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 Assistant Commissioner Graham Whyte explains who has to lodge a tax return, “Generally everyone who works will need to file a tax return. 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.”
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.
To access myTax people need a myGov account. Graham Whyte explains 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.”
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. “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.”
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.
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.
“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. “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.
Graham Whyte says it’s important to inform the tax department even when you are not required to lodge a tax return. “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 on 131450.
Graham Whyte says that most new arrivals are eligible to use their free Tax Help service.
Community representatives can take others through the online lodgement process.
“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.”
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. Individuals who don’t lodge their returns by the deadline could face financial penalties and even interest charges from the ATO.
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