Changes in legislation have led to some confusion at the end of the 2012/13 financial year, with amendments to the tax-free threshold in Australia leaving some workers unsure of their position.
Last year the Australian Government raised the tax free threshold from $6,000 to $18,200, freeing up to a million people from having to lodge a tax return from 2012-13.
The changes were proposed to make life easier for low-income earners who previously had to interact with both the tax system through the Australian Taxation Office and the transfer system through Centrelink.
Oncore CFO Grant Gee says understanding your tax free threshold is important when completing your Tax File Number Declaration.
"If you are an Australian resident for tax purposes and your total income for the year is under $18,200, you pay no tax. This is called the tax-free threshold. Once you earn more than this, you have crossed the threshold from paying no tax to paying at least the lowest rate of tax. Therefore, by claiming the tax free threshold, you reduce the amount of tax that is withheld from your pay during the year." Check also for payroll processing service.
In 2012-13 the $18,200 tax-free threshold for pay as you go (PAYG) withholding purposes is equivalent to $350 a week. When your taxable income exceeds this tax-free threshold, you are then required to pay tax on the excess.
"There are also several circumstances when your tax-free threshold may be less than $18,200 in a financial year if you either entered Australia permanently during the year, left Australia permanently during the year, or are not a resident of Australia for tax purposes."
From July last year, part-year residents can now access a tax-free threshold of at least $13,464. Access to the remaining $4,736 of the full tax-free threshold is pro-rated.
With key markets in Australia, the UK and New Zealand, Oncore is constantly monitoring contractor payroll management and financial developments in all regions, in particular legislative changes and the contractor recruitment industry.
Oncore is a global outsourcing company specializing in contractor risk mitigation, outsourcing payroll service and outsourcing payroll services for corporate, recruiters and professional contractors. Oncore focuses on delivering outstanding outcomes to benefit you or your company - whether you are looking for financial, structural or compliance solutions. Oncore has offices located across Australia, as well as the UK and New Zealand. We have an intimate understanding of our markets and we are focused on continued global growth through excellent payroll systems delivery and customer service.
Over the years Oncore has built up a strong network of partnerships around the globe, allowing us to pass the benefits of these alliances on to our clients and customers.
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Understanding tax free thresholds in Australia