Completing a tax return can be extremely confusing and stressful, especially if this is your first time lodging it. However, once you lodge your tax return for the first time, it becomes easier and less complicated for the following years. So, all you need to focus on is how to lodge your first tax return correctly.
All you have to do is be a little prepared and organised, and you shall be able to get a good tax refund from the ATO or Australian Taxation office. So, here’s a guide that will help you be extra prepared for your first-ever tax return.
Do you need to lodge a tax return?
The very first question many people have in mind is whether they have to lodge a tax return. If you fit in any of the following, you are required to submit a tax return:
- You are a resident whose total assessable income is over the $18,200 tax-free threshold for an income year.
- You paid Pay As You Go Instalments last year, irrespective of your income.
- You have a business going on (irrespective of your income or loss).
- You are asked by the Commissioner to submit a return. In this case, a full tax return is required even in the absence of assessable income to report.
- You are an Australian resident taxpayer with income less than $18,200 who has had tax withheld from this income.
- You are a minor (and resident), i.e., you are under 18 years old on June 30th, and you have received income from distributions or dividends, and this amounts to a value greater than $416. Along with this, Franking credits were attached, or, in some cases, the tax was withheld.
If you meet any of the abovementioned requirements, you must lodge your tax return. If you do not do it for a specific year, the ATO or Australian Taxation Office will send you a request to lodge it.
In Australia, the first $18,200 of a person’s yearly income is tax-free and is termed a Tax-free threshold. Individuals can use this threshold to reduce the tax withheld from their pay during the year. When the taxable income goes over this threshold, one must pay income tax on the income earned above it.
What if you have more than one job? In such cases, it is suggested to claim the tax-free threshold from the employers issuing the highest wage or salary. The other payer (or payers) has to withhold tax at a non-free threshold rate.
How to lodge your tax return?
While preparing your tax return, you will need the following information:
- Your TFN or Tax File Number
- Your income statement (it is accessible from a payment summary provided by the employer or your Australian Taxation Office (ATO) online services via MyGov)
- A summary stating the interest you have received on your bank accounts
- Information related to the income you received through your investment, such as dividends, shares and managed funds
- Private health insurance statement
- Information on the child support payment
- Receipts for all the charity donations
- Receipts to prove work-related expenses
- Your BSB and account number
An income statement shows the wage or salary you were paid, how much tax the employer has taken from your salary, the superannuation amount paid into your fund and other additional payments paid to you.
Nowadays, most businesses automatically report their employee’s salaries, wages and superannuation information directly to the ATO. So, you will not need to ask the ATO to provide your income statement.
You can use the MyGov account or portal to lodge your tax return or contact a registered tax agent. In either of the case, you will be asked for the information mentioned above.
Tax deductions are claims one can make on the expenses incurred during the year. Such deductions will help you lower your overall income tax. After lodging your tax return or once your tax accountant has done it for you, you will receive a tax refund.
Here are the kind of deductions you can expect to claim:
- Car expenses
- Self-education costs
- Business expenses
- Memberships and licenses
- Phone, internet and utility costs (for those working from home)
- Journals and subscriptions
- Insurances (but not all)
Remember that you can only claim the expenses directly related to your work or job, not your personal expenses. Along with this, you will have to provide proof of the expenses.
What happens after lodging your tax return?
Once the ATO has processed your return, you will get a Notice of Assessment or NoA. In this assessment, you will know whether you need to pay money to the ATO or you are due a refund.
It would be best if you kept this NoA secure, along with the information you lodged your tax return with. In future, if the ATO questions you about your tax return, if you choose to do your tax return online or if you apply for a loan, you will need this information.
Deadlines for lodging a tax return
You should lodge your tax return as soon as possible after the new financial year begins, i.e., after July 1st. However, you must lodge it before October 31st each year.
Is there a way to extend it? Yes, you can get extensions if a written notice is forwarded to the Commissioner within this time frame. A registered tax agent can help you extend it.
Can I lodge my own tax return?
Yes, you can lodge your tax return on your own, directly to the ATO, or you can reach out to a registered tax agent to do it for you. For those unfamiliar with the Australian tax laws or have a very complicated tax situation, it is recommended to seek professional help.
What if I made a mistake in my tax return?
While lodging the tax returns, individuals are held responsible for all the information included in the tax return. So, if you find any mistake after lodging the tax return or realise that some amount was left out, you must lodge an ‘amendment’. You can use the ATO’s official website to learn more about this.
To avoid such mistakes, reach out to Clear Tax Accountants, where you will get a team of professional accountants who promise to make taxes easier for you.
Disclaimer: The information on this website is for general purposes only and should not be relied upon for making legal or other decisions. The advice provided in this article is general in nature and is not subject to the personal financial situation and needs of any individual. Clear Tax tries to keep the information accurate and up-to-date; however, you should bear in mind with changing circumstances, the accuracy and reliability of the information will not necessarily remain the same. The information is by no means a substitute for financial advice.