In most cases both individuals and businesses are required to file an annual tax return.
Generally, if your taxable income exceeds the minimum tax-free threshold you must lodge a tax return. If you are an Australian resident (but not a primary producer or, in some cases, under 18 years old) the threshold is currently $18,200 effective 1 July 2013. The availability of various rebates means that, even if you earn more than the threshold, you may not have to pay any tax, although you will have to lodge a tax return.
A low-income tax offset (LITO) of up to $445 applies to individuals who earn an income of less than $66,667, although the offset amount is reduced for taxable income of more than $37,000. The LITO no longer applies to reduce tax payable by minors (persons under 18 years as at 30 June) on unearned income (e.g. dividends, interest, rent and royalties).
From the 2011″“2012 tax year, if you were under 18 at the end of the tax year (30 June) and received income in a form other than salary or wages (e.g. dividends, interest, rent and royalties), you do not have to lodge a tax return if your income was $416 or less. (Note that different rules apply to minors who received income as a result of an inheritance and in certain other circumstances).
If you are not a resident of Australia for tax purposes, you need to lodge returns if you derive income that is taxable in Australia, other than income from which withholding tax has been deducted.
In some cases you may need to lodge a tax return even where you have not reached a tax-free threshold. For example, you may work for only a short time but have had taxation instalments withheld from your pay. Even though you have earned less than the tax-free threshold, you will have to complete a tax return in order to receive a refund of the tax that has been withheld. Resident companies (except non-profit companies), partnerships, trusts and superannuation funds are required to file returns regardless of income. Non-profit companies (which include most clubs and associations) have to file a return if their taxable income exceeds $416.
More information on who is required to submit tax returns is contained in the Individual tax return instructions 2014 and on the ATO website (see “Useful resources“).
In most cases, you will be required to complete an Income Tax Return Form for Individuals if you are:
- a salary or wage earner;
- a pensioner;
- on unemployment benefits; or
The Individual tax return instructions 2014 contains copies of return forms, as well as instructions and a general outline of the relevant tax provisions that assist you in preparing your forms.
If you are the legal personal representative of a deceased person (e.g. the executor of the person’s estate), you will need to complete a “date of death” return on behalf of the person for the period up to the date of their death. The form used for this is the Tax Return for Individuals. You will then need to apply for a TFN for the estate and complete a Trust Tax Return on behalf of the estate for each income year until its administration has been completed. Further information on the responsibilities and liabilities of executors can be found in the Individual tax return instructions 2014, and also in the Guide to Capital Gains Tax and Partnership and Trust Tax Returns Instructions, available from the ATO website (see “Useful resources“).
Businesses also need to file annual tax returns. In addition, if you are carrying on a business, you will also need to complete a Business Activity Statement (BAS). The BAS is used for the majority of your tax obligations including your business income and your PAYG and Goods and Services Tax (GST) reporting requirements (see “Goods and Services Tax“). While some businesses will be required to lodge their BAS on a quarterly or monthly basis, others will only need to lodge a BAS annually.
If you earn investment income or carry on a business but are not required to be registered for GST, you will need to complete an Instalment Activity Statement (IAS). Like the BAS, the IAS is used for reporting your tax obligations, such as company income tax, PAYG and Fringe Benefits Tax (FBT).
More information on your BAS and IAS obligations can be obtained from the Business Infoline on 13 28 66 or the ATO website (see “Useful resources“).
It is most likely that your tax return will be due on 31 October each year. If you cannot meet this date, you should lodge an application for an extension of time with the ATO. This must be lodged before the due date and the application should state your reasons for requiring an extension.
Tax agents are allowed to spread their work over the bulk of the working year. As a result, one advantage of using a tax agent to lodge a return is that for many taxpayers the return will not have to be lodged until a date later than 31 October. This date will vary depending on the characteristics of the taxpayer. The ATO publishes details of its Lodgement Program each year, which can be located on the ATO website (see “Useful resources“). However, when you use a tax agent for the first time you must complete a form provided by the tax agent, preferably prior to 30 November.
The Individual tax return instructionsÂ 2014 indicates where you should lodge your returns. There are various regional Tax Offices and your postcode will determine to which of those offices you should send the form. If you lodge a paper return, it will take up to 50 business days after lodgement to finalise your tax return. (For information about the Individual tax return instructionsÂ 2014, see “Useful resources“.)
Alternatively, you can lodge your return online using either myTax for simple tax affairs or e-tax for more complex returns. MyTax is a shorter online tax return specifically designed for people with straightforward tax affairs. The myTax eligibility checklist available from the ATO website will determine if you are able to use myTax. If you have more complex tax affairs, you can lodge your return online using the ATO’s e-tax software available from the ATO website (see “Useful resources“). Refunds from returns lodged by myTax and e-tax can be expected within 12 business days of lodgement.
When lodging your tax return online, you will be required to create an account with myGov and link your account the ATO. The myGov portal links all your information held by multiple government agencies into one account. To register for a myGov account, visit my.gov.au.
Taxpayers using myTax or e-tax will find their tax returns pre-prepared by the ATO with various information, including salary and wages, interest, dividends, Centrelink payments and private health insurance details. If you useÂ myTax, the information will automatically download. If you use e-tax, the information is available using the pre-filling service. As most of the information is available by early August, the ATO recommends you wait until early August to use myTax.
Once the ATO has completed your assessment, a notice setting out the details is issued and posted to you. If you are entitled to a refund, the notice will indicate this and either a cheque will be attached, or a bank account you have specified will be directly credited with the amount. Where you are required to pay additional tax this will be indicated on the notice, along with a date by which it must be paid.