Most Australian’s will need to lodge their tax return, regards if they work or not. The Australian Taxation Office (ATO) regards any income stream, be that from a wage, salary, bank interest, a super stream, dividends of government allowance as taxable income. The ATO uses tax returns to make sure that Australian individuals and businesses are paying the right amount of tax.
Do I Really Need To Lodge A Tax Return?
Most Australians will need to lodge a tax return – even a child if they have an income stream – however there are exceptions.
A non-lodgement advice (NLA) is a form sent to the ATO if you don’t need to lodge a tax return. This form alerts the ATO that you won’t be lodging a tax return and ensures they don’t tag you with an outstanding tax return.
You’ll need to work out if you should send a NLA to the ATO. Generally:
- if you earned under $18,200 (tax-free threshold) and didn’t pay tax, you can submit an NLA
- if you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties and you paid the correct amount of non-resident withholding tax
- if you are a working holiday maker (417 or 462 visa holder) and your taxable income for the year was less than $45,001
A tax agent can submit your details for you and work out if this is what you’ll need to do.
In most circumstances, you’ll need to lodge a tax return even if you’ve only had $1 taken from your income stream as tax withheld. You’ll need to lodge a tax return if:
- You’ve had tax withheld from any payments (such as a wage, salary, centrelink or government payment, bank interest, dividend) during the income year (1 July – 30 June)
- You’re an Australian resident and your taxable income was more than the tax-free threshold
- You’re a foreign resident and you earned more than $1 in Australia
- You’re leaving Australia forever or more than one income year
- You want to claim tax deductions
- You’re a foreign resident with a HELP/HECS debt or a training loan
- You’re a liable or recipient parent under a child support assessment and you income was $26,319 or more
When Do You Need To Lodge A Tax Return?
The time to lodge your tax return is generally between 1 July to 31 October each year. In most instances, you’ll need to lodge your tax return by the 31 October, however you can get an extension if you use a tax agent to lodge your tax return for you. The tax agent deadline is 15 May, however you’ll need to have booked your appointment before 31 October to be eligible to lodge after the tax season without incurring late fees or penalties.
The best time to lodge your tax return is from late July. Why? Information from the businesses you work for, Services Australia, banks and health insurance companies have until 14 July to upload your financial information which may not be ready before that date.
You’ll need to be marked as Tax Ready to be able to lodge your tax return properly. If you lodge too early, you might miss out on information and need to amend your tax return.
Before You Start
There’s a bit of housekeeping to do to be Tax Ready. The ATO requires your bank details so they can pay any refund directly into your nominated bank account.
Pro Tax Tip: It pays to check your bank details every year when you lodge your tax return. Wrong or out of date details will end in delays.
You’ll need a Tax File Number (TFN) to lodge your tax return. Your TFN is your personal identifier for the tax system. It’s important you keep your number a secret. In fact, there are only a few times you’ll need to give it to anyone:
- Your employer
- Your bank
- Your super fund
- Your tax agent
You should have obtained a TFN before you start work. If you don’t have one, your employer is obligated to take out your PAYG at the top marginal tax rate, which is 45% (normally reserved for income earners over $180,000)!
What Are Income Streams?
The ATO requires you to declare all of your income streams. You may earn an income from more than your salary or wage alone. Income can be earned from:
- Your employer when you’re paid to do a job, including cash payments
- Payments from government sources such as from Services Australia, grants and other government funding
- Investments, such as from shares or bank interest
- Rental income from properties
- Renting out a room in your house, ride-sharing and other side-hustles
Pro Tax Tip: You’ll need an income statement from your employer, Centrelink payment summary and bank or share dividend statement to calculate your total assessable income. Most of this income will appear automatically in late July.
Tax deductions are really expenses you’ve incurred through earning an income. They are wide and varied and largely dependent on the way you earn your income. Tax deductions are costs you can subtract from your total assessable income to reduce the tax you’re obligated to pay. This means you pay less tax.
Total income – tax deductions = total taxable income
Some examples of tax deductions you may be eligible for include the cost of tools you needed to buy to do a job; the cost of clothing you need to wear for a particular job; money you gave to a registered charity; union fees; the cost of income insurance; or advertising and marketing costs for your freelance job.
Pro Tax Tip: A tax agent will know all of your eligible tax deductions and can help you work out and reduce your tax bill.
After you lodge your tax return, the ATO will work out whether you’ve paid too much tax, in which case you’ll get a tax refund. If you’ve underpaid, you’ll end up with a tax debt and will need to pay the outstanding amount. A tax agent’s job is to reduce your taxable income. They’ve studied to know every deduction that can be claimed and will work out ways to maximise your tax return. Their fee is 100% tax deductible so you’ll know that not only are you not paying too much tax, but you’re getting the advice for free. Phone 1800 367 487 and chat with a friendly professional today.