Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 313

Preparation for PAYG employees at tax time

It’s time to get your tax return sorted and crucially to ensure you pay the right amount of tax.

The first question is whether you do your own return or not. Where a taxpayer lodges their tax return via a tax agent, an extension of time to lodge and pay may be available. This though is only the case if your previous returns are all in order. No time extension will be given if there are outstanding prior year returns.

Ordinarily, taxpayers are required to lodge their tax returns by 31 October following the 30 June year end, so PAYG employees should consider whether a lodgement extension is desirable in their particular circumstances.

The deferred lodgement due dates available for clients of tax agents are:

  • 31 March 2020 if the taxpayer’s last lodged tax return resulted in a tax liability of $20,000 or more; or
  • 15 May 2020.

Not only do you gain more time, but crucially professional expertise. Qualified tax agents have experience in dealing with the ATO. As outlined in the ATO’s Compliance Programme, they are aware of the audit focus areas. Tax agents are also aware of any current ATO questionnaires or notices and ATO data matching activity, and the impact that these have on the taxpayer. All taxpayers should seriously consider whether going it alone is a false economy.

But for those who have reasonably straightforward tax affairs and choose to do their own tax return, what are the main points that you need to be aware of?

Firstly, don’t be late!

Missing that 31 October deadline can give rise to late lodgement penalties. The second key item to note is the tax payment due date is three weeks after lodgement, i.e. 21 November 2019. Paying your tax liability late is likely to give rise to interest charges being imposed by the ATO.

Most taxpayers lodge their tax return online via myTax by linking a myGov account with the ATO. It is not mandatory but it can help streamline the process. If you are expecting a tax refund, lodging online should expedite receiving the money. The ATO usually issues tax refunds within 12 business days where the tax return is lodged online, or 50 business days where a paper return is lodged.

A change to note this year is that many employers will have reported through Single Touch Payroll (STP), which refers to direct payroll reporting to the ATO on a real-time basis. If your employer reported through STP in the 2018/19 tax year, you will not receive a PAYG payment summary. Instead, this information will be included in an employment income statement that should be readily available for you to access via your myGov account after 15 August 2019 once your employer has finalised their STP report for the year.

How can PAYG employees maximise the amount they get back in tax?

First, you no longer need to ‘salary sacrifice’ super contributions in order to reap tax savings. From 1 July 2017, all individuals under 75 years (including those aged 65 to 74 years who meet the work test) are eligible to claim a tax deduction for personal super contributions made into an eligible super fund. In order to claim a deduction, taxpayers need to provide their super fund with a ‘notice of intent to claim’ on or before the day the 2019 tax return is lodged or 30 June 2020, whichever is earlier. Trap: taxpayers should observe the concessional contributions cap (currently $25,000) and limit their deductible contributions to the cap amount if they want to avoid paying excess concessional contributions tax.

Second, make a payment of interest in advance on your investment portfolio. You need to ensure you don’t breach pre-payment rules, so payment of interest before 30 June 2019 would need to be for interest relating to the period prior to 30 June 2020.

Third, if you have a rental property, claim appropriate capital works and capital allowances (depreciation) deductions. Be aware that the rules changed from 1 July 2017. Capital allowance deductions can generally no longer be claimed for previously used plant and equipment (second hand assets) acquired after 9 May 2017, or second hand assets acquired before 1 July 2017 but not used to earn income in the year ended 30 June 2017. Investors who purchase new plant and equipment will continue to be able to claim depreciation expenses on these assets. Tip: engage a quantity surveyor to make an assessment and prepare a depreciation report to outline amounts to be claimed in your tax return each year. The cost of having a depreciation report prepared is also deductible.

Fourth, review un-reimbursed work-related expenses to determine the extent to which they are deductible and ensure you have retained sufficient substantiation. For example, if an employee uses their vehicle for work-related purposes then, at a minimum, they should record the kilometres travelled for work-related purposes. Trap: it is important to note that home to work travel is considered to be private travel and not work-related travel.

Fifth, ensure you have picked up all donations made during the year to deductible gift recipients. Taxpayers may make donations over the course of the year but often forget to claim them because they forget to keep a record. With increased use of electronic receipting via email, the ability to locate the receipts in the digital world has become easier.

Sixth, ensure you have adequate private hospital insurance coverage with an Australian registered health fund so that you are not liable for the Medicare Levy Surcharge (MLS). Having ‘extras’ or ‘ancillary’ cover only will not be sufficient. At present, the MLS will apply where a taxpayer’s ‘income for surcharge purposes’ is above $90,000 (singles) or $180,000 (families). Tip: it is now optional for your health insurer to send to you a private health insurance statement, so you may need to request a statement from your health insurer to complete your tax return if one is not automatically provided.

So, start collating all your information. Back up that digital file if you keep everything on your computer or bring out the shoe box. It's never too early to be prepared.

 

Mardi Heinrich is a Partner, Deals, Tax & Legal, at KPMG. This article is general information and does not consider the circumstances of any person.

 

RELATED ARTICLES

Tips and traps: a final check for your tax return this year

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

Investing

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Investment strategies

A closer look at defensive assets for turbulent times

After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.

Financial planning

Are lifetime income streams the answer or just the easy way out?

Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.

Shares

Is it time to buy the Big Four banks?

The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?

Investment strategies

The useful role that subordinated debt can play in your portfolio

If you’re struggling to replace the hybrid exposure in your portfolio, you’re not alone. Subordinated debt is an option, and here is a guide on what it is and how it can fit into your investment mix.

Shares

Europe is back and small caps there offer significant opportunities

Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.

Shares

Lessons from the rise and fall of founder-led companies

Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.