Generally, all Australians who receive or earn income are required to lodge an individual tax return each financial year.
Income you must declare
It is important to declare all of the income you received during the financial year, such as employment income and allowances, lump sum payments you received when you leave employment, pensions, annuities and government payments, interest, dividends and some prizes or rewards.
Expenses you can claim
You are also allowed to deduct certain expenses from your total income when computing your taxable income. These expenses include:
- Work related expenses;
- self educated expenses that are sufficiently connected with your work;
- car expenses;
- gifts and donations; and
- clothing expenses.
How lodged
The individual tax return may be lodged:
By paper tax return: This is the traditional method of lodging which is still preferred by many who utilise the services of a bookkeeper or service for completing their returns.
By E-Tax return: This is a free and secure service provided by the Australian Tax Office (ATO) so you can prepare and lodge your individual tax return online. This system is currently for individuals and not for company tax returns. Once lodged online, there is no additional duty to send in a paper return but you will still have to keep records of income payments received and business expenses incurred for at least 5 years.
Benefits of E-Tax
If preparing your tax return by yourself you are encouraged to lodge your individual tax return using the E-Tax system because of its numerous benefits:
- Cost-free preparation and lodgement of your tax return;
- safe and secure connection;
- available 24 hours a day, 7 days a week;
- saves time by ensuring you only answer questions relevant to you;
- most refunds are issued within 14 days;
- tax debts are not due before 21 November even if you lodge as early as 1 July;
- built-in checks and online access to the Tax Office’s publications and rulings which help make sure your tax return is completed correctly;
- all calculations are done for you, including an estimate of your tax assessment;
- privacy even when the e-tax software is used by another member of your household.
If your tax return and deductions are a little more complex, then you should not hesitate to enlist the services of a competent, profession tax specialist to help you with your individual tax return.
