Individual Tax Returns

Are you getting ready to file your individual tax return? (tax return for individuals) In that case, there are some things you need to be aware of before you begin. In this post, we will provide you some useful advice on how to file your tax return in a timely manner while ensuring that it is accurate. In addition to this, we will go over some of the most typical errors that people make when completing their tax returns. Therefore, if you are getting ready to submit your tax return, make sure that you read our blog post in its entirety!

Do you dread having to complete the job of filling out your tax return? Don't fret; you're not the only one feeling this way. It is essential to ensure that your tax return is accurate, despite the fact that doing so may be difficult and time consuming. The tax season can be a pain, so why not hire a professional tax firm to handle your taxes for you this year? You will be able to have your return filed quickly and efficiently with the assistance of a professional tax agency, and they may even be able to obtain you a refund.

There's no getting around it: the time for filing taxes has arrived. That entails filing a tax return for the vast majority of individuals. It is crucial to be aware of what to anticipate while filing your taxes, regardless of whether you do them yourself or use a professional. This post will provide you with an introduction to individual tax returns, covering the types of information that are necessary to be submitted as well as an estimate of when you can anticipate receiving your tax refund.

Knowing How the Australian Income Tax System Works

The most important source of revenue generated by the tax system is the income tax, which is comprised of the following three primary pillars:

• Personal earnings
• Business earnings
• Capital gains

The individual's total taxable income is used to calculate the amount of income that is subject to income tax, which must be paid on all sources of income. Your wages from your employment, the profits from your business, and the returns on your investments all factor towards this total. When assets are sold, such as a house or shares, an individual may be subject to income tax as well.

Due to the fact that there is a tax-free threshold, taxpayers who have two or more occupations or other sources of taxable income should be aware that they run the risk of unintentionally falling into a tax trap.

Income Tax Rates

Because of its progressive tax structure, Australia requires its citizens to pay a greater proportion of their income in taxes as their level of income increases.

You are exempt from paying taxes on earnings up to $18,200 for each fiscal year. This is the point at which one will no longer be exempt from paying taxes; thereafter, the applicable tax rates will be applied.

The following is a list of the tax rates that will be in effect for residents for the fiscal years 2020/2021 and 2021/22 (please note that these rates do not include the Medicare levy):

• The lowest rate is 19%, and the maximum rate is 45%; however, this rate is only applied to incomes that are greater than $180,000. Therefore, the majority of Australians fall somewhere in the middle category.
• Both your contributions to and earnings from your superannuation fund are subject to taxation, but there are a number of tax advantages to contributing money to your fund.

The following table details the tax rates that will apply to non-resident aliens during the fiscal years 2020/21 and 2021/22:

• Working vacationers with visa types 417 and 462 are taxed at a rate of 15% on their total income up to $45,000. After that, they are taxed at resident rates on their total income.

Lodging Your Return

After the 30th of June, you have until the 31st of October, which is the absolute cutoff date for self-lodgment of your tax return. While it is possible to file your taxes on your own, it is strongly recommended that you use a tax preparation service, so that you can be certain that everything is filled out correctly and that you receive the finest return possible in a timely way.

Make sure you have all of your relevant paperwork assembled before going in for your appointment or lodging your claim online. This will help to ensure that the process of submitting your claim goes as smoothly as it possibly can. When it comes time to complete your return, you will find that keeping important documents, receipts, and invoices in a file throughout the year will save you a significant amount of time. In addition to this, you should check that all of your information is up to current. For instance, if you've relocated or changed your name, you'll need to let the ATO know so they may update their records with the new information. Potentially simple mistakes like these might cause significant delays in processing your return and even result tax penalties.

It is imperative that you have a complete understanding of your tax duties if you are retired or if you have access to your superannuation fund. When it comes to paying taxes on money taken out of a superannuation account, the level of responsibility owed by individuals changes depending on their age.

Deductions

Expenses related to your employment that you incurred throughout the tax year are eligible to be deducted from your income. In general, tax deductions work to lower a person's taxable income and are frequently the reason why individuals are eligible for tax refunds.

You can deduct from your income taxes any money that was spent on business-related activities. You have the legal right to deduct the cost of anything that you purchased with your own money that was necessary for you to carry out the duties of your employment. For instance, expenses incurred while travelling for work or the price of uniforms would go under this category. You may be eligible for a deduction for the percentage of time spent on the job using a personal electronic device such as a laptop, desktop computer, tablet, or phone.

It is essential to keep in mind that you should only submit claims for benefits to which you are legally eligible. It is not possible to deduct personal expenditures or any charges that were covered by your employer. Claiming anything for which you are not eligible can result in penalties as well as a stressful audit by the ATO.

