We all know the feeling, your colleague is on the same pay rate, same job description but here comes the end of the financial year and you’re told that they got double the refund.
Even a visit to their accountant won’t wash away the disappointment.
relax, grab a cup of coffee and let us tell you why:
The following are a list of what might be the case:
o The first $18,200 earned are tax free (2013, 2014 and 2015 Financial years), you get the employer to apply it by ticking yes next to the Do you want to claim the tax-free threshold from this payer, it’s number 8 on Section A of the Tax file number declaration form (NAT 3092)
o If your friend clicked No, the employer will not consider the first $18,200 to be tax free and more tax will be withheld from pays during the course of the year so upon the lodgement of the tax return the ATO will apply it regardless of whether it was or was not applied by the employer
• Having a HELP/HECS liability but earning below the Repayment Threshold
o You don’t need to start repaying your Higher Education Loan Program (HELP) and Higher Education Contribution (HECS) until you earn $51,309 or Higher.
If your pay fluctuates (Casual or part-time employment) , didn’t work for the full year , taxable income fell below the threshold as a result of claiming deductions on your income tax return or simply an out of date payroll software used by the employer, can all result in getting back the additional tax withheld by the employer during the course of the financial year.
• Changing in residency status.
o When you pass the residency test you become a resident for tax purposes on the date of arrival or cease to be a resident on the date of departure ( refer to the residency test).
Although this will result in a pro-rated threshold eligibility, you are entitled to a Medicare exemption from the date of ceasing to be a resident or before becoming a resident. (Items A2, M1 and M2 on the individual income tax return form)
• Medicare levy exemption entitlement
o Citizens of Countries that don’t have a Reciprocal Health Care Agreement with Australia (e.g. Republic of Ireland, Canada, the United States of America, South American countries etc..) are not entitled to Medicare services and therefore get back the 1.5% Medicare withheld by their employer.
o Defence personnel are exempt from paying Medicare ( they pay still pay 0.75% if they have a dependant spouse that earns too little to pay Medicare)
o If your taxable income is equal to or less than your lower threshold amount, you do not have to pay the Medicare levy. If your taxable income is greater than your lower threshold and less than or equal to your upper threshold amounts, you pay only part of the Medicare levy.
Medicare levy thresholds for an individual
Category Lower threshold (2012-2013) Upper threshold (2012-2013)
If you are eligible for the seniors and pensioners tax offset (SAPTO) $32,279 $37,976
All other taxpayers $20,542 $24,168