It’s Tax Time. This means the 2015 to 2016 financial year is nearing its end. Time to get financial records in order, so individuals can lodge a tax return. To help in the process, the Australian Tax Office provides support systems to better understand how to complete a tax return.
Tax returns are needed for almost all earners in Australia. Australian Tax Office (ATO) Assistant Commissioner Graham Whyte explains who has to lodge a tax return.
Generally if you have earned over $18200 you will need to lodge a tax return, particularly if you had tax withheld
“Generally everyone who works will need to file a tax return. Generally also those people that receive the government benefits such as Centrelink payments and also from investments. Generally if you have earned over $18200 you will need to lodge a tax return, particularly if you had tax withheld. Some people earn under that amount but have tax withheld and so they need to lodge obviously to get that money back to them.”
Graham Whyte says the essential step to entering the workforce is to receive a Tax File Number, which you can apply for via the ATO website.
Tax returns can be lodged either with the help of a tax agent or through the ATO’s online tool myTax
“And that tax file number once you get a job you will need to provide that to your employer. What people can do is that if they are still waiting for their tax file number they can still start work they have a bit of time before they will need to provide that to their employer.”
Tax returns can be lodged either with the help of a tax agent or through the ATO’s online tool myTax. Graham Whyte says it’s important to make sure that your tax agent is registered.
“They could use our online product which is myTax to lodge their tax return. They could also go to a registered tax agent. If they are going to a registered tax agent, they need to make sure that person is actually registered and they can go to the taxation practitioners board website to check that.”
“A myGov account will also give you some other benefits as well. You will be able to link to other government agencies such as Centrelink and things like that. But once you have got your myGov account you will need to link to the ATO. You will need some information to if you like prove your identity. On the website there is information that will guide people. Also if you are having some difficulties you can also give us a call and we will help you.”
A tax return is a form which tracks your income tax on money received against deductions that are related to earning your income
He says there are many benefits to using myTax.
“myTax the benefit for people is that it actually pre-fills a lot of the information you need. We gather over three hundred million pieces of information from employers, banks, financial institutions, companies that pay dividends and also other informations such as private health insurance and things like that.”
Individuals can reduce the amount of tax they pay by claiming certain deductions
A tax return is a form which tracks your income tax on money received against deductions that are related to earning your income. The ATO says individuals can reduce the amount of tax they pay by claiming certain deductions. But what can be legitimately claimed? The ATO website provides a guide to the types of deductions that are available. Graham Whyte recommends the ATO App called myDeductions to keep a record of your of expenses.
Keep a record of your of expenses
“A registered agent will be able to provide guidance around what exactly you can claim. If people do need information about what they can claim we have a lot information on our website. We also have some guides for various occupations. Something else that we have got in place that will really help people is that we have an ATO App. And that App can be downloaded on to virtually any device. Within that App we have a tool called myDeductions and what that does is that helps people if you like record through a photo ....that it can record and take a photo of the receipt. They are able to also include the information about the expense.”
Tax returns also determine who is eligible to pay the Medicare levy and the Medicare levy surcharge
“The Medicare levy gives Australian residents access to health care and is partly funded by taxpayers who pay that Medicare levy which is around two per cent of their taxable income. The Medicare levy and any reductions are calculated from the information that you provide in your tax return. For example myTax will ask you the relevant questions. Your Medicare levy is reduced if your taxable income is below a certain threshold and in some cases you may not have to pay the levy at all.”
What families or spouses earn may affect tax obligations, concessions and other government benefits
What families or spouses earn may affect tax obligations, concessions and other government benefits. Low income earners could also be eligible for a tax offset, which is worked out automatically by the ATO. Capital Gains tax can also be listed as a part of individual’s income.
Individuals lodging tax returns must keep a record of their expenses and follow rules around what can be claimed
“Generally it is not another tax if you like, it is just part of the income tax. But where it is if you have for example have disposed of shares or other capital assets you may need to pay tax on those gains. There are also some discounts available for example, if you sell shares you will be only taxed on 50 per cent of the gain.”
Individuals lodging tax returns must keep a record of their expenses and follow rules around what can be claimed.
ATO can track down people whose claims are not real
“But generally what we say to people is that there are three rules. We call them the three R’s which are: it must be Real, that is that you must have spent the money yourself and not reimbursed; obviously you can’t double dip. It must be Related; the expense must be related to your work and not a private expense. It must be also Recorded. It is really important that people have a record of the expense.”
Graham Whyte says that ATO can track down people whose claims are not real.
Those found guilty of incorrect claims could face fines and prosecution
“Because what can happen is that people can obviously lodge their tax return. We use nowadays sophisticated technology and analytics to analyse claims and things like that. If your claims are outside of the norm, outside of the ordinary, or using our technology, for example comparing you with other people in your area, then you may be subject to an audit or being asked about those expenses that you have claimed. You will be asked of course for any records that you have at that stage to prove those expenses.”
Those found guilty of incorrect claims could face fines and prosecution.
It’s important to inform the tax department even when you are not required to lodge a tax return
“Obviously this can lead you open to a fine and even a prosecution. What we far prefer is that people lodge their tax return themselves and keep their affairs up to date.”
Graham Whyte says it’s important to inform the tax department even when you are not required to lodge a tax return.
The ATO has a variety of tools to support newly arrived Australians, including translated information in 30 languages and a translating and interpreting service
“Look for some people they don't need to lodge a tax return. But the best thing is to tell us and what they can do is they can do that through our online services, tell us that a return is not necessary. Get in contact with us. Tell us what the circumstances are; we want to listen and help you. Don’t just stay at home if you like worrying about it. Get in contact with us. Again the message is get in contact with us before we contact you.”
The ATO has a variety of tools to support newly arrived Australians, including translated information in 30 languages and a translating and interpreting service. Graham Whyte says that most new arrivals are eligible to use their free Tax Help service.
This assistance is free, is confidential, and they will help them lodge their tax return online
“In our Tax Help service they will be able to find someone who if you like speaks will be able to communicate with them in their home language.”
Community representatives can take others through the online lodgement process.
“A lot of these services are actually run out of community groups that they may be members of. These volunteers, and there is about a thousand of them operating out of about seven hundred different locations, they are able to provide them with assistance. This assistance is free, is confidential, and they will help them lodge their tax return online. Benefit of them lodging their return online electronically is that they will get any refund far quicker than if they lodge using a paper return.”
If you lodge your own return, you need to do that by the 31st of October or if you use a tax agent you need to talk to them
ATOs are also available in pop-up kiosks in areas like shopping centres. Graham Whyte says tax returns for the current financial year should be lodged by 31 October 2016.
“If you lodge your own return, you need to do that by the 31st of October. If you use a tax agent you need to talk to them. They have a different program if you like, you need to talk to them about when they need to see you to lodge your return.”
Individuals who don’t lodge their returns by the deadline could face financial penalties and even interest charges from the ATO
For translating and interpreting service for people from non-English speaking backgrounds, call 131450 and for information in different languages visit ato.gov.au