The ATO took a few months to scratch their heads…then they sent an assessment back indicating that she was not a resident for tax purposes and further more they had imposed a fine for providing misleading information on the return!

When you’ve been in our industry for a while (as we have) you get to hear about all the funny things other companies do…we constantly hear people over quoting tax refund amounts, under quoting refund times and being told that they are resident for tax purposes when they are obviously not! Because we assess our clients properly upfront it makes it easy for us to have the confidence to fight for them if the ATO make a decision like the one above.

So we took the information our client had provided and prepared an objection to the ATO’s assessment. There’s not many tax agents who would be able to fight a decision like this one, we are the specialists in this field having chosen to take a marketing leading approach to residency issues and categorization many years ago. We have constantly challenged the ATO over misleading information on their website, on their tax file declaration form and on their tax file application form too which has built our knowledge around the subject to a level far higher than the average tax agent.

Our clients case was interesting to us: she had moved around a lot during her stay in the country and did return to the same address she departed her native country from, but she had stayed for over 183 days of the financial year. If you went purely by the ATO’s website and their residency questionnaire you could come to the conclusion that she was a non-resident for tax purposes her in Australia. However, we used our bank of knowledge and this week we received great news that our objection has been accepted in full. This resulted in over $2500 difference in our clients pocket and has cemented more facts regarding residency and it’s grey areas which we are constantly working to clear up.

Our client was extremely pleased and commented;

“I’d just like to say thank you very much to him and I really appreciated his hard work on this complicated case”.

We work hard to ensure that we do the right thing by our clients and we fight hard for them if the tax office make incorrect assessments like the one described here- it’s very heart warming to receive such positive feedback and such a great result.

When your ready to claim your super back we can help you here.

This year individual taxpayers experience the significant tax free threshold increase from $6,000 to $18,200. However significant to the taxpayer at the end of this financial year, it may not be obvious to some (certainly not the Tax Office) that the amendment requires a new formula for calculating the part-year tax-free threshold.

Backpackers Buddy specialises in tax returns for travellers- we lodge a high volume of part year returns for working holiday makers when they cease working in Australia. The Commissioner has failed to apply the correct formula for the calculation of the part-year tax-free threshold resulting in a significantly lower refund for the tax payers.

It appears that the processes implemented by the Tax Office to perform its primary function, i.e. assessing tax liabilities, have incorrectly updated their systems in response to legislative development in this area. This raises significant concerns for all taxpayers. If the Tax Office does not keep abreast of legislative changes, how can taxpayers have the confidence that they are paying their fair share of tax, especially when the system errors result in overstated tax liabilities? If the Tax Office cannot get it right what chance so the tax payers have.

Our Example: John lodged his 2013 tax return in September 2012 claiming a part-year tax-free threshold for the three months of the year. Backpackers Buddy estimated John’s tax liability to be $528. However, the notice of assessment issued by the Tax Office stated that John had a tax liability of $2,446.

The difference of $1,918 is due to the Tax Office applying the incorrect formula to calculate our client’s part-year tax-free threshold. The table below explains the difference:

Backpackers Buddy has lodged an objection to the above assessment and are awaiting the Tax Office’s response. If you or your clients are in a similar situation we would be grateful if you could share your experience with us.

This incorrect calculation is leading to Backpackers getting smaller refunds, which is giving them less money to spend here in Australia- something which affects our whole industry.

The 2012 Shitbox rally is over!

Melbourne – Wentworth – Tibooburra – Innamincka – Windorah – Winton – Undara – Cairns

The Backpackers Buddy car is going off to the great scrap heap in the sky…she did us proud making the 7000 kilometre round trip without a single breakdown and only using 17 litres of oil in the process!!

Thanks to everybody who supported us, making it possible to raise $5410 for the cancer council

Check out some of the fun we had in our videos

Also check out the official Shitbox rally videos, our major blowout is at 2mins 40secs here

 Manly is the home of Backpackers Buddy, it’s surfside laidback  atmosphere has trapped many travellers who intended to only stay a couple of days.

Manly was the natural choice for the Australian Open Of Surfing, serving up a couple of weeks of events from Feb 11th – 19th including performances by Sneaky Sound System and Bluejuice, a skate bowl and of course some of the worlds top surfers going there thing in the water.

Check the lineup of events here

But we get a lot of people who had no choice but to get an ABN and get paid in this way. So at the end of the Australia tax year they have to declare all the earnings and sort out all the tax.