How To File A Personal Tax Return

It's possible that filing your tax return will appear intimidating and difficult at first, but if you're well-prepared, you'll find that it's much simpler.

If you are working and bringing in money, you might be eligible to deduct some of the costs that are associated with your job and your earnings on your tax return. You can find additional information on tax-deductible expenses that you can claim by visiting the website of the ATO.

How To Lodge Your Tax Return

You will need certain information in order to prepare your tax return, and part of that information is as follows:

• Your Tax File Number (TFN)
• Your Income Statement, which can be retrieved using the online services provided by your ATO through myGov, or a payment summary that was sent to you by your employer. You will be able to acquire additional information regarding access to either your payment summary or income statement.
• A rundown of the interest that you have accrued from your various bank accounts (you can get this in NetBank)
• Details concerning the sources of your investment income, including managed funds, managed stocks, and dividends
• Statement from your personal health insurance
• Information about child support payments
• Charity gift receipts
• Receipts for expenses linked to your job
• Your business standard branch number and account number for any tax refund that may be owed to you

Here Are Some Tips

• The majority of financial institutions, insurance companies, and government agencies like Medicare and Centrelink make their paperwork available for online download. Check the website or app of your service provider for further information.
• Through NetBank, you will have the ability to quickly get a summary of the interest that you have accrued on your CommBank accounts. Simply log in, click the "View accounts" button, followed by the "More" button, and finally the "Interest & tax summary" button.
• If you are a customer of CommSec, you can get a summary of the previous fiscal year by signing into CommSec, hitting the "Portfolio" tab, and then clicking the "Statements" tab.

Can I File a Tax Return on My Own?

You have the option of submitting your tax return directly to the ATO, or you can seek the assistance of a registered tax agent in preparing your return.

Employing the services of a tax agent to assist you with your tax return is something you should consider doing if you are unsure about the Australian tax laws, have a complicated financial situation, or find the amount of paperwork to be daunting. They will charge you a fee; but, if you itemise your deductions on your tax return for the following year, you can deduct that fee. Most significantly, spending some money to guarantee that your tax return is precise and comprehensive can be money well spent.

If you file your own taxes, it is typically more efficient to do it online using the ATO's myTax platform; but, in order to do so, you will first need to create a myGov account. In addition, the 'Pre-fill' tool that is included in the ATO's myTax software can assist you in ensuring that you do not omit any income when filing your taxes.

According to the website of the Australian Taxation Office (ATO), electronic returns are typically handled within two weeks, although the manual processing of paper returns might take up to ten weeks.

You might qualify for the Tax Help programme offered by the ATO if your income is low enough and you meet certain additional requirements. Under this programme, community members who have received training and accreditation can assist you in filing your tax return electronically.

What Comes Next After I Have Submitted My Tax Return?

After the Australian Taxation Office (ATO) has finished processing your tax return, you will get a Notice of Assessment from them (NoA). This will tell you whether the ATO owes you money or whether you are eligible for a refund from them.

It is of the utmost significance that you keep your Notice of Assessment as well as the information that you utilised to prepare your tax return. It is possible that you will require this information in the future, such as if you are asked about your tax return by the ATO, if you apply for a loan, or if you complete your tax return online in the future.

How Can I Correct An Error On My Tax Return?

Because you are responsible for all the information that is included in your tax return, you should always perform a thorough review of everything before submitting your tax return. This is true regardless of the method that you choose to use to submit your tax return.

After you have submitted your return, if you discover that it contains an error or that a certain amount was left off, you will be required to submit a "amendment" to your tax return. You can find advice on how to modify your tax return on the ATO website, which you may check out. It's possible that your book-keeper, tax agent, or financial counsellor will be able to assist you with the procedure as well.

Individual - Tax administration

When an individual's annual gross income is greater than the tax-free level of AUD 18,200, they are required by law to file a return of income for that year (see the Taxes on personal income section for more information). Non-residents who earn more than one Australian dollar (AUD 1) from sources outside of Australia are required to submit tax returns. In Australia, there is no such thing as joint filing or joint assessment.

The income tax return must be filed no later than October 31 of the following year, unless a tax agent is used to file the return and then an extension can be requested.

On the basis of the individual's income tax return, the Australian Taxation Office (ATO) will issue an income tax assessment that details the individual's taxable income, tax loss, and the amount of tax that is owed (if any). Individual taxpayers who have a tax liability of at least one hundred Australian Dollars will also be given a tax receipt by the Commissioner of Taxation. This tax receipt will contain information regarding how the government spends the taxpayers' tax money and will be issued by the Commissioner of Taxation.

