Tax and Income

Donaldhump on 31/05/2016 - 14:11
Last edited 31/05/2016 - 14:11

So I finished up fulltime work in feb this year, and have landed 5 weeks works from may 25th to June 30.

The company I work for pays on the 10th the following month. I thought this was cool as my June incomes goes into the next financial year. I decided to rort this more and not fill out my tax information on time thus preventing me getting paid what would be 5 days work on June 10th. This will now be delayed to the next financial year.

Is this correct, as you are taxed on income when payed not literally the day you earned it .

Is this correct.

I have no intention of working next financial year, unless something good comes up.

Financial

Comments

  • Nugs on 31/05/2016 - 14:15
    +12

    you will know the answer when your group certificate arrives

    • SnoozeAndLose on 31/05/2016 - 14:29

      Should it depend on how the accountant put on his statement?

      • spackbace on 31/05/2016 - 14:30

        It's income from another company. Do you think they won't accurately write up their group certificates?

        • SnoozeAndLose on 31/05/2016 - 14:32

          if they not get pay how could they write up their group certificates after the financial year end?

          if you earn $5000 and get pay on 10/7/2016 will this $5000 count toward this FY or next FY?

        • spackbace on 31/05/2016 - 14:35
          +2

          @LoveBargain15:

          It has nothing to do with when you, as an employee, get paid! It's all to do with when you earn it! All pay is finalised within the financial year, and your group certificate is written from that. All billings will be finalised within the last week of the financial year, including purchases and expenditure.

        • SnoozeAndLose on 31/05/2016 - 14:41
          +2

          @Spackbace:

          So that is to say for OP anything earned before 30/6/2016 will be on the group certificate even the money is not in his pocket?

          Normally on year end the amount on my group certificate is the last pay, but the last pay may not land on the last day of this FY.

          So I think that it is base on when we actually received the fund, in OP case the amount he got pay on 10th will count towards next FY.

        • bluedufflecoat on 31/05/2016 - 16:20

          @LoveBargain15: that's my experience.

        • SnoozeAndLose on 31/05/2016 - 17:15

          @bluedufflecoat:
          So when are you end up declaring? This or Next FY?

        • bluedufflecoat on 31/05/2016 - 19:43

          @LoveBargain15: next fy, because it's going to be in my next fy's payment summary

        • patinadiary on 01/06/2016 - 16:29

          @LoveBargain15: From the company's perspective: Its Accrual accounting i.e. Revenues and expenses are recorded when they are incurred, regardless of when cash is exchanged. OP's pay up until 30 June will be recorded as part of his income for FY15-16, irrespective when he gets paid.
          From the individual's point of view: It's income when you get paid, so in OP's case it is income for FY16-17

    • Donaldhump on 31/05/2016 - 14:40
      +3

      you think I will get a group certificate before being paid with the income earned on it?

      I don't see how this is possible, as the company hasn't paid it yet, they could go into receivership the next day

    • trex on 31/05/2016 - 14:51
      +3

      Actually for employment income for individuals, you are liable for income tax when the income is paid. So if OP's 5 days work in May/June is paid in July, it falls into the next financial year.

      • spackbace on 31/05/2016 - 14:52
        -1

        This Ruling is not intended to be prescriptive; rather, it should be used as a guide.

        This Ruling applies to individuals and entities who, for tax purposes, must make use of the receipts and/or the earnings method of tax accounting to determine their assessable income

        • trex on 31/05/2016 - 15:02

          There's only 2 ways to account for income, cash (receipt) basis or accrual (earned) basis.

      • BigTed on 31/05/2016 - 16:20
        +1

        The classic view it is counted from the time it is first applied for the employee's benefit.
        So - generally it will be when it is paid, but if you were to direct it to some other source then it will have been applied for your benefit.

        • trex on 31/05/2016 - 18:14
          +1

          Yes, you are right. Such a redirection would be fall in as constructive payment.

    • Smulder on 31/05/2016 - 15:44
      +4

      This is incorrect. Salary income is included in the tax year when it is paid.

    • GameChanger on 31/05/2016 - 21:20
      +1

      Incorrect the financial year is from the 1st July to 30th June.

      The 10th of July falls in the 2016/2017 financial year and so he will pay tax then.

  • retiredfeline on 31/05/2016 - 14:43
    +1

    The payment summary (what used to be called group certificate) will state which financial year it relates to. If you were in business for yourself you could elect to receive the money next FY but you are an employee.

    • Donaldhump on 31/05/2016 - 14:48

      so what payment summary will it go on? 15/16 16/17?

      • retiredfeline on 31/05/2016 - 14:50

        Well that remains to be seen. But point is he has no say in it.

        • Donaldhump on 31/05/2016 - 14:53
          +1

          who is he? if you mean me, well I don't but its crucial to know

          if 15/16 = 100% super contribution
          if 16/17 = 100% cash in my bank

        • retiredfeline on 31/05/2016 - 14:55

          @unclesnake: Oh sorry you are the OP. You have to ask your employer.

        • Smulder on 31/05/2016 - 15:45
          +2

          It will go in the year it was paid. 16/17 in this case.

  • Donaldhump on 31/05/2016 - 15:34
    +2

    as per account, its when its received, not paid

  • HarmonicMelody on 31/05/2016 - 15:40
    +5

    Call ATO; there are armchair accountants here

    • Smulder on 31/05/2016 - 15:46
      +17

      Actual accountant here. It is included in the financial year in which it is paid.

      • McFly on 01/06/2016 - 13:28
        +2

        Yes, but can you prove you didn't reply (from your phone) while sitting in your armchair?

