If you’re living in Australia and earning money, you may have to pay tax to the Australian Government. The Australian Taxation Office (ATO) collects tax for the government. Generally you must pay tax on your income you get from the following sources: working as a wage or salary earner, running or owning a business, receiving government benefits, income from investments other worldwide income.
The main tax you will pay is income tax, which is calculated on income you receive. Generally you pay income tax during the year as you earn it – for example, if you are an employee your employer will take it from your wages. The amount of income tax you pay is linked to how much you earn and whether you are an Australian resident for tax purposes.The more you earn, the higher your rate of tax.
At the end of the income or financial year (which is 30th June), most people need to lodge an annual income tax return to tell the Tax Office how much income they received, the tax they paid, and any deductions or offsets they are entitled to.
If you are an employee, most of this information will be on a payment summary that your employer gives you. The Tax Office uses this information to work out your tax refund or tax liability; and then sends you a notice of assessment together with your tax refund (if you’re entitled to one).
To complete your tax return you will need a tax file number (TFN) and the financial documents or records you’ve received during the income year. In particular you will need your payment summaries from your employer or other payer. They must give you a copy of your payment summary by 14th July. You have until 31 October to lodge your income tax return (unless you have it prepared by a registered tax agent).
There are a number of ways can prepare and lodge your tax return. These include:
- using and online facility from the ATO
- by mail using Individual tax return instructions
- by phone if you are eligible to use the Short tax return
- with the help of a family member, friend or community volunteer.
For any return other than the simplest type, we would recommend the services of a registered tax agent like ourselves. We can advise you on all matters related to paying tax in Australia.