Tax Returns and Payment in Australia
Information about how to file a tax return and when and how to pay your tax in Australia...
Income Tax Returns
Even if you're an employee on PAYG and have no non-salary income, you must file a tax return in Australia if you receive over $6,000 in taxable income during the financial year. Returns must be lodged by 31st October for the previous tax year. If you're expecting a refund, the earlier you lodge your return, the quicker you're likely to receive it. If you're unable to meet the deadline due to circumstances beyond your control, you should request permission to lodge at a later date in writing and before the deadline to the office where you last lodged.
The ATO provides a comprehensive free TaxPack for individual taxpayers, which is available from newsagents, post offices and tax offices. It contains tax return forms and instructions on how to complete them. A copy is delivered to all households just before the end of the financial year (30th June).
The tax office where you must lodge your return is determined by your postcode; a list of Finance offices and relevant postcodes is included in the TaxPack. You can post your tax return (to GPO Box 9845, in your state or territory's capital city) or lodge it personally in the box provided at any ATO office. You can also lodge your tax return online (as 2m people do) using free tax return preparation software available via the ATO website.
Keep a copy of your tax form and anything else you send to the ATO. This is essential if your tax form is lost in the post or there are any queries. Also keep a copy of all documentation (invoices, receipts, statements, etc.) which substantiates claims made in your tax return. Records must be kept for three and a half years for salary and wage earners, and five years for the self-employed (seven years for vehicle- and travel-related expenses). Some tax returns are audited and you may be penalised if the information provided is found to be incorrect. As in most countries, the self-employed are much more likely to be audited than employees.
Although tax returns are relatively easy to follow and understand, only 30 percent of taxpayers complete their own returns and many use a tax agent or accountant, the cost of which is tax deductible. A tax agent has the responsibility for completing your return correctly and is liable for any errors. He will (or should) also ensure that you claim for all the allowances and rebates to which you're entitled. A tax agent usually charges a few hundred dollars to complete a tax return for the 'average' taxpayer, although additional fees are charged for extra services; accountants are more expensive. Shop around and obtain a few quotations - some agents offer a free initial consultation.
After around eight weeks, you receive a Notice of Assessment from the ATO, which is an itemised account of the tax you owe. At the bottom of the assessment is your tax debt or, if you're due a refund, your refund cheque. Your notice of assessment tells you when you must pay by in order to avoid incurring a penalty. If you don't agree with the ATO's assessment, you can lodge an appeal. If the amount owed is over $8,000, you can make the payment in quarterly instalments. Tax can be paid in person at a tax or post office, or by post by cheque or postal order (payable to the Deputy Commissioner of Taxation), which must be sent with the bottom section of your notice of assessment. If you use a tax agent who lodges returns electronically, your tax bill (or refund) can be paid directly from (or into) a bank, building society or credit union account.
If you're unable to pay your bill on time, contact your tax office and ask for an extension. You need to give a reason for needing an extension and, if it's granted, you're charged interest at a daily rate (equal to 20 percent per annum) on the amount outstanding after the due date.