A lot of young people have limited knowledge about income tax and how to prepare their first tax return. Accessing the right information is critical for getting this task completed accurately.
The Australian Taxation Office, simply called the ATO, manages all tax matters. This is the government body that issues your Tax File Number (TFN).
Lodging Your Income Tax Return
There are a number of options for completing your income tax return. You can complete your tax return online, through myTax, you can get help to complete your tax online through the ATO Tax Help Program or you can use a tax agent. A tax agent will charge you a fee for this service. Tax agent charges are tax deductible.
The following video gives a quick over view of the myTax online return option. myTax is simple, easy and safe to use. You will need a myGov Account to use myTax.
There are a number of things you will need to lodge your return, whether you are getting support from the ATO Tax Help Program or you are lodging online through myTax on your own. These include:
- A myGov account, linked to the ATO, including your user ID and password
- Your bank account details including your BSB (Bank-State-Branch six digit number) and account number
- Your Tax File Number (this is also recorded on your payment summary)
- Your Payment Summary or Summaries. These are sometimes referred to as income statements or Group Certificates and include statements from Centrelink.
- All your receipts for the tax deductions you are seeking including receipts for gifts, donations and work-related expenses
- Details of any child support payments you have made
- Details of any losses made on investments including losses on shares, investment funds or rental properties, these are net losses (income less expenses)
- If you had a spouse, you will need details of their taxable income
- The Tax-Help program will also require an original or amended notice of assessment from any one of the last five years.
myTax works on almost any device that is connected to the internet, meaning you can lodge your tax return from a computer, smartphone or tablet - anywhere, anytime. You can access it through your myGov account or the ATO app via your smart phone or tablet.
The deadline for lodging online is 31st October.
Understanding Tax Deductions
The tax that you pay is based on how much you earn, known as your taxable income. There are certain items that reduce your taxable income, called deductions, which reduce the amount of tax you need to pay. It is important to understand that what you can claim will vary based on your occupation and the sources of your income.
You taxable income will be the sum of all your sources of income (salary or wages, interest on bank accounts, investment returns, rental income, Centrelink payments or any other source of income) less your deductions, the costs of earning this income.
Deductions you can claim depend largely on your occupation and personal circumstances, but include the following broad areas:
- vehicle and travel expenses
- clothing and dry-cleaning
- gifts and donations
- home office expenses
- interest dividends and other investment income deductions
- self-education expenses
- tools, equipment and other assets
- other expenses incurred to generate income
More information on these deductions can be found at the ATO website
The Australian tax system relies on the accuracy of what you declare and claim on your tax return. This means you need to keep accurate records of your income and claimed deductions. If you have simple tax affairs you will need to keep these records for a minimum of two years from lodgement. You may need to keep your records for up to five years if you tax return is more complex. The ATO has more information on Keeping Your Records.
The myTax app can simplify records keeping and understanding your deductions so it is worth exploring the benefits of using this tool. The ATO has a useful video on How to add and review deductions in myTax that is worth exploring. The myTax app has built-in support for identifying deductions.
The ATO has a series of videos on the use of the deductions tool in the myTax app which can simplify the process of keeping records of your deductions.
Need Help With Your Tax Return?
If you are not using a tax agent and need help with your tax return, you can use the Tax Help Program. To be eligible, you need to earn less than $60,000 per year and have a simple tax return.
This service is available from July to October, and they will help you to lodge online using myTax, the online tax return service. You can call 13 28 61 to make an appointment for Tax Help, or contact your local Neighbourhood Centre as many deliver the Tax-Help Program.
If you are lodging with a Tax Agent, you will also require the items noted in the list above. There are many local tax agents and who you choose will probably come down to word of mouth recommendations. Ask you parents, colleagues or other contacts about who they use and choose an agent that is highly recommended. you will be charged a fee to use an agent and this will vary from agent to agent and the complexity of you return.