FocusOn - Top 10 Tax Tips for Students

1. Know whether you need to lodge a tax return

Technically you are required to lodge an income tax return if your taxable income exceeds $6,000. However, the low income rebate eliminates any tax payable up to $11,000 (2008 rates). If your income was below $11,000 and you had tax deducted from your salary, or you have received income from an investment, you may also be required to prepare an income tax return.

2. Claiming self-education expenses

You may be able to claim a tax deduction for the costs of your studies. Please refer to the enclosed FocusOn Self-Education Expenses for further details.

3. Travel expenses

Travelling between two jobs is tax deductible and can be easily calculated by making a reasonable estimate of the number of kilometres travelled multiplied by a rate prescribed by the Taxation Office.

If you are able to claim self-education expenses (see point two) you can also claim the travel from home to your place of education and some of the travel when you travel to work as part of the journey.

4. Working for more than one employer

If you have more than one job you should only claim the ‘tax-free threshold’ from one employer. Claiming the threshold from multiple employers may create a tax liability in your income tax return. You make this election on the tax file number declaration form that you complete each time you start new employment.

5. Topping up your superannuation

If your taxable income is under $58,000 and you make a personal contribution of up to $1,000 into superannuation fund in a financial year, you may be entitled to receive the Government’s co-contribution. This co-contribution is paid into your superannuation fund and can be up to $1,500. The full entitlement of 150% of your contribution is paid where your income is below $28,000 and then phases out, ceasing when your income reaches $58,000.

6. Home office/study expenses

If you work or study from home and are entitled to claim self-education costs (see point two), you can claim the deductible portion of your gas, electricity, telephone and internet bills. Gas and electricity can be claimed using the Taxation Office’s standard rate of 26 cents per hour. Telephone, mobile and internet costs are claimed based on the percentage of study use. A time diary recorded for four weeks per year should be used to substantiate your claim.

7. Disclosing all of your income

When completing your income tax return, ensure you include all income including interest, dividends and managed fund distributions. Income from these sources are data matched by the Taxation Office.

8. Maintaining records

Ensure you retain receipts for all your work-related expenses including subscriptions, stationery and journals. Receipts aren’t required to be kept if the total claim for work-related expenses is less then $300. However, you still need to incur the expense in order to claim the tax deduction. Maintain time diaries to prove your claim for expenses that are partly private.

9. HELP (HECS) payments

Your employer will deduct additional tax (if required) from your salary to cover the HELP repayment. In the situation where your HELP debt will be significantly or completely repaid in a tax year via your income tax return, you may wish to consider repaying the debt directly. This will enable you to access the 10% bonus. The bonus is not available when the HELP repayment is made via your income tax return.

The following table indicates the income levels at which you are required to make a payment towards your HELP debt. The HELP repayment, which is administered via your income tax return, is determined based on your income multiplied by the relevant rate. For example if your income for the financial year was $45,000 and your HELP debt was $8,500, you would be required to pay $45,000 x 4.5% = $2,025 towards your HELP debt.

10. Claiming donations to charities

You are entitled to claim a deduction for donations made to charities which have been approved by the Taxation Office as tax deductible. To claim a donation you will need a receipt from the organisation showing that you have made a donation and that the donation is deductible. Note that a deduction is not available for the purchase of items such as raffle tickets or pens (items such as legacy badges are OK).

Published : 20 August 2007