Each year we obviously get asked lots of questions. And some of those questions are asked more frequently than others. We thought it might be interesting for you to know the answers to a few common tax questions that we get asked regularly.

Do I have to lodge a tax return, I haven’t earned much?

Everyone needs to either lodge a tax return or lodge a “non-lodgement advice” form. If you have earned $18,200 or less in the past financial year and you had no tax withheld from that income, you might not be required to lodge a tax return.

Can I pay or distribute my profits to my children?

If your children are 18 years or over, and your trust deed allows you to distribute to your children, yes you can pay profits to your children. If your children are under 18 years old, they only have a tax free threshold of $416, then they pay 68% on the next $891 (up to $1,307) and then they pay 49% on the balance over $1,307. They are allowed to work and earn employment income before they turn 18 and this income is excepted income that will be taxed like an adult.

What is capital gain tax rate on sale of my investment property or shares?

There is no separate tax rate on the sale of the shares or investment property. The profits from the sale are added to your normal income and tax is calculated at your marginal tax rate. This could be as high as 49% if your combined income is greater than $180,000.

I have given some shares to my kids and transferred my investment property to my kids, but I didn’t take any money for it. Do I have to pay tax?

As there is a transfer of ownership you are liable for tax on the transfer of these assets. The tax is payable on the profit; the profit is the difference between the market value at the time of transfer of the asset and the purchase price of the asset.

My foreign investments are paid in my overseas account and I pay tax there so why do I have to pay tax in Australia?

If you are an Australian permanent resident and a resident for tax purposes you are required to declare income from all sources even if tax is paid or withheld at source in that foreign country. The Australian tax system will give you a benefit of the tax paid in another jurisdiction. Depending on the tax rate you may have to pay the shortfall, but you will never receive a refund here if you paid a higher amount in that foreign country.

Do I pay tax on tax on sale of my home?

If the land area is less than 2 Hectares and you have never used your home to derive assessable income then any profit or loss from the sale will not be assessable or deductible. Only property exceeding the 2 hectare limit will be subject to taxation.

When is a capital gain assessable?

Capital gains are assessable in the financial year when the contract is signed not when the contract is settled.

You may have others, so by all means, let us know what we can assist you with.