Archive for June, 2014

The New Financial Year Made Simple

Monday, June 30th, 2014

It’s that time of the year again when many of us turn our thoughts to what we can spend our tax returns on (or how much extra we will have owing to the tax office). As with any new financial year there are a bunch of changes to the system whose impact on you may be positive or negative.

First the bad news. Tax rates are going up for anyone earning over $180,000 to the tune of an extra 2% for every dollar earned above that amount. Yeah, my heart bleeds for the people who have to pay this. This one is called the deficit levy, not the deficit tax ‘cause the Prime Minister promised no new taxes, not no new levies.

The other levy to go up is the Medicare levy. It rises from 1.5% to 2% to pay for the National Disability Insurance Scheme. Personally I am happy to pay an extra 0.5% for the benefit of those in society who need it the most.

The good news is that for Aussies who have simple tax arrangements, doing your tax just got a whole lot easier. If your only income is from wages/salary, bank interest, dividends and/or government payments and your only deductions are things relating to that income (as well as donations and expenses related to doing your tax returns) then you no longer need to do your online tax return via e-tax. E-tax has been a great way for just about everyone to lodge their tax, but it is designed to cater for really complicated tax returns. People with simple returns could easily be confused by all the pages in it that were not necessary for them to complete.

Now there is My Tax – a shorter, simpler alternative that can be done on a smartphone or tablet and which is no more than 10 pages (as compared to e-tax’s 200 pages). For both e-tax and My Tax you do have to create an account at first, but it’s a once off event and you may already have an account if you’ve visited for Centrelink, child support or Medicare purposes. If you are not sure if your tax is simple enough to do via My Tax, check out this Australian Tax Office page.

The main reason that doing your own tax is so easy these days is due to the fact that the tax office knows more about your income than you do. Data matching has meant that most of the figures you go to punch into your computer are already pre-filled by the ATO. Big Brother is watching (not the crap TV show BB, the seriously scary George Orwell one) and he’s got a real good idea what you should be claiming on your tax for someone working in your job. If you want to fudge the figures, prepare yourself for a letter from the ATO that sends chills down your spine.

Be especially wary if you work from home, are a tradesperson or if you claim work related expenses. These are the areas that the tax office is paying special attention to this year and, as you’ve probably just worked out, that’s a huge number of people on their radar.

The Fine Print

Thursday, June 12th, 2014

When is a $50 gift voucher not a $50 gift voucher? When you don’t read the fine print.

Gift vouchers; they’re pretty handy things (read: acceptable gift for someone who is too hard to buy for, or when you don’t know exactly what they could do with). When friends of ours had a baby recently we decided that a gift voucher to purchase baby related stuff would be a good idea.

We have found that the baby clothes at Target are fairly priced and of a decent quality so we went there and looked at a stand of cards, coming across the one pictured below. It’s a $50 prepaid Target Visa debit gift card and, as it’s a debit card, can be used in any store that accepts Visa. I was close to grabbing it and taking it to the registers for authentication when I read the fine print. Apart from the fact it expires in only eight months, the “card purchase fee” is nearly 12% of the value of the card. I left it on the stand, right below the sign that says: “Target. Get more. Pay less.”

Target Visa debit card

A couple of metres further away was another stand with more cards on it, including standard Target gift cards (valid only in Target stores but expiring a full two years after purchase). For $50 you get $50 worth.

Just goes to show that you should always read the fine print.