Your first tax return... the shock, horror, and maybe, surprise! Adolescence is a time when many interesting things happen; you get a job, a car, loads more independence, you make more decisions than you have probably ever made before, and you also get lumped with financial responsibility. Whilst getting a job and having financial freedom is liberating, there are some things like bills and taxes that many young people choose to be in denial about. In fact, most people at that age have no idea what it really means. It’s not until we have to get a tax file number and receive our first pay, that young people realise a deduction gets taken from their pay to cover tax.
Tax Return Australia - the shock, the horror!
Realising that the Government gets a cut of your hard-earned cash is a shock to most young people when they commence their first job! It is at this point that many-a-parent has had to explain that, yes, as citizens of Australia who receive some kind of income, a percentage of our pay is taken as a tax by the Government.
Tax Return Australia: What is tax?
Tax is the money we all pay to Federal, State and Local Governments which they use as revenue to pay for things such as public goods and services including health and community services, public education, national defence, roads, and railways etc. You need to get a tax file number by applying to the ATO when you start working. Follow this link to the ATO’s website to Apply for a TFN.
Tax Help: How does income tax work?
Income tax is paid throughout the year as you earn money from your employer, so it is money that you never see so long as your employer is using the Pay As You Go (PAYG) system. This is the best way to pay tax because otherwise you will be left with a big tax bill when you file your income tax return at the end of the year. Your income tax may also include the Medicare Levy which pays for the public healthcare system.
Lodge Tax Return: Why do I have to complete a tax return?
By completing a tax return, you are calculating the amount of tax you need to pay or claim, alongside the amount of PAYG tax withheld by your employer during the year. In this return you will be asked to provide some information about your income, work arrangements, living arrangements, savings, shares and deductions before you lodge tax return. From this info, the ATO will determine if you will get a tax return or have to pay a bill.
Income Tax Return: What can I claim?
Allowable deductions reduce the amount of income to which tax rates are applied. This, in effect, will reduce the amount of tax you pay overall. Deductions must be made in the same financial year as the purchase and you cannot double-dip or claim an expense you have already been reimbursed for. You must also have written evidence of purchases, such as receipts.
Some of the deductions you can claim include:
- Gifts and donations of $2 or more to an approved charity (they would normally have provided you with a tax receipt).
- The cost of uniforms for work and the expenses to launder these.
- Self- education expenses
- Work related vehicle travel
- Home office expenses.
Tax Help: How do I lodge my return?
Most people have simple tax affairs, and you can easily lodge your Tax Return Australia online using the ATO’s MyTax online portal. By using eTax the ATO will provide a lot of pre-filled information (connected to your tax file number) which will make your job a lot easier! If this doesn’t suit you, you can fill out a paper form tax return from the ATO or visit an accountant to assist. Always remember, it pays to be prepared, so throughout the year make sure you document your expenses and keep your paperwork so that come tax time you are ready to submit your claim quickly and easily.
Tax Debt Australia
If you have received a large tax bill that you cannot pay, or you have a large amount of debt that you have no idea how you will repay, you may need professional assistance. Start by seeing a Tax accountant, who will be able to help make sure you are taxed correctly. If after that you still have an unreasonable amount of debt, consider enlisting the help of a debt specialist such as Credit Counsellors, who will be able to conduct a free and confidential debt assessment, and help point you in the right direction. You don’t have to struggle with overbearing debt for the rest of your life! Call us on 1300 003 328 and get the help you need!