STEP 3: Personalise Return

Author

Benedict Thekkel

Personalise Return

Understanding “Personalise Your Return”

This step customizes your tax return based on your specific circumstances. The ATO uses your selections to: - Show only relevant sections in Step 4 (Prepare Return) - Pre-fill data from employers, banks, and government agencies - Calculate automatic offsets (LITO, SAPTO, etc.)

Key Principle: Self-Assessment

You’re responsible for declaring ALL income and claiming only valid deductions, even if not pre-filled.

1️⃣ Basic Information

Residency Status

Question: Were you an Australian resident for tax purposes from 1 July 2024 to 30 June 2025?

Why it matters: - Residents: Taxed on worldwide income with tax-free threshold ($18,200) - Non-residents: Taxed from first dollar, no tax-free threshold

Common resident indicators: - Live in Australia permanently - Australian citizen/PR holder living here - Stayed 183+ days in Australia

Select: ✅ Yes (if you lived in Australia all year)

Spouse Status

Question: Did you have a spouse at any time between 1 July 2024 and 30 June 2025?

Why it matters: - Affects Medicare Levy Surcharge calculations - Enables spouse super contribution offset - May affect family tax benefits

Spouse definition: Married or de facto partner (including same-sex)

Select: Based on your relationship status

2️⃣ Income Categories

💼 Employment Income

Select if: You received salary, wages, or government payments

Includes: - ✅ Salary, wages, allowances, tips, bonuses (including lump sum payments) - Regular pay from employer (pre-filled from income statements) - Allowances: car, travel, meal, tool, laundry allowances - Bonuses and commissions

  • ⬜ Australian Government payments
    • JobSeeker, Youth Allowance, Austudy
    • Age Pension, Disability Support Pension
    • Parenting Payment, Carer Payment
  • ⬜ Employment termination payments (ETP)
    • Redundancy payments
    • Golden handshakes
    • Early retirement schemes
  • ⬜ Foreign employment income
    • Income from overseas employment (shown on payment summary)
  • ⬜ First Home Super Saver (FHSS) scheme
    • Voluntary super contributions released to buy first home

Typical selection: ✅ Salary, wages, if you were employed at any point in the year

🏦 Superannuation & Annuities

Select if: You received payments from super funds or annuities

Includes: - Super pension payments - Annuity payments - Transition to retirement income streams

Typical selection: ⬜ No, while you are still accumulating rather than drawing a pension

💰 Investment Income

Select if: You had interest, dividends, rent, or capital gains

Sub-options:

Interest

  • Bank account interest (pre-filled)
  • Term deposit interest
  • Bonds and debentures

Dividends

  • Australian company dividends
  • Franked and unfranked dividends
  • Dividend reinvestment plans

Rent (Australian properties)

  • Residential rental income
  • Commercial rental income
  • Can claim expenses: rates, repairs, interest, depreciation

Capital Gains/Losses

  • Select if: Sold shares, property, crypto, or other assets
  • Not from managed funds (that’s a separate category)
  • Can offset capital losses against capital gains

Unapplied net capital losses

  • Select if: You have capital losses from prior years to carry forward
  • But no CGT event this year

Typical selection: ✅ Interest, since almost any bank account earns some

📊 Managed Funds & Trusts

Select if: You received distributions from: - Managed investment funds - Unit trusts - Family trusts - Distributions that include capital gains or foreign income

Typical selection: Based on your broker holdings. Check each broker’s annual tax statement

🏢 Business & Personal Services Income

Select if: You’re a sole trader, contractor, or in partnership

IMPORTANT DISTINCTION:

Personal Services Income (PSI)

Select if: - You provide mainly YOUR LABOR/SKILLS - Income mainly from your personal efforts - Examples: IT consulting, trade work, professional services - Typical situation: ✅ YES for skills-based contracting, where the client is paying for your own labour

Rules: - Stricter deduction rules - Must pass PSI tests (Results Test, 80% Rule, etc.) - Labor hire payments go here

Business Income or Loss

Select if: - You sell products or services - Have employees or significant assets - Generate income from business structure, not just your labor - Examples: Running a shop, manufacturing, business with staff

Typical selection: ✅ Personal services income, for skills-based contracting work

Sub-options: - ⬜ Partnerships - ⬜ Net farm management deposits or repayments

🌏 Foreign Income

Select if: You had income from outside Australia: - Foreign employment - Foreign rental property - Foreign dividends or interest - Foreign business income

