Your life is all about firsts when you’re a teen. You get your Leaners permit. You get to study for your final exams. You might even have gotten your first job, which opens up a whole can of worms. When you get your first job, you’ll need to open a bank account, apply for a Tax File Number (TFN), and you’ll also need to lodge your first tax return.
Although lodging your tax return for the first time might seem daunting, it’s really not that hard. You just have to be a little organised. The more organised you are, the more of a tax refund you might get back from the Australian Taxation Office (ATO) when the time comes. So, let’s get you started.
Who Has To Pay Tax
Your employer will take tax from your wage or salary and send it to the ATO on your behalf. Australia has a progressive tax system, meaning that the more you earn, the higher percentage of tax you will be obligated to pay. Local, State and Federal governments use the tax collected to pay for public services, such as hospitals, schools and roads.
You won’t need to start paying tax until your gross annual wage is over $18,200, but even if you earn under that, your employer will need to take tax from your wage, which you will then claim back when you lodge your tax return. The tax your employer takes from your wage is called Pay-As-You-Go (PAYG) withholding, and you will be able to see that amount on your income summary. It’s a good idea to have your TFN, otherwise your employer will take 49% tax from your wage.
Pro Tax Tip: If you’re thinking about applying for a job or already have your first job, it’s a good idea to start the process and get your TFN. To get it, you complete an online registration form and then make an appointment at your local Australia Post Office who will complete the registration process for you.
How Much Tax Will I Have to Pay
|Taxable Income||Tax On This Income|
|$18,201–$45,000||19c for each $1 over $18,200|
|$45,001 – $120,000||$5,092 plus 32.5c for each $1 over $45,000|
|$120,001 – $180,000||$29,467 plus 37c for each $1 over $120,000|
|$180,001 and over||$51,667 plus 45c for each $1 over $180,000|
How Do I Lodge My Tax Return?
Your first tax return is most likely going to be very simple. First of all you’ll need your income statement from your employer. Nowadays, businesses automatically report all of the wages, salaries and superannuation payment directly to the ATO. You won’t need to ask the ATO for your income statement. The accountants at ITP Accounting Professionals can get all of that information for you.
An income statement shows the amount of wage or salary you were paid, the amount of tax your employer has taken from your wage, the amount of superannuation that has been paid into your fund and any additional payments your employer might have paid to you.
In order to complete your tax return and claim back as much as possible, you’ll also need to tell your tax accountant of any other payment you’ve received. This could be through:
- Interest on your bank account
- Any other jobs you may have
- Shares and dividends
- In fact, any money you have received
Don’t worry about remembering it all. An ITP tax accountant will help you go through all of your possible income streams.
What Are Tax Deductions?
Tax deductions are claims that you can make on expenses you have incurred during the year. These deductions lower your overall income tax. You will receive your tax refund once your tax accountant has lodged your tax return with the ATO.
The types of deductions you can claim are:
- Business expenses
- Car expenses
- Self-education costs
- Memberships and licenses
- Journals and subscriptions
- Internet, phone, and utility costs if you work from home
- Some insurances to name a few.
In order to claim back as many expenses as possible, the ATO asks that you prove that you incurred the expense in the form of receipts. There are three rules that you must comply when you claim your deductions:
- You must have spent your own money and not been reimbursed through your employer
- You must have already spent the money and that it directly relates to earning your income
- You must provide proof of your expenses
Pro Tax Tip: The expenses you claim must only relate directly to your job. You won’t be able to claim back any private expenses.
It’s important to keep the receipts for all of the expenses which you claim because the ATO can look back over your tax return for five years and ask to see them. Luckily, they accept electronic receipts as well as paper receipts, so if you think you might lose them, it’s a good idea to use an app that will help keep them nice and safe. You won’t have to show them to your tax accountant when you lodge your tax return, but it is a legal requirement to keep them. Even though you use a tax accountant, you’re ultimately responsible for the claims and deductions you make.
Where Do I Lodge My Tax Return
There are three ways you can lodge you tax return:
- Through your MyGov portal by yourself
- Through a direct face to face meeting, phone, email or zoom appointment to your tax accountant
- Through ITPs online tax return service
What’s the Difference?
When you lodge your tax return through MyGov, you’re on your own. There is no one there to guide you and if you don’t know everything you can claim, you might miss out of making some deductions that can save you money. Remember, the ATO wasn’t designed to minimise tax! That’s where a tax agent comes in.
Lodging your tax return through ITP, either in an interview or via our online service, you’ll have the help of a professional who will guide you through the whole process by asking you questions and work out the maximum deductions you can make. Tax appointments generally take 30 minutes, unless you have a complicated tax return which could take up to an hour.
Even when you lodge through our online service, a tax accountant will individually go through your figures and maximise your tax deductions automatically. They will then make contact with you if there are any questions. If everything is okay, they’ll email you the result, ask for your signature and then lodge your tax return directly to the ATO on your behalf. It’s a tax accountant’s job to maximise your tax deductions!
Fees charged by a tax accountant are 100% tax deductible. What does this mean? The next year, when you lodge your tax return, your tax accountant will claim their fee as a tax deduction. In fact, any costs you incur to do your tax can be claimed as a tax deduction. Not only do you get the help of a professional who will save you money, but you can fully claim their fees.
How Long Does My Tax Return Take Once It’s Lodged
Generally, if there are no issues, your tax return will take up to 10 working days for the ATO to process your refund and for it to be paid into the bank account you nominated. You may get your tax refund faster, or it may take longer and that will depend on the ATO. A tax accountant can check the progress for you if things are lagging.
When Do I Need To Lodge My Tax Return?
The tax year follows the financial year, and in Australia that is between 1 July and 30 June. You have four months to lodge your tax return following the end of the financial year, between 1 July and 30 October. If you work with a tax accountant, you’ll be able to claim a bit of extra time. In fact, up to 15 May, however you’ll need to let your tax accountant know you’ll be late and book your appointment during tax season.
If you have any questions, an ITP Tax Accountant will be more than happy to have a chat. Phone 1800 367 487 today or book online to find your closest branch.