She's On The Money - Let's talk about TAX baby!

Episode Date: June 15, 2021

It's that time again - and we've done our best to give you a coupla weeks to get your affairs in order (doesn't that just sound SO fancy - I've always wanted to say that!) for all things tax!V and Jess talked about a few resources in today's ep, and info on the tax free threshold is here, info on what you can claim is here, the tax brackets info is here, aaannnnddd a cute little blog from the ATO about Cryptocurrency and Capital Gains Tax is right here. (Wow I deserve to jump into a higher tax bracket over all of that admin!!! I really hope V reads these!) As always, DM us with any queries! Toni xOur fearless leader and money queen B has written a book! You can pre-order Victoria Devine's book right here!!!!The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. Tax time is almost upon us, friends, and if you're anything like me, that means you have lots of questions that you want answered. By the end of today's episode, you'll know what you can and can't claim, what the go with tax on side hustles, second jobs and your investments plus plenty more. My name is Jessica

Riggi and I'm so excited to be joined for today's episode by financial advisor and all around queen Victoria Devine. You are too kind. I feel like it's not a she's on the money episode unless someone unnecessarily strokes my ego to begin it. Absolutely. I love to lay it on you, but V, let's rip into it. Tax time is just a couple of weeks away now. So where on earth do we start in terms of getting our finances sorted. Where do we even start? I think we need to start by taking a massive deep breath because for too many of us, tax time is a stressful time and it shouldn't be that way. I mean, it's June 30. It is the end of financial year. Also your birthday. I was about to say, which is also my birthday. And on the 30th, I turned 30. And I think that's pretty cool.

I don't know. I don't think anybody else cares, but like 30 on the 30th. It's like a magical alignment of numbers. It's called a golden birthday. I'm pretty sure. Is it? Yeah, I believe So like your age and birth date align? I think that's right. Oh, is that what that means? I think so. Toni's sitting in the room and she's not meant to be in this podcast, but she just got really excited because her birthday is on the 28th of November and on that date she turns 28.

So like, is that her golden birthday too? It absolutely is. That's kind of fun. Oh my gosh. I'm so excited about that. Anyway, I'm very excited about my birthday. I'm not one of those people that do birthday months or anything like that. I'm just excited because it's also tax time.

So there's that. For those of us who aren't so tax-minded, V, what is really, what should we be excited for? Why do we love tax so much? So tax time actually means a few different things for a few different people. So it's pretty exciting if you're a casual worker because usually you expect a little bit of a return in your bank account, but it can actually be really stressful for people like me who are small business owners who potentially have tax owing and it's a total drainer for freelancers who maybe haven't stayed on top of their tax throughout the year. So it's different for everybody, but I think that what we need to

understand about tax time is one, what we can claim and what we can't claim, and maybe what we need to do in the lead up. Because unfortunately, when it comes to tax, once the 30th of June passes, you can't actually do anything in arrears. You can't actually go and be like, okay, cool. Well, I actually did need a new laptop. I'm going to buy it now. The dates actually have to be before the end of financial year for you to actually claim any benefit in that financial year. Of course, you can do it the next year, but that's not what it's about. That's not why you're buying it, right? You want to make the most of right now and make, hey, well, the sun is shining and the sun isn't shining 12 months from now because that's just too far away to even think about,

right? So, it sounds like staying organized is going to be really beneficial to anyone in prepping for tax time, especially those freelancers and small biz owners. I am going to be biased and just say in general, it is quite helpful to be organized, but I wouldn't know. That's why I have a bookkeeper, Jess. And that's why you often run the content on SheSoldTheMoney because I genuinely cannot be trusted. But essentially, to make sure that we are ready for when July 1 rolls around, you can do a number of different things. So you can prepare by making sure that you have all your receipts and sorting them out and organizing them by category. So say you have a whole heap of different receipts, put them all

together and make sure that you've got them in different categories so that you can give them to your accountant to claim properly. The second thing I'd say there is I actually have a folder on my phone and I know that the ATO tax app actually allows you to take photos and automatically upload it to save it for later. I don't use that just because I like having them on my phone so I can share them personally with my bookkeeper or reference them because I think that I wouldn't be alone when I say that we've all lost a receipt so I think making a habit of actually just snapping a quick pic of it and putting it into a folder right then and there actually really helps because you don't need the actual original you just need proof of the actual receipt and so for me making

sure that you've got the receipts is really helpful but then also just having photos I promise you that by having photos instead of a shoebox full of dirty receipts that have gum wrappers stuck to them is going to make your accountant much happier or you much happier when it comes to doing your tax. And it is worth noting, just to throw in there, because I did not know this, you want to make sure that you're keeping those receipts or your records of those receipts for five years because... Minimum. Yeah, at a minimum, because you can be audited. And I feel like, as you were saying, having that digital copy makes it really easy for people to file them away on your computer. And if for whatever reason you have to come back and reference those, it's all there and really

simple for you. I'm crazy when it comes to tax and making sure that I keep track of them. I actually upload them all to Dropbox at the end of financial year when I don't need them anymore and just label it like tax receipts for 2017 or 2018 or 2019 or whatever you're doing. And then I delete them all from the album on my phone so that I don't get confused the next year. So smart. Because I do get confused. Yeah. Like this hasn't come from me being smart. It has come from me not understanding what the hell I'm doing. Tax is definitely, like it can be so overwhelming. And I think a lot of people want to know, should they do it themselves or should they be getting an accountant to help out? Well, that is a question that I legitimately cannot answer for you because you genuinely need

to work that out yourself. But if your tax is relatively straightforward and you just are a single employee, you don't have any investments, no side hustles, and you're feeling pretty confident, then yeah, absolutely. It's something you could consider doing yourself. In saying that some people just prefer to have less stress and prefer to have the stress taken off them so that they can go and get someone else do it and that is absolutely fine. The important thing here though is if you have an accountant do your tax for you as much as they will do it and lodge it and you know it's to the best of their ability they aren't taking responsibility for your tax. So if you then end up being audited that's on you that's not on the accountant that you had because they'll make

you sign to say, no, I agree that everything is true and correct. So if you went and said to your accountant, like, oh my gosh, I spent $300 on, you know, sun cream products. So I really want to claim those. Like they'll go, yeah, okay, no problems. If you're saying that you can claim them as a part of your job more often than not, an accountant will absolutely believe you. They'll have a conversation about whether it's relevant or not. Like Jess, I'm pretty sure if you tried to claim sun cream and you were like, oh, it has SPF, they're going to be like, don't you like work in an office environment in a studio that literally has no windows? Like, probably not. But sometimes they will let you claim it and then the ATO come back and audit it and it's not true

and correct. And so many people will say like, oh, but my accountant said it's fine. Like, that's not going to fly with the ATO. It is up to you. It is your responsibility. Yeah. Okay. And so, it sounds like a good accountant, if you do want to see one, is going to be pretty helpful. How do we figure out or find a good accountant? How do we find someone who's going to be able to help us out. So, making sure that you do actually have a registered tax accountant is very helpful if you're going to be paying for them. And tax advice can sit from anywhere between like $100 to get your tax return all the way up to like thousands of dollars depending on your structure. So, I think it's important to just find someone that

works for you. I always say that the best way to find someone is just by referral. So, if you're looking for an accountant and your mate has one, ask them, do you like that person? Because more often than not they'll be hopefully local to you and actually understand your area or maybe if your friend and you have similar jobs they'll understand your industry but if you work in a more complex industry or you're looking for someone who's a little bit more hands-on especially if you have a small business or you've started investing and you really need help above and beyond just the tax statements that your micro investing platform gives you access to I think it's important to do a little bit of research and just ask them like hey cool like for example an Instagram influencer

right like they have to do tax in a very different way to other people because obviously they can claim things that you or I just couldn't claim not yet anyway maybe one day one day they can claim different things so sometimes it's just really nice to have someone who has experience with your type of work and like that happens often with sex workers as well so they can claim different things and more often than not it's just helpful to have somebody who already understands that and gets you and gets your work. So for me, finding a good accountant that is actually aligned to your role is important. But yeah, it's about referral. It's about understanding where it is. But to be honest, all accountants, if they're registered, should be able to do the job pretty

well. Amazing. And that kind of leads into my next question, which is what can we actually claim? So generally, you can claim any work-related expenses, including working from home expenses and then any uniform costs, vehicle expenses, self-education costs. And then there are other deductions that you can make. So say if you made a donation during the year, you could claim that your personal superannuation contributions, which I think is important to talk about because if you're planning on making a superannuation contribution prior to the end of financial year this year. So like, let's just absolutely go off on a tangent here right now. So you guys would have heard of the first home super saver scheme. If you're planning on making use of that

in the near future, but you haven't contributed to it already, you can at this point, and I know legislation is about to change, you can contribute $15,000 in one financial year and then another $15,000 in the next financial year. So hypothetically, you could drop in 15 grand today and have that claimed on 30 June tax and then drop in the second 15 grand on like the 2nd of July or something and then you've got your $30,000 in there ready to purchase by the end of the year if that is your plan. I think it's then important to understand why you might want to do that because if you have been thinking about the first home super saver scheme and then you're like yeah but I'll buy by the end of the year I'll make a decision well you'll only be able to put in $15,000

because you'd have to wait until the 2021 financial year is over for you to put the second $15,000 in So that's why I'm bringing stuff like that up because, you know, with superannuation, obviously you've got your caps as well. So if you're wanting to make an additional contribution, it's kind of like a user or loser kind of situation. Otherwise, you're going to have to wait a significant period of time before you can use it again. Yeah. And in regards to super, you have done a whole video on making additional contributions to super. It's available on YouTube and we always suggest, we know it can be a little bit confusing. So if you want some help and aren't sure how it works, give your super a call.

They're super helpful. They should have a dedicated in-house team who can give you a hand and answer any questions you might have. They absolutely will. Make use of their call centres. Call them up and say, how much can I contribute? You know, how might this impact my tax? They can talk you through all of that.

Like use those people because they can be really helpful. The one thing they can't do. They're free, but one thing they can't do is give you personal advice. But if you've got a whole heap of questions, they'll be able to answer those for you and your specific circumstance so Jess hypothetically if you called them and said hey I've paid x amount of super this year how much more can I contribute without having you know any ramifications they'll be able to tell you yeah and you know I earn x and I want to contribute why will that reduce my personal tax rates they'll be able to answer

that it's not advice so I think that it's actually really underrated like call your super fund have a chat because I guarantee the people on the phone love talking about it because that's their jobs. That's what they've chosen to do. There you go. And you're paying fees on your super chances are anyway. So you might as well get the extra mileage. Make the most of it. Absolutely. So, and there are, as you said, a whole range of things that you can claim. And the ATO has a really extensive guide, which we're going to get Tony to pop in the show notes because it varies industry to industry and person to person. And if you don't speak to an accountant, that guide is a really great way to get an overview of what you may and may not be able to claim. It's really good.

That's what I use every year is I get on the ATO website. I go, okay, cool. Like what can my current job category claim? Really? How does that work? I don't think I've seen it. So on the ATO, like when you go to what can I claim, you can Google like, and by industry more often than not, it'll, it won't list everything, but generally they'll have an overview of like, you can claim X, Y, and Z. You can't claim X, Y, and Z. And it just, for me, cause I've never had my tax done. I've always done it myself, it makes it really easy to kind of go, okay, well, I have this many things that fit into that category that I am going to claim. Oh, cool. So you can kind of just do a bit more research. We'll drop that link in the show notes because I think that'll actually be

