Hi,
Trying to complete the witholding tax forms (will be calling Derek very soon…
)Looking at the forms, it looks like they calculate your total income from adding your salary plus your income from rent…is this right? If so, this will knock me up into the top tax bracket, which would be a good thing for my negative gearing – my taxable income after deductions is in the 42% bracket.
Can someone confirm this? Cheers.
you know what?? forget about it…I’ll see an accountant, I’m confusing myself too much!!
andymitchell,
The withholding tax form is only of benefit to you if your taxable income is “reduced” because of your investment. In other words, your interest, bills, depreciation etc are greater than your rent. The net loss is used to reduce your taxable income, hence reduce your tax payments. So if you end up with a “higher” taxable income, why bother lodging the form? Unless, you want to pay more tax before you have to. [blink]
yep – sorted it…I was calculating the difference from the incorrect taxable income.
I have amended my calculations and they match the figures produced by my spreadsheet perfectly (well, nearly)
the only difference is that my SS calculates the refund at 43.5% (i.e including medicare levvy) whilst the other does not…when I take the additional 1.5% into consideration, they match perfectly…!..I know, clear as mud.
The one thing is…if a taxable income is, say 124K, and their end of year bonus is 2K…does this put them in the top tax bracket?
Tax rates 2005-06
$0 – $6,000 = Nil
$6,001 – $21,600 = 15c for each $1 over $6,000
$21,601 – $63,000 = $2,340 plus 30c for each $1 over $21,600
$63,001 – $95,000 = $14,760 plus 42c for each $1 over $63,000
Over $95,000 = $28,200 plus 47c for each $1 over $95,000
The above rates do not include the Medicare levy of 1.5%The top tax bracket is for taxable income over $95000. Of course, the 47% rate is only for income in that bracket, not the total income. Same applies for all brackets. I find a LOT of people are under the misconception that they pay the tax rate of the bracket they are in on ALL of their taxable income. It’s quite funny when I hear colleagues at work panic that their backpay for a salary increase is going to be lumped together and place them in a higher tax bracket.[biggrin]
)
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