an annual amount of $500 until their child turns five, although this amount will be smaller in the first year. What should our viewers know about the baby bonus?

The baby bonus is a payment aimed at recognising a reduction of taxable income upon the birth of a child. That is, where one parent may have to give up or reduce their employment to care for their child. You may also receive the baby bonus if your taxable income has not reduced but is $25 000 or less in the year you are claiming.The baby bonus is available to parents who had a child after 30 June 2001 or gained legal responsibility for a child under five years of age after that date.

The baby bonus is also available to you even if you already have children, for the arrival of your first subsequent child on or after 1 July 2001. You will be entitled to the baby bonus until your child turns five years of age.Generally, the bonus is paid to only one parent - usually the mother, although where the father has sole legal responsibility he will be able to claim the bonus.If you want to claim the baby bonus, you need to fill in the claim form and send it to the Tax Office.

You can do this either with your tax return if you're lodging one, or just send in the form if you don't need to lodge a return. You can also lodge your baby bonus claim using e-tax. There's information about the baby bonus on the Tax Office website.

Well, the baby bonus is good news for parents. What about older Australians? The Commissioner has written to a lot of senior Australians about the Senior Australians Tax Offset. What can you tell our viewers about this?

The Senior Australians Tax Offset means eligible seniors such as pensioners and self-funded retirees who are 65 or over for a man or 62 or over for a woman can earn more income before they have to pay income tax or the Medicare levy. To be eligible, you have to meet certain conditions, including age, an income threshold, and eligibility for the Government age pension or similar payments.If you are eligible, fill in the relevant questions in TaxPack 2002 or TaxPack for retirees. You may never have to lodge another tax return.

We talked about lodging tax returns last month - could you tell us about some of the more common deductions employees can claim? It's been my experience that car expenses are among the most popular.

You can claim deductions for any expenses that you incurred while performing your job. The most common would be tools, union fees and subscriptions to associations, uniforms, protective clothing and of course car expenses. With regard to car expenses, many people are not aware that there are four different ways of working out how much they can claim. It's a bit too complex to describe in detail so, viewers should be able to find the information they need in TaxPack or e-tax.

Alternatively, they can visit the Tax Office website or talk to their tax agent about which method gives them the best deduction and what records they need to keep. Viewers also need to be aware that, generally, they can't claim a tax deduction for the cost of travelling to and from work, as this is a private or personal expense.

Some viewers are probably studying to improve their educational qualifications. Many would know they can claim deductions for expenses for an education course provided by a school, college or university if it's going to provide a formal qualification that can be used in their jobs. Is there anything else they should know?

Yes, they need to remember they can only claim expenses that relate to their work activities while they're studying. If they're studying to improve their chances of getting a different job, these expenses are not tax deductible. There must be a connection between the income being earned and the study being undertaken.So, for example, if you're an apprentice chef and you're studying to be a chef, you can claim a deduction for your textbooks and college fees. But if you're studying for a new career, such as a travel agent, you can't claim a deduction.

Many of these people will be using a home office. What can they claim?

They can claim the additional running expenses of a home office, for example, the decline in value of - and repairs to - their home office furniture and fittings. The cost of heating, cooling, lighting and cleaning their home office may also be deductible. They can keep a diary to work out how much of the running expenses relate to doing work in their home office. Alternatively, instead of keeping a record of their actual costs, they can use a fixed rate of 20 cents per hour for home office expenses for heating, cooling, lighting and decline in value of furniture.Diary records help prove the connection between work and using a home office. Taxpayers should keep diary records that cover a representative period and also cover a reasonable time - at least four weeks. In your diary, note the time your home office is used for work related activities.

Something else that's been covered in the media recently is sun protection being tax deductible for certain people. Outdoor workers like builders, farmers and road workers who buy sunscreen, hats and sunglasses to use at work can now claim these sun protection products as work expenses. What else do our viewers need to know about this?

People who are eligible to make a claim can choose to use a Tax Office estimate, even if they don't have receipts. You can estimate up to $85 worth of sun protection products for any year you worked outdoors back to the 1998 financial year, and claim all of those years on your 2002 tax return.You can claim up to this amount if you believe it's a reasonable estimate of your expenditure. You need to take into account things like the length of time you worked outside, and whether these items were for private use as well as work. If you want to claim more than the $85 estimate and your total work related expenses for the year are more than $300, you may evidence of your expenses so you can claim your actual costs this year and ask for amendments for earlier years. If you don't have receipts, you need to provide a persuasive explanation that you had those expenses.

That raises an important point about record keeping. I advise my clients to keep all the records used to prepare their tax return for five years. If they claim deductions, I advise them to keep written evidence to prove their claims for those expenses. Are these the most important points about record keeping?

Yes, they are. I guess the only other point I would make is that if you claim less than $300 worth of work expenses, you don't need to keep written evidence - you just have to show how you calculated the total expenses. On the other hand, if you're claiming more than $300 in total, you need to keep written evidence of all these expenses - not just the amount over $300. The $300 limit does not include claims for their car, meal allowances, award transport allowance or travel allowance expenses. There are some other exceptions to the written evidence rule, and these are explained in the relevant questions in TaxPack.If you have simple tax affairs, you may only have to keep records for two years from when you lodge your tax return, which is known as a shorter period of review.

What else can you tell about this shorter period of review?

If you're eligible, you'll receive a note with your 2002 notice of assessment saying that you qualify. Eligibility depends on each year's circumstances, but you would need to be an Australian resident and have simple tax affairs. In terms of income, you would have simple tax affairs if your only income was from the following sources: salary or wages, pensions, benefits or allowances paid by the Government, dividends, or interest from financial institutions or government bodies. In terms of deductions, you would have simple tax affairs if your only deductions are for things like the cost of managing your tax affairs, account keeping fees and cash gifts or donations.If you're eligible for the two-year shorter period of review, this means you only need to keep certain tax records for two years. The two-year period is the time in which the Tax Office can review and amend your return, or in which you can make any objection or request an amendment.

Viewers may not realise that if they're not sure about their tax affairs, they can get an oral ruling from the Tax Office. This can be done over the phone or in person on a simple tax inquiry that relates specifically to a viewer's own tax affairs. The oral ruling is binding on the Tax Office in much the same way as a private ruling. Could you explain more about this service?

This service is called binding oral advice, and certain conditions apply. Your tax affairs must be simple in nature and you'll need proof of identity, such as your tax file number and most recent notice of assessment.We'll confirm a caller's eligibility for binding oral advice by asking a series of questions to confirm that the inquiry and tax affairs are simple. If we provide binding oral advice, we'll also provide a registration number for the ruling.If we cannot provide binding oral advice, you can write to the Tax Offfice.

We've covered a lot today. What would you say are the most important messages for our viewers?

• If you're lodging your tax return yourself, you need to do this by 31 October 2002 using either the paper form in TaxPack or the electronic e-tax program.
• If you have a tax agent, check to see when your tax return is due.· If you're a low income earner, you can use the Tax Help service for advice and assistance with your tax return.
• You must remember to keep records for five years, to support any claims you've made in your tax return.
• If you want to claim the baby bonus or the Senior Australians tax offset, you can do this in your 2002 tax return.

And where can our viewers get more information about the things we've discussed today?

For a range of tax information in Vietnamese, viewers can visit our website at www.ato.gov.au and click on the Other Languages icon. If they would like to ask any questions about their personal tax obligations, they can phone 13 28 61. If they don't speak English, they can phone the Translating and Interpreting Service on 13 14 50 for help with their call.