really helpful. I think it's also worth touching on the fact that so many of us in this financial year worked from home. And when you work from home, you actually are able to claim your work from home. So I've done some of the maths and essentially they have two different methods, right? They've got the 80 cent method, which would essentially, you know, if you work it out and you work 48 work weeks a year by 40 hours a week, you could get a $1,500 deduction, which is I think a pretty good money win. And if you're not claiming that and you did work from home, genuinely, we need to talk about it. But they have the fixed rate method or the 80 cent method. So just explain the 80 cent one but if you use the fixed rate method and you're in like middle tax brackets

you'd end up getting 52 cents per hour to cover running costs which could potentially be like a thousand dollars and then you might also be able to claim a percentage of your phone bill and your internet which could be up to another 700 dollars and in that case the fixed rate might work better for you than the 80 cent rule so I think my hot tip there is to just do the numbers and work out what works for you best, because you might see that, you know, the fixed rate method is like 52 cents on the dollar. Whereas the other rate, which is the 80 cent method where you can't claim anything more, you might go, oh, well, that's more. I want that. But you can't claim things like your internet usage or your phone bill that you used in relation. So definitely do a little

comparison and work out what actually works out better for you personally, rather than just going, oh, 80 cents is more than 52 cents. Like that makes sense. And don't just plug in random numbers, because if you do get audited, the ATO will ask you to justify your numbers. So they'll expect you to be able to present them with a calculation of how you came up with that amount. So don't just pull it out of the air, but like make sure you're doing the right thing because they are cracking down, we've heard, on auditing and we don't want that to happen to you. They absolutely are and we're not meaning to scare you guys. I think it's just important to only claim the things that you genuinely can claim because one, we're trying not to do the wrong thing, but two, it will come back

to bite you because not only will the ATO then ask for the money back but they'll also ask for interest on that money which is essentially a fine like I mean they don't call it a fine but they will ask you for interest on that money and you'll end up paying a whole heap more back and it won't be worth it I promise you that's so interesting addendum um I got audited last year oh did you actually yeah I did because I claimed because I worked multiple jobs so my claim was like higher than like the average person in my like role and obviously it was fine like I did all the right thing like I had of course you did Jessica Ricci would have been like hey well here are my receipts well I was the filed folder I think I was missing like three receipts it was

like a hundred dollars or something and they're like yeah pay it back and thankfully the guy was really nice because he was like normally we would fine you but like I can see that you've done all the right things just use an error but he was like yeah like normal we will usually hit people with fine I was like oh well that's scary so it's scary but in saying that they're just trying to do the right thing and make sure people aren't abusing the system. And you kind of go, yeah, all right, I can understand why you might do that. And that's why I'm saying to be really good about it because it's happened to me, it can happen to you. So just make sure, don't do the wrong thing, keep your receipts, keep your sums and everything. So that if you are audited,

it's really easy for you to be like, no, like actually that's just what I'm able to claim. Yeah. And I think that that's important as well because auditing is happening more often now, everything is so much more automated for the ATO. They can automatically just flag people and go, yep great we'll audit all of these people and more often than not it'll be automatic so you will then resubmit and then they'll re-analyze it or whatever and check it out so more often than not people are being audited because it's less manual for them nowadays yeah cool so we've kind of covered off on what you may be able to claim what can't we claim I mean you can't claim things like your gym membership or like suits or like self-maintenance even though I was doing face

masks during work hours during COVID, but it's not the point. You also can't claim your membership at like fancy golf clubs, even if you're networking and doing quote business there, these aren't tax deductible. And while none of those are relatable, what you can't claim is actually petrol or public transport expenses getting to and from work. Of course, if your job actually involves a whole heap of driving during business hours, once you arrive at work, you can claim that. Like if you're a trades person or a real estate agent, then you'd potentially be able to claim that. But it's more around, I think I've had this conversation before in our DMs with people like, oh my gosh, I drive to and from work and I've been keeping a log book. I'm like, okay,

