Address:
3/374 Pennant Hills Road, Pennant Hills NSW 2120
Call Us Today:
(02) 9980 5892

The Past Year May Have Pushed You Over The Tax-Free Threshold – Here’s Why

Did you know that, regardless of how many jobs you worked over the past year, once your income reaches $18,200 it has crossed the tax-free threshold?

 

The tax-free threshold is the maximum amount of income that you can earn in a year without having to pay any tax.  Currently, that limit is set to $18,200.

Did you also know that payments from the government could also be counted as taxable income, which contributes to your tax-free threshold?

The previous year has not been without challenge for many Australians, who may have faced difficult issues with maintaining employment during business shutdowns or disasters, and required supplemental income (such as payments from Centrelink, government support or disaster relief).

Those payments may have pushed you over the $18,200 threshold without you realising. This will create an issue particularly if you failed to elect to have tax withheld from the payments.

This could impact the amount of money that you might otherwise receive from your tax return claim, as it could push you into a different income bracket for your return.

Centrelink payments, disaster relief payments and government support packages may be considered as taxable income. This, on top of what you may have earned during employment, is what the ATO will consider when calculating your tax return claim.

Want to get the most out of your tax return for this upcoming financial year? Speak with us so that we can advise you on deductions, your income and other queries you might have that we could help with.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

Testimonial

What our Client Say

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier