Saturday, July 30, 2011

Moom's Taxes 2010-2011

I can't submit my tax return yet as I don't have details of the tax treatment of a couple of distributions I received. But I did all the other calculations now to get this out of the way. In the following table I make some assumptions about the distributions:

Click here for the 2009-10 data. For those of you outside Australia, the Australian tax year runs from 1 July to 30 June. There are no state income taxes and no joint taxation of married couples. All numbers are in Australian Dollars (1 AUD = 1.10 USD).

I was only employed in Australia for 6 months of the year, hence the relatively low salary, which is after 10% voluntary super (retirement) contributions. Gross interest and Australian dividends are pretty self explanatory. Dividends are just direct payments from companies. Dividends and other Australian income not including capital gains paid out by a managed (mutual) fund is include in the Income Distribution from Trusts. I had a net capital loss, but you can't deduct any of that against general income (unlike the US), so zero is entered here. Foreign source income is a lot bigger than last year because I worked in Sweden for a month. It's also the reason why I have such a large foreign tax credit as I was charged 25% flat tax on my earnings there. Total income comes in 28% higher than in the previous year.

The work related travel expense is due to not being fully refunded for flying to CCL. Australian dividend deductions are mostly margin interest. Taxable income was up 32%.

Gross tax is the tax due on taxable income if no credits were allowed. The low income tax offset is a credit available if your income is under $67,500 and is maximal at $1,500 if your income is below $30,000. Franking credits are credits on Australian dividends for corporation tax paid by the companies. This is Australia's way of reducing the double taxation of corporate profits. As noted above, I paid a lot of foreign tax, mostly to Sweden this year. As a result I should only owe $6,624 to the Australian government, which is an 11.82% tax rate. As $12,266 was withheld, I should get a $5,642 refund. Withholding was very high because it is based on me earning my salary for 12 months rather than just 6.

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