but you can't claim that because that was your choice. That's actually not to generate profit. But if from work you drive to see a client and back, you can potentially claim that. So I think it's just important to understand the differences between what we can and can't claim. And that's where I sometimes see an accountant as a really helpful tool to go, hey, can I claim that? And they'll say yes or no. And sometimes they'll highlight things that you didn't even know you could claim. But Jess, it sounds like that ATO website that you were talking about could answer all those questions for you anyway. Super helpful. Definitely check it out. Like we said, it'll be in the show notes. The ATO does everything they can to make it really easy for people to get the

information they need. Their website's super clean cut. It's really searchable. I've been doing my own tax for the last decade. I cannot recommend it enough. How much are the ATO paying you to say that. Oh, I wish. ATO, please sponsor me. I know you have a lot of money because I am paying it to you every year. On the other side of this, we'll be back to chat tax brackets, what tax means for all of our slide hustlers and how we can sort ourselves out for the next financial year if we're maybe realizing now that we aren't as organized as we could have been for this one. Don't go anywhere. all right so tax brackets what are they super sexy we love it can you tell me more oh you want

more information okay i'm so sorry do you want me to actually explain what each bracket is and then we can talk i was hoping you would say no don't worry we'll put a blogger up or something All right. So if you earn under $18,200, you don't pay any tax money. Win. We should note before we get into this, this is for the 2020-21 financial year. It is subject to change. If you're listening to us in the future, again, you can check the tax brackets on the ATO website. I think Jess will also chuck up a little text post of what the tax brackets are and what they actually mean on Instagram, just because I've already got that text post ready to go because I'm a genius. Amazing. Yeah, you're welcome. Anyway, then if you earn between $18,201

and $45,000, you will incur a tax rate of 19 cents for every $1 that you earn above and beyond that $18,200. So Jess, you know when you start a new job and they get you to fill in that form that says claim the tax-free threshold and you have to remember that if you have a second job not to tick that because obviously the first $18,200 that you earn is not taxed. That is where that comes from. So if you then accidentally tick the box that says, yeah, I do want to claim the tax-free threshold for this job, you end up claiming the $18,200 of tax-free money twice. And then at tax time, that's when you get bitten in the bottom because you have to pay tax back on all the money you earn above and beyond that. So that's important to note there. Then if you earn between $45,000

and $1 and $120,000, you'll pay $5,092 plus 32 cents in the dollar for every $1 over $45,000. Then if you're lucky enough to earn between $120,001 and $180,000, which would be wild, you would pay $29,467 in tax. And then in addition, you'd also pay 37 cents for every $1 that you earn over $120,000. And then if you're in the bucket where you earn more than $180,001, I'm jealous. Can you imagine if you earned that much and then you were worried about that additional $1? I mean, you probably would be because it changes your tax bracket. tax bracket. It does. But before I explain what this means, that's what we mean when we talk about additional super contributions to drop you a tax bracket down. So say you were earning $180,001

and you had to pay $51,667 plus 45 cents for every $1 over $180,000 that you earn. hypothetically if you went and made an additional super contribution from your post-tax income and then you were able to claim it it could potentially put you back into the other tax bracket which means that you're paying 37 cents for every dollar over $120,000 instead of jumping up to that 45 cent bracket. And a few cents doesn't sound like a lot but when you're paying it on every dollar that adds up super quickly. It really really adds up and that's why so many people who are in those higher tax brackets often really prioritise making sure that they're making additional superannuation contributions because it could potentially change their tax bracket if

they're sitting on the cusps. So obviously if they're earning like $300,000 a year like a super contribution is not going to change which tax bracket they get but when you're like on the cusp of something sometimes it's really helpful to actually look at it and be like oh my gosh if I just made an additional super contribution I could potentially drop my tax bracket and therefore it would be really equitable and you might end up with more in super while still not significantly impacting your take-home pay which is something that I always recommend you talk to your accountant about because they can actually be really crafty with it and you know actually give you the numbers and give you the example instead of me saying oh it's a potential when we talk about it so that's