Typical selection: ⬜ No, unless you have overseas income

🔄 Other Income

Select if: You had income not listed above

Includes: - Employee share schemes - Sharing economy income (Uber, Airbnb, TaskRabbit) - Cryptocurrency trading - Jury duty payments - Prizes from work-related competitions

Your selection: Based on whether you have these income types

3️⃣ Deductions

🎁 Gifts, Donations, Interest, Dividends & Tax Affairs

Select if: You made donations or have tax management costs

Includes:

Gifts & Donations

  • Must be to registered DGR (Deductible Gift Recipient)
  • $2+ requires receipt
  • Political donations have separate rules

Interest on Investments

  • Interest on loans to buy shares/property
  • Margin lending interest
  • Only deductible if investment produces assessable income

Dividends

  • Deduction for franking credit adjustments
  • Uncommon for most taxpayers

Cost of Managing Tax Affairs

  • Tax agent fees
  • Software subscriptions (e.g., Sharesight)
  • ATO interest charges
  • Your items: Could include accounting software

Typical selection: ✅ Yes, if you paid an agent or for tax software

🛡️ Income Protection Insurance

Select if: You paid premiums for income protection insurance

What qualifies: - Insurance that replaces income if you can’t work - Paid from your own money (not super fund)

What doesn’t qualify: - Life insurance - Trauma insurance - Total & Permanent Disability (TPD)

Your selection: Based on whether you have this insurance

📋 Other Deductions

Select if: You have deductions not covered above

Includes: - Election expenses (for union/company positions) - Interest on money borrowed to pay existing tax debt - Legal fees for tax matters - Certain Australian film industry deductions

Your selection: ⬜ Unlikely for most employees

📉 Tax Losses from Earlier Years

Select if: You have business losses from previous years

Rules: - Can offset against current year income - Must be from actual business activity - Specific carry-forward rules apply

Your selection: ⬜ No (not applicable for employment/PSI in first year)

🎯 Tax Offsets or Adjustments

Select if: You’re claiming specific offsets

Common offsets (automatically calculated): - ✅ Low Income Tax Offset (LITO): Auto-calculated if income <$66,667 - ✅ Medicare Levy Reduction: Auto-calculated if applicable - ⬜ Seniors & Pensioners Tax Offset (SAPTO): Age pension age

Offsets you might claim: - Spouse super contribution offset - Zone/overseas forces offset - Private health insurance rebate adjustment

Your selection: Most offsets are automatic; select if claiming specific offsets

4️⃣ Important Notes

💡 Sharing Economy Income

Income from digital platforms is assessable: - Ride-share (Uber, DiDi) - Short-term accommodation (Airbnb) - Task services (Airtasker, TaskRabbit) - Delivery services (Uber Eats, DoorDash)

Where to report: - Employment/PSI: If labor-based (driving, tasks) - Business: If operating as a business - Other income: One-off or irregular

💵 Cash Income

CRITICAL: Cash payments MUST be declared - Just because you’re paid in cash doesn’t make it tax-free - The ATO has data-matching programs - Penalties apply for non-disclosure

🏥 Automatic Inclusions

These appear automatically in Step 4: - Medicare Levy (2% of taxable income) - Medicare Levy Surcharge (if high income, no private health insurance) - Private Health Insurance Statement (pre-filled) - Low Income Tax Offset (auto-calculated)

🔍 Pre-Fill Data Sources

The ATO receives data from: - Employers: Salary, wages, PAYG withheld - Banks: Interest payments - Share registries: Dividend payments - Centrelink: Government payments - Health funds: Private health insurance - Super funds: Contributions and payments

Timing: Data may take weeks after June 30 to appear

⚠️ Can’t Remove Pre-Filled Selections

If a checkbox is locked (⚠️), it means: - Data has been pre-filled by ATO - Or you entered data in a previous step - Delete the data in Step 4 if incorrect

📝 Worked example: one complete selection set

The dictionary below is an illustrative selection set for the profile used throughout these notebooks: a part-time employee who also does some skills-based contracting and holds shares. No real amounts appear in it. Substitute your own circumstances.

The real selections for this household are worked out in p_02_my_tax_2024-25.ipynb, which is not published.

