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Tax Requirement*

Tax Return Services for Under 21s and Students

Getting your first job and earning your own money is an exciting milestone in your life. You can spend your cash on whatever you’d like. Earning a wage also includes sorting out your Tax File Number, getting a bank account, getting paid superannuation and paying tax.

Persons must be under the age of 21 at time of tax return lodgement and new to ITP. Discount is only valid for those persons under 21 years of age, is employed on a wage or salary basis and single year lodgement. This discount is not valid for those persons over the age of 21 at time of tax return lodgement, is a registered sole trader, company, trust or in a partnership. Only valid at participating offices. Discount Not Valid in Northern Territory.

You can talk to your consultant prior to your appointment and they will advise what you should bring, some of which might include:

  • tax file number
  • bank details (BSB and account number) to receive any refund owed
  • Your Medicare card or number
  • PAYG Payment Summaries (previously Group Certificates)
  • Payment Summaries from Centrelink for example, Newstart, Youth Allowance, Disability Pension
  • Eligible termination payments
  • Any interest earned from bank accounts
  • Share dividend statements
  • Any money made from the sharing economy – for example, if you’re an Uber driver, or renting out your home on AirBnB or
  • Any money made on eBay or other websites
  • Any cash payments you received
  • Annual tax statements from trusts, managed investments, property and cash management trusts
  • Income and expenses from investment properties

Make sure you bring all of your receipts with you. Your tax agent will advise what you’re eligible to claim, and you may or may not be limited to. The following details should be brought to your appointment or emailed to your tax agent:

  • A motor vehicle log book or diary for car expense claims
  • Receipts from charity donations (unless you get a ticket to win something in return, those ones don’t count)
  • School building levies and library funds donations
  • Interest and fees on investment loans
  • Accountancy fees charged for previous year’s tax return
  • Income protection insurance
  • Sickness and accident insurance
  • Private health insurance annual statements outstanding
  • Out of pocket medical expenses for disability aids, aged care and attendant care only in excess of $2,377. (2019 is the last year these expenses are claimable)

You may have more than one part-time job, come tax time may be a little confusing. As an Australian resident, you may earn under $18,200 in which you don’t have to pay tax, but if you have a second job, you may earn over the threshold and will attract tax.

If you work more than one job, the ATO will look at your total combined income to work out how much tax you need to pay regardless of the amount of jobs you have. It’s best to be organised and make sure you have set aside the correct amount for tax, rather than have to pay extra at the end of the year.

Your first $18,200 of your yearly income is tax free. This is called the tax-free threshold. You will still need to claim the tax-free threshold on your primary job to reduce the amount of tax withheld if you do start to earn over $18,200 during the year.

When you start a job, your payer (employer) will give you a Tax file number declaration form to complete. Centrelink is also a payer and they will give you this form if you apply for their payments.
You tell your payer you want to claim the tax-free threshold by answering “Yes” at question 8 ‘Do you want to claim the tax-free threshold from this payer?’

It’s important to keep track of how much you earn in the year. A pay rise, even small, may tip you over the tax-free threshold. You should be sure that your employer is putting tax away for you each pay time if required, as you want to avoid a tax bill.

To earn $18,200 a year, you will need to earn $350 a week, or $700 a fortnight, or $1,517 a month. When your taxable income exceeds the tax-free threshold you pay tax on the excess.

When completing your tax file number declaration form, you should typically only claim the tax-free threshold from your primary source of income, or in other words, the job that earns you the higher salary. If you start a second job then you would answer “No” at question 8 ‘Do you want to claim the tax-free threshold from this payer?’

It’s important to know how to report your income on your second job so that you’re not caught short.

Your HECS-HELP debt repayments will take effect, in most instances, once your income exceeds the compulsory repayment threshold, even if you’re still studying and includes any unpaid HECS-HELP, FEE-HELP, VET FEE-HELP, OS-HELP, SA-HELP and VET Student Loans debts.

The ATO will automatically require you to pay back either all or some of your HELP debt through the tax system once you earn above the compulsory repayment threshold.

The compulsory repayment threshold is:

  • $51,957 for the 2018-19 income year
  • $45,881 for the 2019-20 income year

You can make a voluntary repayment to the Australian Taxation Office (ATO) at any time. Your tax agent will help you calculate how much you need to pay back.

You’ll still need to lodge your activity statements and tax returns on time, even if you can’t pay by the due date. You’ll avoid a penalty for failing to lodge on time and show the ATO that you’re aware of your obligations and doing your best to meet them. In many cases, the penalties may actually be higher than the tax you have to pay. The current penalty rate is $210 per month up to a maximum of five months. Therefore if you lodged a BAS or tax return five months after its due date, you could be up for a fine of $1,050.

Your ITP Professional can assist with setting up a tax payment plan that meets your circumstances and you can pay your debt off in instalments. Keep in mind, you may need to pay interest.

It’s never a good idea to avoid the ATO, and failing to pay tax or lodge false claims may result in fines and even jail time.

Before your appointment, Any extra superannuation contributions (including a “Notice of intention to claim” a super tax deduction from the fund)

  • Amount of HECS/HELP debt or Financial Supplement loanyou can speak with one of our professionals and they will advise what to bring in with you to help you prepare. Your appointment time will take around 30 minutes to an hour on average and the charge is 100% deductible. Your ITP tax agent will automatically claim that cost for you.

How much you are taxed depends on how much you earn. If you earn over $18,200, you’ll need to pay 19 cents per dollar in tax that you earn over $18,200. If you earn more than $37,000, you’ll enter the next tax bracket and will need to pay a higher rate of 32.5 cents per dollar you earn over $37,000. Earn over $90,001 and you’ll pay 37 cents per dollar. Over 180,001 and you pay 45 cents per dollar.

The $18,200 tax-free threshold is equivalent to:

  • $350 a week
  • $700 a fortnight
  • $1,517 a month

The good news is, that you’ll be able to claim deductions to reduce the amount of tax you’ll need to pay if you earn over the tax-free threshold. You do this in your annual tax return.

The deadline for lodging a tax return in Australia is 31 October. If you’ve booked an appointment with a tax accountant, you may have up to 15 May to lodge your tax return as tax agents are granted extension by the ATO for their clients.

If you pay tax, then the ATO will allow you to make claims on your expenses to earn your income. Claiming deductions at tax time means that you will receive money back from the ATO on the tax that you paid during the year. The more tax claims you can make, the more money you will receive back from the ATO.

Claims can be large or small, and can range from anything from laundry and cleaning expenses, the cost of work uniforms and self-education costs to larger, more complex claims such as motor vehicle and home office expenses. Many people use Tax Accountants because they can be assured that they are making all of the claims they’re entitled to in order to claim back money their employer has paid to the ATO during the year for their personal income tax.