why we make sure that we talk to our accountant before June 30 about things like this and actually do a little bit of what we call tax planning because if you go oh my gosh it's the 3rd of July, I should really dump some more cash into my super to bring down my taxable income. You can't do it. It has to be done. It's too late, my friend. So, that's why we want to do a little bit of tax planning and that's why we're dropping the episode now. So, if you want to think about it, now's the time, my friends. Amazing. And we want to remind you, we know that tax kind of has a bit of a bad reputation because no one likes to feel like they're giving their hard-earned dollars away. But it's part of being in a community and you need to remember that you're

paying tax because you're earning money and that is a great thing. Genuinely the more tax that you can pay the more money you are taking home and it is always a good thing and you know I've said this on the podcast probably a million times now probably a million times too many but I'm a genuine believer of changing our mindset around quote have to paying tax to we get to pay tax we get to live in this country that provides us with all of these really great infrastructure options a really great healthcare system really great roads that we can drive on and you know police force that look after us and you know it's one of those things that I genuinely want our community to just be more grateful for because too often I see people complaining about how much tax they

have to pay and I'm like wow like that's of such benefit to you and I that you are paying tax and we should just be more grateful for these things because as much as you know sometimes people go yeah but it sucks it's my money like it's not a surprise like tax was never a surprise when you got your first job tax rates existed yeah they change and shift every single year but it was actually never your money to begin with it was always the plan that you would pay tax it's not actually some surprise where now people are oh Jess by the way you know how you've got that great job I now want to take 37 cents from every dollar that you earn like that wasn't a surprise we should have always been planning for that and that's why often I just want people when we're talking about

budget and cash flow like let's not talk about tax let's just talk about your post-tax income and what actually comes into your bank account what we can actually have a tangible impact on because sometimes we see our you know total remuneration package from a business and you're like whoa like it's seventy thousand dollars that's so much money and then you are really upset with what you actually end up taking home it's like no like let's actually just look at take home how much are you actually taking home and what can we do to increase that or you know benefit that and then that's where tax planning comes into it. So I don't mean to be negative and I know that as you were saying tax can have a bad reputation but I just genuinely believe it

shouldn't. Very interesting. Through the thought. Now we have a really good amount of people in our community who love a side hustle and we love to see it but how does tax work for those people? So wouldn't it be so nice if we didn't have to tax side hustlers like they could just like make a whole heap of extra bank on the side and then just go and go to holidays and not have to pay additional tax. Everyone would have a side hustle. Yeah. Unfortunately, when you have a side hustle, you do have to declare any income that you've made from that side hustle, no matter if it is like $100,000 or $1,000, you're still going to have to declare it. So, if you're a sole trader with an ABN, as most side hustlers actually tend to be, all you need to do is declare your income at tax

time along with your individual tax return. If it's a little more than a side hustle and you're running a business or you have your business set up as a partnership or a company or a trust, then you will have to do an additional tax return. So any money that you earn when you're a sole trader will just be added to your marginal tax income. So it's worth talking about this in a little bit more depth. So say you earn right now $100,000 from your main source of income because you're a full-time employee, but you do some kind of side hustle on the side and you actually earn $30,000 a year from that. Wouldn't that be great? Like money win. The important thing you need to remember there is it will actually increase your taxable income and take you up another tax bracket.