# Illustrative myTax "Personalise your return" selection set.
# Employee + skills-based contractor + share investor. No real figures.

selections = {
    "basic_info": {
        "australian_resident": True,
        "reason": "Lived and worked in Australia for the full year",
        "had_spouse": False,
    },

    "income_categories": {
        "salary_wages": {
            "selected": True,
            "reason": "Employed for part of the year, so an income statement will pre-fill",
            "sub_items": [
                "Salary, wages, allowances (pre-filled from the employer)",
                "Government payments (not applicable)",
                "Employment termination payments (not applicable)",
                "Foreign employment income (not applicable)",
            ],
        },
        "superannuation": {
            "selected": False,
            "reason": "Accumulating super, not drawing a pension",
        },
        "investment_income": {
            "selected": True,
            "reason": "Bank interest and dividends both need declaring",
            "sub_items": [
                "Interest from bank accounts",
                "Dividends, including franking credits",
                "Capital gains or losses, if any shares were sold",
            ],
        },
        "managed_funds": {
            "selected": True,
            "reason": "ETF distributions arrive as managed fund income, not as dividends",
            "action_required": "Get the annual tax statement from each broker or fund",
        },
        "business_psi": {
            "selected": True,
            "reason": "Contracting income is Personal Services Income",
            "type": "Personal Services Income (PSI)",
            "sub_items": [
                "Personal services income",
                "Business income or loss (not applicable to skills-based contracting)",
            ],
        },
        "foreign_income": {"selected": False, "reason": "No overseas income"},
        "other_income": {"selected": False, "reason": "No share schemes or gig income"},
    },

    "deductions": {
        "work_related": {
            "selected": True,
            "reason": "Working from home hours, work software, and equipment",
            "items": [
                "Working from home, fixed rate method",
                "Work-related software subscriptions, apportioned for private use",
                "Equipment: immediate deduction under $300, depreciated above it",
            ],
        },
        "gifts_tax_affairs": {
            "selected": True,
            "reason": "Cost of managing tax affairs is deductible",
            "items": ["Cost of managing tax affairs", "Deductible gifts and donations, if any"],
        },
        "income_protection": {
            "selected": False,
            "reason": "Only select this if the policy is held outside super",
        },
        "other_deductions": {"selected": False, "reason": "None applicable"},
    },

    "offsets_losses": {
        "tax_losses": {"selected": False, "reason": "No prior year losses carried forward"},
        "offsets": {
            "auto_calculated": [
                "Low Income Tax Offset (LITO), applied automatically",
                "Medicare levy, calculated automatically",
                "Franking credits, applied as a refundable offset",
            ],
            "manual_claim": [],
        },
    },
}


def show(selections):
    """Print the selection set the way the myTax screen groups it."""
    print("=" * 70)
    print("ILLUSTRATIVE PERSONALISE-YOUR-RETURN SELECTIONS")
    print("=" * 70)

    basic = selections["basic_info"]
    print("\nBASIC INFORMATION")
    print(f"  Australian resident: {'yes' if basic['australian_resident'] else 'no'}")
    print(f"  Had a spouse:        {'yes' if basic['had_spouse'] else 'no'}")

    for heading, key in [("INCOME", "income_categories"), ("DEDUCTIONS", "deductions")]:
        print(f"\n{heading}")
        for name, details in selections[key].items():
            mark = "[x]" if details["selected"] else "[ ]"
            print(f"  {mark} {name.replace('_', ' ').title()}")
            print(f"        {details['reason']}")

    print("\nAUTOMATIC OFFSETS")
    for offset in selections["offsets_losses"]["offsets"]["auto_calculated"]:
        print(f"  - {offset}")

    print("\n" + "=" * 70)
    print("BEFORE LODGING")
    print("=" * 70)
    for n, item in enumerate([
        "Get the annual tax statement from every broker and fund",
        "Check the pre-filled bank interest against your own statements",
        "Total the working-from-home hours log for the whole year",
        "Collect receipts for every subscription and equipment purchase claimed",
        "Confirm residency and spouse status, which drive the Medicare levy",
    ], 1):
        print(f"  {n}. {item}")
    print("=" * 70)


show(selections)

🎓 Key Concepts Explained

Personal Services Income (PSI) vs Business Income

This is one of the most confusing distinctions. Here’s how to know:

You Have PSI If:

  • Income is mainly from YOUR personal skills/labor
  • Client pays for YOU specifically (not your business)
  • Income would stop if you stopped working
  • You don’t have employees doing the work
  • Examples: IT consulting, contracting, freelance work

You Have Business Income If:

  • Income comes from business structure/assets
  • You have employees generating income
  • You sell products (not just services)
  • Business could operate without you
  • Examples: Shop, manufacturing, business with staff

Why It Matters:

  • PSI has stricter deduction rules
  • Can’t claim deductions for things like:
    • Rent for business premises (in most cases)
    • Payments to associates unless actually working
    • Superannuation for associates
  • Must pass one of the PSI tests:
    • Results Test: Paid for results, not time (best outcome)
    • Unrelated Clients Test: 80%+ from 2+ unrelated clients
    • Employment Test: Have employees
    • Business Premises Test: Separate business premises

Typical case: Skills-based contracting is PSI, because the client is buying your personal labour

Work From Home Deductions

Two methods available:

2. Actual Cost Method

What you can claim: - Actual % of running costs (electricity, gas, internet) - Phone usage (work portion only) - Depreciation on furniture/equipment - Cleaning (if dedicated work room)

Requirements: - Keep ALL receipts - Calculate work-use % - Apportion based on floor area for home costs - More record-keeping but potentially higher deduction

When to use: If your actual costs exceed fixed rate (rare)

Student Loan Repayments (HELP/HECS)

IMPORTANT: These are NOT tax deductible!

What they are: - Compulsory repayments based on income - Calculated automatically by ATO - Added to tax bill (or reduce refund)

Your situation: - Total SFSS/Student Loan withheld: $934.00 - This is a repayment, not a deduction - Already taken from your pay (like PAYG tax)

Repayment thresholds 2024-25: - Below $54,435: 0% - $54,435-$62,850: 1% - $62,851-$66,620: 2% - (increases with income)

Superannuation

Employer SGC contributions (11.5% of ordinary earnings in 2024-25): - ❌ Not your income (employer pays separately) - ❌ Not a deduction (you didn’t pay it) - ✅ Increases your super balance - ✅ May be taxed in super fund (15% contributions tax)

Voluntary super contributions: - Can make after-tax contributions - May claim as deduction if notify fund - Reduces taxable income - Super cap: $30,000/year (2024-25)

Tax Offsets vs Deductions

Deductions:

  • Reduce your taxable income
  • Value depends on tax rate
  • Example: $1,000 deduction saves:
    • $190 if in 19% bracket
    • $325 if in 32.5% bracket

Offsets:

  • Reduce your tax payable directly
  • Dollar-for-dollar reduction
  • Example: $1,000 offset saves $1,000 in tax

Common offsets: - LITO: Up to $700 (income <$66,667) - SAPTO: Seniors/pensioners - Spouse super: Contribute to spouse’s super

📊 Quick reference: what to select

Select when it applies to you

Category Select if
Australian resident You lived in Australia for the year, or meet one of the residency tests
Salary/wages You were employed at any point, even briefly
Personal services income You contracted out your own skills rather than selling a product
Interest You held any bank account that paid interest, however small
Dividends You held shares that paid a distribution, franked or not
Managed funds You held an ETF or managed fund. Distributions come through this section, not dividends
Capital gains You sold shares, crypto or property during the year
Work-related expenses You have working-from-home hours, work software, or equipment
Gifts and tax affairs You donated $2 or more to a deductible gift recipient, or paid for tax help

Check before deciding

Category What to check
Spouse Affects the Medicare levy surcharge and the spouse super offset, even if finances are separate
Private health insurance Without adequate cover above the income threshold, the surcharge applies
Income protection Deductible only if the policy is held outside super
Foreign income Includes overseas bank interest and foreign shares, not just overseas employment

Usually not applicable

Category Why not
Superannuation income Only if you are drawing a pension or lump sum, not while accumulating
Rental property Only with an actual investment property
Business income Skills-based contracting is PSI, which is a separate section
Prior year losses Only if a previous return recorded a carried-forward loss

🚀 Next steps

  1. Complete Step 3 in myTax using the selections above.
  2. Gather supporting documents: payslips, bank interest statements, broker annual tax statements, subscription and equipment receipts, and contracting invoices.
  3. Move to Step 4, Prepare Return, to enter the actual amounts.
  4. Review the pre-filled data rather than trusting it. Pre-fill can be incomplete, and self-assessment means the return is your responsibility either way.
  5. Lodge by 31 October, or register with a tax agent before that date to get their later deadline.

💡 Pro tips

  • Do not skip a category because you are unsure. Selecting it only adds the section to Step 4, and you can leave it empty.
  • Pre-fill takes weeks. Employer and bank data often does not appear until late July.
  • Keep receipts for 5 years from lodgement, and for shares, 5 years after the asset is sold.
  • Round to the nearest dollar. myTax requires whole dollars.
  • Study loan repayments are not deductions. They are compulsory repayments of a debt.
  • Verify franking credits. They are often pre-filled, but they are also often wrong or missing.
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