Tax Returns- What you need to know
You may have heard the term "Tax Return". This term is used for the similar process we have in our Home Country declaring income tax.
Everybody who works legally in Australia should file a Tax Return.
The fiscal year in Australia starts in July and finishes in June of the next year. Therefore, the period for filing your tax return is from 1st of July till31st of October.
I hold a student visa. Should I file a Tax Return?
Yes, everyone who has a Tax File Number (TFN) needs to declare tax in Australia, regardless of whether they receive a salary or not. All incomes should be declared. TFN, ABN, savings account interest, return on investments, etc.
If your income is less than $18,200, you may file a Tax Return Nil (An Exempt from Taxation declaration). However, if you had income on your ABN, even if it is less than the minimum rate, it is necessary to file a tax return to keep your ABN active. The fine for those who do not make a declaration within the deadline is random and varies from $180 for every 28 days overdue, with a maximum penalty of $ 900 per overdue tax return.
What is a TFN?
The Tax File Number is the taxpayer number consisting of 9 digits, which is issued by the ATO.
The document is mandatory if you have the intention to work legally in Australia. Once this document is issued, you will be obliged to send your income tax annually, even if your Tax Return is Nil (An Exempt from Taxation declaration).
It is very important that you know that your passport is linked to your TFN, therefore, if you have overdue tax you may have trouble when you return to your home country. If you lose this document, the only way to replace it is by contacting the ATO.
What is an ABN?
The Australian Business Number is an identification document consisting of 11 digits. You only apply for it if you are going to open a small business or work as a freelancer. In the case that you have been issued an ABN and you not are using it, it is advisable to deactivate the number proactively to facilitate a possible reactivation, if necessary.
Remember that for the issuance of an ABN you need a TFN, that is linked to your passport, therefore, if you have overdue tax you may have trouble when you return to your home country.
Will I have to pay something to the Australian Government or receive something?
The payment or rebate will depend on each specific case, although as a general rule, if you are in Australia, hold a student visa and are working mainly under TFN without exceeding the limit, you can request a rebate of the money your employer retains.
1. If you earned less than $18.200, they must refund the tax that your employer or your employers retained during the period that you worked in Australia
2. If you earned between $18.200 and $37.000, you will pay 19% only on your earnings that exceed $18.200. For example, if you earned $18.300, you will spend $100 and will have to pay 19% of this amount. In other words $19.00.
3. If you earned more than $37.000, you must pay 32,5% on every dollar that exceeds $18.200.
What do I have to declare?
The kinds of earnings you should declare are:
Employment income
Super pensions and annuities
Government payments and subsidies
Investment income (including interest, dividends, rent and capital gains tax)
Business income, partnership and trust
Foreign income
Other income - including compensation and insurance payments, discounted shares in employee participation schemes and premiums and awards.
What are deductions?
“Deductions” are what you had to buy and spend to do your job. This goes for both employees (TFN) and the self-employed (ABN).
In order for you to identify deductions, it is usually enough to apply logic. In any case, if you are in doubt, it is better to consult a specialist in accountancy.
Some examples of deductions are expenses directly related to your work, including:
Travel and vehicle expenses
Clothing, laundry and dry cleaning expenses
Home Office Expenses - For employees working from home as a result of COVID-19, we have specific information available on home office expenses
Self-education expenses
Tools, equipment and other assets
Other work-related deductions
Employees, (including casual staff), can claim work-related expenses in the year in which they are incurred. This means that if you start to work in June, but do not receive income until the next financial year, you will be able to claim deductions for work-related expenses incurred in June.
If you to hire someone to help you in your job, it is not usually possible to claim a deduction for employing them.
Is my employer deducting the right amount?
You can consult the table of taxes and verify if your employer is deducting according to the information you gave on the Tax File Number Declaration Form.
You can consult the following link: https://www.ato.gov.au/Rates/Fortnightly-tax-table/
How do I file the Tax Return?
As with income tax declaration in our home country, in Australia, you can do it by yourself or hire a tax agent to do it for you. Depending on the level of difficulty of your Tax Return.
You can apply online through the site: https://www.ato.gov.au.
Through a registered professional: In this case you will be sure that all the information will be in line with the legislation, revised annually and will optimise your rebate. The amount paid to the accountant can be debited for the next year, reducing the amount of tax paid.
YOOZ hopes to have answered any questions you may have had about this theme, and that you are a little clearer about how to file a TAX RETURN in Australia.
Should you need help, YOOZ has partnerships with accountancy companies!
*Special prices for YOOZ STUDENTS
And, of course, you can write to us with any question or request you may have. It will be a pleasure to help! #contecomyooz
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