So you'll go from paying 32 cents for every dollar over $45,000 to paying 37 cents for every dollar over 120. So it's not going to change it massively. And I think that this is such a misconception because whether you're a side hustler or you've just got, you know, two casual jobs, so many people say things like, oh my gosh, like, is it even worth having another job if you're ending up paying more tax? More often than not, yes, absolutely. Like there's no situation where you're going to end up paying a whole heap more for something just because you have another job. Yes, you are increasing your taxable income and yes, you might jump up another tax bracket, but that's where we just need to be smart about, okay, is that going to change? What tax planning can I do to make sure

that I maybe stay in that old tax bracket if I can and actually make some plans around that as opposed to going oh my gosh like I'm never going to get a second job or do something else because like they'll just tax me through the nose. There's a really big misconception I've seen a lot and heard even just from friends where people say oh like I don't want to have a second job because my tax will be doubled as though you go from paying let's say 30% to 60% which isn't the case it just gets as you said added on to your current taxable income and I think it's yeah people aren't going to charge you double tax and often if you're feeling like that is the case have a chat with an accountant actually understand the semantics of it because sometimes if you do have a second

income you are taxed at a higher rate because they're just trying to make sure they're taking enough tax so that you don't end up with a massive tax bill come June 30. So have a chat about how you can manage that and more often than not when I see clients who you know do have a number of side hustles and have been quote overpaying tax they end up with a really nice refund which sometimes we really like. Absolutely. So Jackie from our community was asking if you have to pay tax on your investments how does that work? Yes you do because your investments are hopefully increasing your income right Jess? So you definitely have to pay tax on any income that you make from your investments and that includes the interest that is paid the dividends any rent

if it's an investment property and any capital gains. So in terms of how much you need to pay, it's just going to be taxed in accordance with your marginal tax rate. And it's one of those things where it is, but it isn't. So if you've incurred that income, then great, you will be taxed on it. But hypothetically, if you owned a property and it increased massively in value, you're not going to be taxed on that because you haven't actually realized that increase. So when I say realized or I say, I think I say this a lot on the podcast, I'll say like, you haven't realized that gain or you haven't crystallized that gain. What I'm talking about is actually that money is not in your bank account. You didn't actually receive that.

That's just a hypothetical. If you sold that asset, it would be worth more money. So you're not paying tax on it now, but you will pay tax on it if you sell it. And if you sell any of your assets within a financial year, you will have to make sure that there isn't any capital gains tax to pay on that and you'll have to declare it. And my friends who have been investing in cryptocurrency recently, you absolutely have to pay tax on that as well. So, what about dividends? So, dividends are going to be a part of your income. So, your income is going to be taxed in line with your marginal tax rate. And when we say marginal tax rate,

just to clarify, is that coming back to the tax brackets that we were talking about earlier? So, your marginal tax rate is that graph that essentially says, hey, if you earn between X and why you have to pay X on tax. I think we say this a lot, but people always say, well, what's my marginal tax rate? That's what bucket you fall into for how much tax you have to pay. And if you end up with this massive, epic investment portfolio, which we obviously all dream of, and you're making a hundred grand a year in dividends, then that is going to become part of your marginal tax bracket, unless you have it in a trust or there's a completely separate structure at play there. So I just want to say that, but if you own them in your own name,

then yes it will become part of your own income because you've essentially purchased an income for yourself and you have to pay tax on that. Obviously this is going to be really dependent on your age and what stage of life you're at and how all of that works as well but for 99.95% of our listeners it is going to mean that you will pay tax on it. So also while we're talking about marginal tax brackets and I mentioned CGT so CGT is capital gains tax and that's essentially a tax that you need to pay when the asset that you have just sold increased significantly in price. So say you bought a cryptocurrency asset for like $5 and then it's worth $5 million. You're going to have to pay tax on the amount that it increased by. You don't just get to take the profit and

run away. But something that people don't seem to have comprehended because I feel like this whole cryptocurrency investor world is very online at the moment and very topical to talk about. And whilst I think I need to be incredibly clear about the fact that I don't support our community purchasing crypto like you do you boo boo like go and buy it if that aligns to your values I just want to be really clear that I don't think it is the safest asset to be purchasing especially as a first asset but if you're classed as a crypto investor I feel like so many of us have forgotten to take tax into consideration but you will be taxed on any capital gains that are a result of your crypto investing. And if you hold any asset for more than 12 months, you could be eligible for

