Don’t Let Your Tax Return Turn into a Costly Surprise! Learn from Alex’s Story

The end of the financial year (June 30th) often brings a mix of excitement and dread for many international students and temporary residents in Australia. Will you get a tax refund, or will you owe money? For some, it’s a straightforward process, but for others, it can quickly become a stressful and expensive ordeal.

Let’s look at Alex’s experience, a common scenario we see all too often.

Alex’s Tax Tale: A Costly Lesson Learned

Alex had been in Australia for almost two years, juggling study with various jobs. For a significant part of that time, he’d been working casually using his ABN (Australian Business Number) for contract work, and more recently, he’d also started a part-time job with a TFN (Tax File Number).

Last year, Alex had done his tax return himself and hadn’t owed anything – a win! This year, with both ABN and TFN income, he felt it was time to get professional help. He was optimistic, hoping to get a refund from the tax withheld from his TFN job, as many friends had told him this was common.

When Alex met with a tax agent, the agent asked for all his income details, specifically how much he earned through his ABN and if he had any business expenses. He also inquired about his TFN income statement.

Alex’s heart sank as he started explaining.

“For my ABN work,” Alex admitted, “I just gave them my ABN when I started. I never really issued invoices.” (Mistake #1: Not tracking income properly)

“And expenses?” the agent probed. Alex had definitely incurred costs – he’d bought tools, paid for specific work-related insurance, and had other professional fees. “But I never kept the receipts,” he confessed, sheepishly. (Mistake #2: Not keeping records of expenses – a very costly error!)

The tax agent patiently explained that without invoices or clear bank statements directly reflecting the ABN income, it was difficult to accurately report his earnings. And without receipts for expenses, they could only claim a very minimal amount as deductions – far less than what Alex had actually spent.

The Unpleasant Surprise

After reviewing all the information available, the tax agent prepared Alex’s tax return. To Alex’s shock and dismay, not only did he not get a refund, but he actually owed AUD $2,500 to the ATO!

Alex was devastated. He hadn’t kept track of anything, and now he was facing a significant unexpected bill, just as his visa renewal was approaching.

What Can We Learn from Alex? Avoid These Common Tax Return Mistakes!

Alex’s story is a powerful reminder that while Australia offers great opportunities, understanding your tax obligations is crucial. His situation could have been entirely avoided with better preparation and a little guidance.

Here are the key takeaways:

1. Understand Your Income Streams: Whether it’s TFN employment or ABN contract work, know how each affects your tax. With ABN income, you are essentially running a small business and responsible for your own taxes.
2. Keep Meticulous Records: This is perhaps the most critical advice!
   • For ABN Income: Always issue invoices and keep copies. Track all payments received.
   • For Expenses: KEEP EVERY RECEIPT related to your work. This includes tools, uniforms, courses, specific insurance, travel for work, etc. These can be claimed as deductions, reducing your taxable income.
3. Don’t Leave it to the Last Minute: The financial year ends on June 30th. Start organising your documents well in advance.
4. Seek Professional Advice: Tax laws can be complex, especially with different income types. A qualified tax agent can ensure you claim all eligible deductions and report your income correctly, potentially saving you money and avoiding penalties.

Let AMES Group Help You with Your Tax Return!

You don’t have to navigate the Australian tax system alone. At AMES Group, we understand the unique tax situations of international students and temporary residents. Our experienced tax agents are here to:

• Help you understand your obligations: Whether you work with a TFN, ABN, or both.
• Maximise your refund: By identifying all eligible deductions you can claim.
• Ensure compliance: Submit your tax return accurately and on time to avoid ATO penalties.
• Simplify the process: We guide you step-by-step, making tax season stress-free.

Don’t let your tax return be a source of anxiety. Get it done right and potentially boost your refund!

Contact AMES Group today to book your tax return appointment. Let us help you manage your finances smarter, so you can focus on your Australian journey.