5 Steps to Avoid a Nasty Tax Time Surprise

The Australian Taxation Office (ATO) recently detailed some advice to help taxpayers avoid an unexpected tax bill. This can be done by ensuring the correct amount of tax is put aside throughout the year.

The key points include:

1. HECS/HELP Debt: Inform your employer if you have a study or training support loan, so additional tax can be withheld to cover compulsory repayments.

   
   

2. Tax-free Threshold: Ensure you are only claiming the tax-free threshold from one employer, usually the one who pays you the highest wage.

   
   

3. Medicare Levy Surcharge: If you, your spouse, or dependent children don’t have adequate private hospital cover and you earn above a certain income, you may face a Medicare Levy Surcharge of up to 1.5% of taxable income.

   
   

4. Private Health Insurance Rebate: Check with your health insurer that your income tier is correct to avoid overpayment of the rebate, which you would need to repay at tax time.

   
   

5. PAYG Instalments: Consider entering PAYG instalments if you earn business or investment income. Prepaying tax helps smooth cash flow and spread out payments, reducing the risk of a large tax bill.

   
   

The tax payment due date for taxpayers who lodge their own return is 21 November, but can be extended when using a registered tax agent up to 15 May the following year. Tax payment plans can also be requested where you have a larger than expected tax bill to pay and need more time. Note general interest charges can be incurred.