What you need to know this tax time

What you need to know this tax time

30 June marks the end of the financial year, which means tax returns will soon be due.

Key points

  • Most Australians will need to submit a tax return from 1 July
  • The statement doesn't just include income from employment, but also some Government payments and deductions
  • You can get support from the Australian Taxation Office, Centrelink or a private accountant

If tax confuses you, don’t worry! We have explained the basics of what you need to think about below and where you can get help to make sure the amount of tax you pay is correct.

Tax returns

A tax return shows the Government how much money you have received during the year from employment and Government benefits so that they can decide how much you need to contribute in tax.

Tax is managed by the Australian Taxation Office (ATO) and your tax return is lodged with this Department. It needs to be submitted before 31 October each year and although you can submit it from July 1, Services Australia suggests waiting until at least mid-July so that as much information is available as possible.

The first step you need to take is to find out whether you need to lodge a tax return.

If you are employed by someone else you will need to do a tax return, but you will also need to submit one if you are self employed.

If you earn less than the tax free threshold of $18,200 and no tax has been withheld from that income you might not need to lodge a tax return, unless you also receive certain Government payments.

The ATO has a tool you can use to check whether you are required to lodge a tax return or not, which you can access from your MyGov account by linking it to the ATO.

If you don’t need to do a tax return you can tell the ATO by submitting a ‘non-lodgement advice’. This can be done by logging in to your online MyGov account and going to the ATO services site, then following the menu for ‘Tax’, ‘Lodgements’ and ‘Non-lodgement advice’, or you can download at print a form to fill out on paper and send to the ATO via mail.

Government payments

In addition to any income you have received over the past year, you also need to report some taxable and tax free Government payments.

One of the new reportable payments to be aware of is the Pandemic Leave Disaster Payment (PLDP), which you may have received if you lost work hours and income because of needing to self isolate after a positive COVID-19 result, or a positive result by someone in your household.

This payment is not automatically included in your income tax return or Centrelink payment summary so you will need to add it in.

If you are completing your return online it comes under ‘Australian Government special payments’.

If you are filling out your return on paper include the PLDP under ‘other income’ for question 24, and if you have a tax agent lodge your tax return for you make sure you tell them you received the PLDP.

In some cases, if you don’t need to lodge a tax return you have to tell the ATO you aren’t lodging one. This is the case if you receive the Child Care Subsidy or Family Tax Benefit.

You can notify the ATO of a ‘non-lodgement’ through your online Centrelink account or the ExpressPlus Centrelink mobile app.

Some regular Government payments are taxable, such as the Austudy payment, JobSeeker and Youth Allowance, so you need to include them in your tax return.

The ATO also uses this information to determine whether you qualify for other benefits or concessions.

The Carer Payment and Disability Support Pension (DSP) are tax free if you are under age pension age, however you will still need to include them in your tax return so tax offsets can be calculated.

Offsets

Tax offsets reduce the amount of tax you are required to pay and apply to several different Government payments, including the DSP and Youth Disability Supplement.

The ATO will automatically calculate how much of a tax offset you are eligible for as long as you include all of your payments.

You can also get a tax offset in limited circumstances if you ‘maintain an invalid or invalid carer’, meaning you look after a person who is older than 16 years old and receives the DSP or a carer of that person.

To work out if you are eligible for this tax offset you can use the ATO’s calculator.

People earning a low income can receive a tax offset, for an income of:

  • $37,500 or less, you will get a maximum offset of $700
  • between $37,501 and $45,000, you will get $700 reduced by 5 cents for every $1 you earn above $37,500
  • between $45,001 and $66,667, you will get $325 reduced by 1.5 cents for every $1 you earn above $45,000

There is also the low and middle income tax offset, which for the 2021-2022 financial year has been increased by $420. This year the tax offset is worth:

  • $675 for those who earn $37,000 or less
  • $675 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,500, for those who earn from $37,001 to $48,000
  • $1,500 for those who earn from $48,001 to $90,000
  • $1,500 minus 3 cents for every dollar of the amount above $90,000, for those who earn from $90,001 to $126,000

Deductions

You may be able to have expenses taken off of your taxable income so you pay less tax, known as tax deductions.

Work-related expenses that you paid for and your employer did not reimburse you for can be claimed as deductions, including travel expenses, clothing such as a work uniform, COVID-19 tests, phone and some working from home expenses.

The ATO app has a section where you can keep track throughout the year of these work-related expenses and the receipts that show you paid for them, so it is not so hard to claim all your deductions at the end of the financial year.

Any expenses or assets you receive due to NDIS funding cannot be claimed on tax.

This means if you purchase assistive technology with NDIS funds to use to start up your own business you can’t claim the assistive technology as a deduction, even if it helps you to earn your income.

In addition to this, any income you earn from the business you started is taxed.

Support with tax

Tax can be complicated and difficult to understand, but there are ways you can get support to make sure you understand how it works and you’re providing the right information.

You can start by reading the information on the ATO website, which includes easy read and video guides with downloadable transcripts in a variety of languages.

If you still have questions or need more support you can call the ATO on 13 11 42.

The ATO can also help if you are worried you won’t be able to pay your tax or lodge your tax return in time by giving you more time to lodge or reducing the amount you need to pay.

If your questions are about the Government payments you receive you can call Centrelink on the phone line that applies to you, found on the Centrelink website.

For direct support in person you can contact a tax agent or an accountant to help you put your tax return together, although you will have to pay for this service.

This article is general in nature and is not intended to be taken as expert financial advice.

What else would you like to know about Government systems? Tell us in the comments below.

Related content:
Financial support for people with disability
What does Centrelink do in Australia?
Don’t get caught out - what you need to know about scams