a 50% CGT discount. And that is something that people are forgetting at the moment. They're, you know, buying and selling these cryptocurrency assets like within a month. You're going to have massive CGT issues potentially. If you bought an asset one month and then sold it two months later, you're going to end up having to pay a lot of CGT on it because the government actually wants you to buy assets for the long term to support retirement. So, they will give you discounts on holding it for a longer period of time. So, if you've been doing that this year, I definitely recommend jumping online. There is actually an entire blog on it from last year on the ATO website. Super helpful. Alrighty, last thing to touch on, in terms of getting organized for the next

financial year, especially for our side hustlers and freelancers, how can we stay on top of things? How do you manage it? What would you suggest? I would suggest keeping track of all of your receipts and all of the things that you you know might forget about it might be really easy to go oh great I incurred this you know laundry fee for my uniform and you forget about it six months later when tax time comes so I definitely recommend having that album on your phone of all the pictures of the receipts that you've been taking photos of if you want you can download the ATO app which will really help you actually keep track of what's going on and they're a little bit more clear as I said I like to have it on my phone because I like a little bit more flexibility

and to be honest I didn't want another app but keeping track of it's really helpful keeping a spreadsheet is also really helpful because it's one of those things where you can kind of put in your income and all of the things that you want to claim so when tax time comes you've got everything in one location but at the end of the day whatever works for you to be honest everyone does it differently like you do it differently to me I'm sure Tony does it differently as well and like we aren't all one size fits all and while we're on it if you do have multiple income streams it's really important to keep track of all of those. One of the easiest ways to keep track of your income in total is actually just to wait till your group certificates come out. I think that

people have this mad dash on June 30th slash July 1. They're like, oh my gosh, I have to get my tax in right now because either they feel stressed about it or they just really want their discount. But more often than not, it's not the priority. And I'm not saying don't do your tax, absolutely do your tax, but wait until you've got your group certificates from your employer because they'll tell you exactly how much income they paid you. And if you've got multiple employers, wait until you have all of those group certificates so that you can actually submit your tax return and know with clarity that's what it is. And given the ATO has, I would say, you know, progressed with leaps and bounds over the last few years, those group certificates are actually usually visible already

on your tax platform. So more often than not, you can just log into your tax platform online and see where they're at and make sure that they're right. But the biggest tip I would have is just keep track of all those incomes and make sure that when you do get a group certificate, just don't take it as gospel. Just double check it and be like, okay, cool. Is this actually what I earned? Do I feel comfortable with this? Does this make sense? Because you don't want to have a mistake come up and you had just accepted your group certificate for what it was. And if you're a sole trader or side hustler, maybe keep track of it in a spreadsheet, keep a hold of any invoices you send out because you're not going to have a group certificate sent to you. That's your job.

Absolutely. And if you're a sole trader or a side hustler, you usually have something like MYOB that keeps track of it for you. So definitely keep on top of that, but different horses for different courses. But at the end of the day, the summary of this is keep track of it. Don't stress too much and make sure that when you are claiming things, you are only claiming things that you are actually eligible to claim, my friends. Awesome. So thank you for wrapping the key takeaways for me. One more thing that I wanted to point out was not only are accountants helpful, but they are also tax deductible. Money wins. Exactly right. If you use an accountant this financial year, you'll be able to claim their fee in your following tax return

the next financial year. Absolute money win. Huge. But that is all we have time for today. So just before we head off, we'd like to acknowledge and pay respect to Australia's Aboriginal and Torres Strait Islander peoples. They're the traditional custodians of the lands, the waterways

and the skies all across Australia. We thank you for sharing and for caring for the land on which we are able to learn. We pay our respects to Elders past and present and we share our friendship and our kindness. The advice shared on Shiz on the Money is general in nature and does not consider your individual circumstances. Shiz on the Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. And we promise Victoria Devine is an authorised representative of Australian Pacific Funds Management, Proprietary Limited, ABN 34132463257, AFSL 339151.

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