Allowances and Rebates

Information about the tax allowances and rebates payable in Australia...

All taxpayers can claim allowances from their taxable income and rebates, in addition to a credit for tax paid during the relevant financial year. Allowances reduce taxable income, but rebates (called credits in some other countries) are subtracted from the tax payable on your taxable income, i.e. rebates are 'worth' the same amount to all taxpayers, irrespective of their tax band.

Most allowances are occupation-specific and must be legitimate expenses incurred in earning your taxable income. They're commonly claimed by employees and include self-education, travel and work expenses. Allowances are also made for certain non-business expenses, such as gifts to approved charities. Allowances must usually be substantiated by documentation, and strict requirements apply where expenses exceed $300 per year. There's a federal government taxation incentive for those who let a property for less than their mortgage repayments, when the loss can be offset against other income. You shouldn't hesitate to claim for anything that you believe is a legitimate business expense. The Australian Taxation Office (ATO) will disallow them if it doesn't agree, but it won't grant you an allowance to which you're entitled but which you've forgotten to claim.

Rebates (also called tax offsets and tax relief) are essentially available only to Australian residents whose dependants also live in Australia. Rebates are made in respect of private health insurance premiums (at 30 per cent, provided the insurance is with a registered health fund; you may choose to claim the rebate as a reduction in your insurance premium) and net medical expenses (including dental, medical and optical aids) over $1,500 that aren't reclaimable from Medicare or private health insurance (at 20 percent). Rebates don't reduce your Medicare levy.

Details of all allowances and rebates for individual taxpayers can be found on the ATO's website.

Extract from Living and Working in Australia (8th Edition - 2013) David Hampshire Published by Survival Books Ltd, Survival Books, P.O. Box 3780,Yeovil, Somerset, BA21 5WX, United Kingdom. Tel/Fax: (+44) 01935-700060 Copyright © Survival Books Ltd All Rights Reserved