What is an individual tax return in Australia?

By Kaleem Ulah

June 19, 2024

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Tax can be hard to understand if you don't know much about budgeting, especially since it changes based on job and income. On top of that, there aren't always clear directions to help you out when it's tax time. That being said, what do you need to know to file a tax return? Australia has a tax system where the more money you make, the more tax you pay. Your tax money supports public services and goods like health care and community services, public education, national defence, and building things like roads and trains.

Everyone who makes taxable income has to pay income tax, which is a tax on all kinds of income. This includes the money you make from your job, business, and any investments, like the interest you earn on your bank account. People with more than one job and different types of taxable income must report all of their income. In this article, we will delve into what individual tax return is in Australia and everything you need to know.

What is Tax?

A tax is a mandatory financial charge or other type of levy put on a user (a person or a business) by the government to pay for government spending and other public expenses. Tax compliance includes actions taken by the government and people that ensure people pay the right amount of tax at the right time and get the right tax breaks, refunds, and other benefits. In Australia and other places on Earth, it is against the law to not pay your taxes on time (non-compliance) or to avoid or fight against taxes. Not many people know that the first known taxes took place in Egypt between 3000 BC and 2800 BC.

What is an Individual Tax Return?

In Australia, people file individual tax returns yearly with the Australian Taxation Office (ATO) to report their income, deductions, and other important financial information. People usually file these forms online through the ATO's platform or a registered tax agent. The tax year in Australia is from July 1st to June 30. Usually, the last day to file tax forms is October 31 of the following year, but there are times when you can get extra time.

The ATO can figure out how much income tax each taxpayer owes based on the information they get from individual tax forms. For example, this includes income from jobs, stocks, rental properties, and businesses and tax breaks for costs necessary to make that income. Depending on their situation, taxpayers may also be able to get different tax breaks and refunds. It is very important to be accurate and thorough when filling out tax returns to ensure you follow Australian tax rules and avoid penalties or audits by the ATO.

How much Tax do People have to Pay?

The amount of tax a person has to pay the Australian government depends on their position, but it is based on how much money they made during the financial year after all legal tax deductions were taken out. The tax you must pay is also based on a percentage of your earned income. This percentage goes up as your income does because it is based on a sliding scale. The following table shows Australia's current personal income tax levels for 2024/25. This should help you determine what percentage tax rate you might be subject to based on your income.

Taxable income Tax on this income Marginal tax rate
$0–$18,200 Nil 0%
$18,201–$45,000 19c for each $1 over $18,200 19%
$45,001–$120,000 $5,092 plus 32.5c for each $1 over $45,000 32.50%
$120,001–$180,000 $29,467 plus 37c for each $1 over $120,000 37%
$180,001 and over $51,667 plus 45c for each $1 over $180,000 45%

Filing your Return

You can lodge your tax return any time after June 30, but the last day to self-lodge is October 31, 2024. You can file your taxes independently, but it's best to go through a tax preparer like The Kalculators to ensure nothing is missed and that you get the best return possible on time. Ensure you have all your important documents before you come in for your appointment or lodge online. This will make the process go as smoothly as possible. Putting away important bills, receipts, and papers all year will save you a lot of time when it's time to do your taxes. 

Also, make sure that all of your information is correct. You need to tell the ATO about any changes, like if you've moved or changed your name. This mistake can cause your tax return to be held up for weeks or fined. It's important to know your tax obligations if you're retired or have access to your super fund. Tax obligations for people of different ages vary regarding taking money out of their retirement accounts.

Reasons you should Lodge

Every time you get paid, you must look at your income to see if you need to file a tax return. You may need to file a tax return if any of the following apply:

  • having any tax taken out of the money you get
  • did business abroad and made at least $1
  • get or pay child support
  • had money from a business or an investment
  • are leaving Australia and have a loan to help with school or training.

What kinds of Papers do you Need to Send with your Tax Return?

To properly file your tax return, you should have the following items on hand, but this list is not exhaustive:

  • The number of your social security;
  • Give the ATO information about your bank account so that they know where to send your refunds;
  • Any statements or summaries of your income that your bosses have given you;
  • Details about payments from Centrelink (Services Australia) for help and relief programmes;
  • Information about any other ways you have made money, like businesses, properties, stocks, or stockholdings;
  • Bring in bills or papers for the expenses you want to deduct from your tax return;
  • Any details you may have about a private health insurance plan;
  • If you have given money to charity, the records for those gifts.

Keep in mind that by the end of July, most of the information from your companies, banks, health funds, and other third parties will already be filled in for you if you file your tax return using myTax, which you can get from the myGov website and the ATO app.