So what happens to this earnings? Basically your tax return get the money you earn under your own ABN get treated the same as the money you were paid though pay as you go (PAYG). And the tax you’ll have to pay on this money is at the same rate….this ultimately means that if you earn under $12 in total (PAYG+ABN earnings) then you’ll still have no tax liability & still therefore usually achieve a full tax refund. If you earned over the tax free threshold then your either going to not get all your taxback or even have to pay some tax as a result of your Australian tax return.

When you work with your own ABN you should sort your tax out every quarter by lodging a BAS return. Most people don’t do this and sort it out at the end of the finacial year…then they’ll get BAS request each quarter after this. Our advice is for people to cancel their ABN’s as soon as they will no longer be earning money under it- if you don’t then you’ll have to lodge a zero BAS return each quarter.

Our biggest tip is to stay organised and keep:

• Invoices
• Receipts for the things you had to buy for work
• Your ABN handy
• The address your ABN is registered at
• The ABN’s of the companies who invoiced you

If you have any questions about tax returns fee free to contact us.

If this sounds familiar get in touch with us as we could well put it right for you and help you to get a big tax refund. We out it right by creating a tax return which is the same as the one you submitted then we make the necessary changes, note them down and send the new return off to the tax office.

So for us to be able to fix the mistakes you made we’ll need to be able to re-create the original return…so remember what information you put in your original tax return! If you can’t remember what you put in their we can order a copy of the return for you.

Amended tax returns usually take 4-8 weeks for the tax refunds to come back.

So I thought it might be handy to give some tips on ensuring you get the biggest tax refund possible…

The number one thing to remember is that you have to be classified as a resident for tax purposes to be eligible to receive a handsome amount of taxback. If you cannot be classified as a resident for tax purposes then you are likely to get a small Australian tax refund or even owe the Australian tax office money. It is a legal requirement to lodge a tax return here in Australia if you have earned money and paid tax on it and not everyone will achieve a refund from their tax return. The issue of tax residency is covered in other posts so have a dig and read around the subject there…

The next thing is…will you be getting all your taxback without doing anything other than declaring your gross earnings and the tax you’ve paid?

Usually people who’ve earned under $12 per year will get all their tax refunded to them after lodging a tax return in Australia. So if this is you stop worrying and just apply for your tax refund with us now! You just can’t get more taxback than you paid in the first place (not everybody believes us when we tell them this!)

If you’ve earned over 12K or havn’t been here a full year then you may not be due all your tax back. So it’s time to use deductions, offsets and possibly a zonal allowance to help you get more tax-back.

Tax Deductions:

Basically most of the stuff you spend on stuff for work can be used as a deduction, these reduce your taxable income and so you have to pay less tax (which means a higher tax refund). If your deductions are below $300 in total (as at 2011 financial year) then you don’t need receipts. If your total deductions are above $300 you’ll need copies of your receipts for us.

The most common deductions we see:

1. Travel- You can claim for travel from one place of work to another, but not from home to work and back. So keep log books or fuel recepts only if you travel around allot for work…but don’t bother if you just go to one place of work and back home again.i
2. Uniform- You can use the cost of uniforms as deductions, but they need to be specific to the place you are working at, it needs to have your name or the company name/logo on it…you can’t just say I bought this suit as I was a car salesman.
3. Courses- If the course you took was related to your job (such as a barista course and you worked in a coffee shop) then you can use this cost to help you gain a bigger tax refund.

 So do I get the full amount of my deductions back?

Short answer is unfortunately no! As mentioned above tax deductions reduce your taxable income and so reduce the amount of tax you have to pay. What you save is the marginal rate of tax- that is to say the amount of tax you would have paid on the earning which the deductions account for. So if you deduct $300 and you were paying 15% tax on your earning you’ll get an extra $45 from your tax return because of your deductions.

 Zonal offset, WTF is that then?

A zonal offset is a tax offset which the Australian taxation office allows you on your earnings when you work in a remote location for a period of at least 6 months. We often come across people who have either worked in a remote location for a shorter time than 6 months and it doesn’t count for anything I’m afraid. We also see people who’ve worked places which they think are remote…but are far from it (Outer Sydney is not a remote loaction, even if you don’t get mobile phone reception!). There is a set list of areas classified as remote zones which we look up for you. A good place to start is the postcode of the place you worked in…In Australia the postcode starts at X000 in the center of the states capital and the number grows as the area moves away from it. So if you have a large number for a postcode there may be a chance of using a remote location offset to help you get a bigger tax refund.

 Dependant Spouse Offset

If you have a spouse who earned very little and was dependant upon you then we may ask you for more details as this could get you more taxback.

Medical Expensis 

If you spent over $2000 on medical expenses and aren’t due all your taxback give us the receipts and you can get 20% of excess back.