        • Smulder on 01/06/2016 - 16:30
          +1

          That depends on the level of proof you require…

        • McFly on 01/06/2016 - 18:08
          +1

          @Smulder: Just the customary picture or it didn't happen happened!

        • GameChanger on 01/06/2016 - 18:42
          +1

          @McFly: I will provide picture, problem is that I am fully naked.

        • McFly on 01/06/2016 - 18:58
          +1

          @GameChanger: I only want a nude picture of you if you're also an accountant.
          I never thought I'd say something like that. This is taking a weirdly unexpected turn…

  • Baysew on 31/05/2016 - 15:51

    ….not fill out my tax information on time

    What does this mean ?

    That the OP hasn't supplied Tax File Number ?

    • Donaldhump on 31/05/2016 - 15:52

      yes, and yes they could tax me 47% but they said they will wait till next month

      • Baysew on 31/05/2016 - 15:54
        +1

        That won't prevent employer paying on June 10, they could just deduct more tax for not having a Tax File Number.

        If they are happy to wait and pay you the next month, then that is OK and is what you are wanting.

        • Donaldhump on 31/05/2016 - 16:07

          I also haven't filled in my bank details..

          im gathering if u did it for more than 1 month it would be not allowed

        • Baysew on 31/05/2016 - 16:26
          -1

          Think of an employer paying in cash.
          Pay day is the 10th of month. You only work on the 15th - 20th. He has paid you in cash, you just haven't picked up your pay envelope.
          Same if there isn't a bank account. It is not when you receive the money, it's when it is recorded as wages by the employer, reported to ATO and with holding tax remitted to the ATO.

        • Donaldhump on 01/06/2016 - 08:02

          @Baysew:

          so you can get taxed on money earned but not paid.
          what if the company doesn't pay you and goes bust?

  • bobbified on 31/05/2016 - 16:18
    +1

    It'll be counted in the financial year that it was paid to you. In this case, it'll be in the 2016/17 certificate.

    • noyesmaybeok on 31/05/2016 - 16:29
      +4

      This is correct. Wages are based on date received. If you get money on the 1st July, that's 2017 income not 2016.

      It is NOT the same as accrual accounting where it's based on invoice date or anything like that.

      • Donaldhump on 01/06/2016 - 08:03

        this is my thinking

  • Devils Advocate on 31/05/2016 - 17:43

    Wouldn't you rather be paid this financial year for tax reasons though? If you had 3 months+ off work it would be likely that your marginal tax rate is lower this FY than next FY yeah?

    Edit: Oh, does this new job finish up on June 30 and you're unsure if you'll work at all next FY?

    • Donaldhump on 01/06/2016 - 08:01
      +1

      i got a redundancy package so aleady in high tax bracket for this year.

      if I get more work next year that's great, if not, id rather utilise the tax free throeshold

      • gstfree on 01/06/2016 - 13:47
        +1

        If genuine redundancy, Term D will be tax free and will not impact your tax bracket.

        ETP will be taxed separately and generally will not impact your tax bracket. You may receive separate PAYG certificate for the red pay.

        • Donaldhump on 01/06/2016 - 14:33

          my redundancy was over the tax free amounts + I had AL, LSL, and a few months paid without having to go in etc.

        • gstfree on 01/06/2016 - 16:13
          +1

          @unclesnake:

          Normal termination unused AL, LSL will be included in the gross and taxed at marginal rate. If genuine redundancy, unused AL, LSL will be reported separately and labeled as Lump Sum A and taxed at flat rate 32%.

          Once you receive the final pay slip, please get your accountant to check for you. There may be mistakes.

        • gstfree on 01/06/2016 - 16:15

          @gstfree:
          The above is just Internet discussion, not an advice in any form.

        • Donaldhump on 02/06/2016 - 10:16

          @gstfree: so the unusd AL, LSL is included in final income right? the flat tax of 32% is just an initial deduction, and then its adjusted accordingly at end of year? is this right

        • gstfree on 02/06/2016 - 18:43

          @unclesnake:

          Will not adjust at tax return time. Pls consult with your accountant.

          Please be noted, not everyone process things correctly.

  • gstfree on 01/06/2016 - 07:01

    Per the normal payroll practice, you will get paid on 10 June for your services 25 May and 30 June, hence all income will be reported in the current financial year.

    You'd better to provide your TFN asap to minimize any issue for you and your employer.

  • [Deactivated] on 01/06/2016 - 08:07

    I have no intention of working next financial year

    How do you pay for food, clothing, accommodation, bills etc if you don't work? o.O

    • Donaldhump on 01/06/2016 - 11:45
      +1

      take a wild guess of the following list?

      1.) savings
      2.) I forage for wild berries and live in a tent
      3.) centerlink
      4.) I am an airatarian

      • tomleonhart on 01/06/2016 - 13:25

        My guess is 5) bikies

        • Donaldhump on 01/06/2016 - 13:27
          +1

          well I don't need to declare income from my pill press business on tax :)

        • McFly on 01/06/2016 - 13:29

          @unclesnake: But then you can't claim the entire cost of the press in the first year!

        • Donaldhump on 01/06/2016 - 14:32

          @McFly: I stole it

        • McFly on 01/06/2016 - 16:13

          @unclesnake: What, you think you'd be the first to try and claim for stolen stuff!?

      • McFly on 01/06/2016 - 13:26

        I'm guessing 3, but that would probably necessitate a combination with either 2 or 4…

      • tomsco on 01/06/2016 - 16:00

        …googles airatarian

  • darkmattersunB6c0MV on 01/06/2016 - 19:21
    +1

    I had this case 5 yrs back, but I was in a consultancy. It appears as income in the fy when it is paid.

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