How To Maximise Your Tax Return

How To Maximise Your Tax Return

1. Spend when itemising

If you plan to itemise in any given year, putting as much of your spending as possible in tax-deductible areas makes sense. It's not a good idea to spend money just to get a tax break, but if you've been putting off making certain purchases, it makes more sense to do so in a year when you can itemise. You can get more out of your deductions if you spend that money in a year when you're already over the medical deduction level. This is true if you've been putting off certain medical treatments.

2. Have proof 

We've all seen those annoying receipts, but you must keep them if you buy something for work, even if it's just for fun. Another important thing to note is that you don't need receipts for work-related costs that don't add up to $300. You may not need a ticket when you spend up to $300, but you must have spent that money on something related to your job; you can't just claim $300.

3. Donate money to charity

Giving to a good cause will make you feel good about helping and may also help you with your taxes. If you give a lot to charity, some may send you a statement at the end of the year, but keeping track of your donations yourself is also a good idea. If you want to lower your adjusted gross income by giving to charity, don't forget to list each exclusion separately. It won't change your tax return if you claim a standard deduction for charity donations.

Most of the time, the most you can deduct is 50% of your adjusted gross income, which must go to a qualifying organisation. You probably should only take this benefit if you make big donations, but checking with a tax expert is always a good idea.

4. Claim using the internet, phone, and pay TV 

Most people would use at least one of these services for work over the year. To get a tax credit, you will need to keep track of how much you spent and the dates of the expenses to figure out how much of the cost was related to work. You should keep a record for one month of the year and write down how much of the service you use for work and fun.

5. Talk to a professional

You shouldn't think you know about all the tax credits and deductions. Tax laws at the federal and state levels are not the same. Talk to a tax expert who can help you get the most out of your credits and benefits. You may already know some things, but getting a second opinion from someone working to get you the most tax breaks and credits  is good.

Conclusion

In conclusion, individual tax returns are an important part of Australia's tax system because they are used to figure out how much income tax each person owes. Filing tax returns correctly and on time helps ensure that tax laws are followed and supports the running of important public services and structures. To get through the complicated world of taxes, taxpayers must know what they need to do, use the available tools, and ask for help when needed. People whose tax obligations are carefully met add to the country's overall economic health, creating a fair and equal society for all Australians.

Australians can also speed up and ensure the accuracy of their tax returns with the help of The Kalculators, a reputable accounting and tax company. Taxpayers can easily navigate complicated financial details with The Kalculators' expert help. The Kalculators offers customised solutions to simplify tax filing, whether figuring out income, finding allowable benefits, or getting the most out of tax offsets. Take charge of your finances right now and work with The Kalculators to file your tax return quickly and confidently.

Frequently Asked Questions

What happens if I miss the deadline for filing my tax return?

If you miss the deadline, you may face penalties from the Australian Taxation Office (ATO). It's essential to file your tax return on time or request an extension if you anticipate difficulty meeting the deadline.

Can I file my tax return online?

You can file your tax return online using the ATO's online platform. Many taxpayers find this method convenient and efficient. Alternatively, you can engage a registered tax agent to assist you with filing your return. Check out A Step-By-Step Guide To Filing Your Tax Returns In Australia.

What documents do I need to prepare before filing my tax return?

You will typically need documents such as payment summaries from your employer, statements of interest earned from financial institutions, receipts for deductible expenses, and other relevant financial records.

How long does it take to receive my tax refund after filing my return?

The processing time for tax refunds can vary, but most refunds are issued within a few weeks of lodging your tax return. You can check the status of your refund through the ATO's online services.

What should I do if I'm unsure how to complete my tax return?

If you're uncertain about any aspect of your tax return, you should seek assistance from a registered tax agent or utilise online resources provided by the ATO. Additionally, The Kalculators offers expert guidance and support to help individuals confidently navigate the tax filing process.

Can I claim deductions for expenses incurred in earning my income?

Yes, you may be eligible to claim deductions for work-related expenses, self-education expenses, charitable donations, and other eligible expenses incurred in earning your income. However, you must meet the ATO's requirements for claiming deductions.

What should I do if I receive a tax assessment notice from the ATO?

If you receive a tax assessment notice, carefully review it to ensure accurate information. If you believe there is an error or discrepancy, you can contact the ATO for clarification or appeal the assessment if necessary. It's crucial to address any issues promptly to avoid potential penalties or further complications.

 

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About the Author / By Kaleem Ulah

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Kaleem is CEO & Author at "The Kalculators". With more than 10 years of experience in financial services, He built Kalculators to transform your financial challenges into strategic triumphs!

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