Is it the first time that you are filing a tax return? If yes, you can naturally get stressed and confused because completing the tax return is itself tiring. If you have just passed out of your university and got your first job or just arrived in Australia, you should read this guide to know the details of a tax return.
Here, we have discussed certain factors involved in the tax return process, the process of tax return like the timings to lodge returns, the actual meaning of tax-free threshold, deadlines, and several other aspects.
You will need to lodge the tax return if you satisfy the following conditions.
You are a resident of Australia, and your total assessable income crosses the tax-free threshold of $18200 for the financial year.
You have paid the PAYG (Pay As You Go) Instalment Tax regardless of the income.
You are operating a business regardless of loss or profit.
You are a resident taxpayer and have had withheld tax from your earnings, under $18200.
The Commissioner has asked you to submit a tax return. Note that you have to lodge a full tax return even if you have no assessable income.
If you are a resident minor (aged under 18) and have received income from distributions more than $416 or dividends and have tax withheld or franking credits attached, you also need to lodge the return.
If you do not file the return for a specific year, the Australian Taxation Office will formally send you a request.
The first $18200 of the yearly earnings of an Australian resident is free on tax, so this amount is called the tax-free threshold. This threshold can be used to minimize the tax withheld amount from the payment amount during the financial year.
At the start of your new job, the company will provide you with a TFN declaration. TFN stands for Tax File Number. However, if you are a sole trader business person, you will get a tax-free threshold for your earnings and need to pay only the income tax at specific individual income rates.
The tax-free threshold of $18200 is equivalent to $350/week, $700/fortnight, and $1517/month. If your assessable income crosses this limit, you will need to pay tax on any amount of earnings that are above $18200.
But what if you are employed in two job positions simultaneously? In that case, you can claim the tax-free threshold from the employer that gives you a higher salary. The second payer will need to withhold the tax at the ‘no tax-free threshold’ rate.
You have to lodge the tax at any time from 1 July to 31 October every year. In some cases, the authority may grant you extensions, but for that, you should not forget to forward a written notice to the Commissioner before the last date of tax return, i.e. 31 October.
Most tax return agents can get this extension beyond 31 October for their clients listed as taxpayers with the Australian Taxation Office (ATO). The date can be extended up to 15 May of the following year. So, for lodging the return, you can contact any experienced tax return agent and discuss the due date with them.
There are several tax return agencies in Australia, and you can contact any of them to prepare your tax return because doing taxes for the first time is tough. After booking an appointment with them, you can discuss your earnings, potential offsets, and deductions with any tax consultant.
When the tax return is prepared to lodge, the tax consultant will examine the payment options, make a final check of the whole thing, and submit it to the Taxation Department. It takes about two weeks for the ATO to send the applicant a Notice of Assessment. This document confirms the lodgement, and subsequently, the refund is processed. The total tax amount will be directly credited to the bank account.
While claiming for work-related cost deductions, you should consider several factors. First of all, you should note that tax deductions can be claimed for only those costs that are related to your office job and not any private expenses.
For example, if you have purchased an office uniform or spent money in business education or travel, and all are intended for your business purpose, you can claim these costs. If you are confused about what to claim, you can consult any tax agent.
If you want to claim more than $300 for work-related costs, you must provide proper written evidence in support of the total claim. All the necessary documents should be kept for at least 5 years from the tax return lodgement date. Sometimes, the required period may be longer. You should keep all the invoices, receipts, and other similar documents. These documents should include information like purchase date, list of purchased items, the value of an item, supplier’s name, and the date of preparation of the documents.
The documents may also include receipts for deductions that are claimed, payment summaries issued by the payers, credit card and bank account statements, and statements from the financial institution, where the earned interest is mentioned. You can look at the formal checklist of tax returns on any website.
You can lodge your tax return on the Online Tax Express. As you are doing it for the first time, it will be better to hire a professional tax agent who can lodge it online on your behalf. Even if you are not sure what you can claim and what you cannot, you can just give them the receipts, and they will include all the claimable deductions in them.
The most significant benefit of hiring a professional is that they will always discuss the individual situations and ensure you get the most return benefits. You can surely get in touch with the team at Palladium Financial Group, for the best suggestions and guidance.