Payment Of Tax

Under the pay as you go (PAYG) withholding scheme, certain amounts must be withheld from salary payments made by Australian employers or by non-resident employers with a basis in Australia. If the contractor does not supply an Australian Business Number (ABN) and the payment amount excluding GST exceeds AUD 75, PAYG withholding tax must additionally be withheld.

To avoid having tax withheld (at the top marginal rate) from income provided to them, employees and owners of specific investments must provide their income tax file number to their employer and/or the appropriate financial institution. In order to avoid the tax from being withheld in relation to discounts received with regard to shares and rights/options bought under an employee share scheme, a tax file number must also be provided to employers.

Subject to certain exclusions, a non-final WHT is applicable to the gross proceeds of the sale of Australian real estate or indirect Australian real estate interests (generally, interests of at least 10% held in an Australian corporation whose majority of assets are Australian real estate). 12.5% is the current withholding rate. The sale of real estate with a market worth of less than AUD 750,000 or when the transaction takes place on an authorised stock exchange are two of the primary exceptions. Additionally, there is no withholding when the dealer sells anything:

• Australian real property and either issues a clearance certificate to the purchaser (related to the purchaser's status as an Australian resident) from the ATO or
• any other asset for which the purchaser is provided with a vendor statement declaring that the vendor is a resident of the country or that the asset does not constitute an indirect interest in Australian real property.

Alterations can also be made to the percentage of money that is deducted.

Specific individuals are responsible for making quarterly PAYG instalments of tax that are computed based on a certain income that was obtained during the prior quarter. These payments are due on the 28th of every other month, specifically the 28th of October, 28th of February, 28th of April, and 28th of July.

In order to calculate the amount of tax that must be paid, the tax instalments are calculated by multiplying the total of certain gross income, such as fees for services, sales in carrying on a business, interest, dividends, and royalties derived during the previous quarter (but excluding salary and wages), by an instalment rate that is provided by the Commissioner of Taxation. This figure is then used to determine the amount of tax that must be paid.

This instalment rate is subject to change at the discretion of the individual; however, a fee for interest will be assessed if the new rate is less than 85 percent of the rate that should have been applied. Individuals (and some other companies that pass specific conditions) have the option of choose to pay their "GDP-adjusted notional tax" in quarterly instalments rather than all at once. If this method is selected, the instalment that must be paid will be calculated using the tax liability from the year before, with adjustments made to account for changes in Australia's gross domestic product, and the choice will be maintained until at least the first instalment quarter of the year after that. Individuals whose notional tax amount is less than AUD 8,000 and who are not registered for the GST and are not required to be registered for it have the option to pay their GST in a single annual instalment. This option is available in the majority of circumstances.

The Process of Tax Auditing

The Australian Taxation Office (ATO) will issue an assessment of income tax for each income year. In order to make the assessment, the ATO will depend on the information and statements provided by the taxpayer in the income tax return. Nevertheless, the ATO has the authority to investigate the taxpayer's business after the assessment has been made and can request additional information if it deems it necessary.

Period of Limitation

An individual who does not actively participate in the operation of a business (unless the individual is itself a small business entity), who is not a partner in a partnership, and who is not a beneficiary of a trust is normally subject to the ordinary two-year amendment period. In any other case, the period of time during which an income tax assessment can be modified is capped at four years. When a taxpayer's tax liability is increased as a result of an updated assessment, in addition to the additional tax debt, the taxpayer may be subject to an administrative penalty as well as interest on any sums that were not paid in full.

Topics The Tax Authorities Are Focusing On

The Australian Taxation Office (ATO) is now operating a privately owned and wealthy organisations tax performance programme known as "Next 5,000." This programme targets Australian residents who, in conjunction with their associates, manage wealth that is greater than 50 million Australian dollars. The ATO will identify wealthy individuals and link them to associated entities by using sophisticated data matching and analytical algorithms. The community as a whole needs to have greater certainty that high-wealth private groups are paying the appropriate amount of taxation, and the purpose of this programme is to fulfil that need.

Throughout the course of the year, the ATO will, on occasion, make public certain compliance emphasis areas that are currently capturing its attention. The following are some of the areas that the ATO is now concentrating its efforts on with regard to individuals:

• Non-lodgment of returns.
• Claims for expenses incurred because of work, such as overnight travel, the cost of using a vehicle to commute between home and the workplace, and the percentage of time spent using computers, phones, and other electronic devices in a capacity connected to work
• Expenses related to rental properties, such as excessive deductions for vacation houses, ineffective division of income and deductions for jointly held properties, and interest deductions being claimed for the private share of loans are examples of some of the most common problems
• Data matching includes, among other things, partnership income, dividends, royalties, overseas transactions, managed funds, sales of real estate and stock, and small company transactions including payments to contractors in the building and construction sector.