Tax time can be difficult and stressful for anyone. Every person's tax status is unique, and such basics as whether or not you're expected to file a return and when to file it can be lost in the intricacies of the tax code. While only an expert can give you advice specific to your situation, these are some of the basics you need to know before you lodge:
You Have to Lodge If…
Generally speaking, you are expected to lodge a tax return for a given year if you've worked at all during the preceding fiscal year, earned money, and paid any amount of tax. Most working Australians pay taxes through the Pay As You Go system, which sees a certain fraction of your income withheld from each pay cycle. If you are self-employed or a business the requirements are different as an activity statement is used to report and pay any tax obligations.
Reporting your actual income at the end of the financial year, as opposed to the projected income used to calculate your tax payable, helps resolve any disparity and ensures you pay the correct amount in taxes.
When to Lodge
The financial year begins on July 1 of each calendar year. If you're required to lodge a return, you have until October 31 of the same year, though sometimes an extension is possible. Filing promptly is advisable, as late returns are subject to fines and other penalties that can add up quickly.
Overpayment vs. Underpayment
After your return is assembled, you might discover that the Australian Tax Office (ATO) owes you a refund. Sometimes, you wind up owing more money than you've had withheld during the year. This is because the taxes withheld from your pay were essentially an estimate of your likely tax burden for the year. Certain factors—such as work equipment you had to buy out-of-pocket, travel expenses, and charitable donations—reduce your taxable income and lower your tax payable. When this happens, your tax obligation might drop to a point lower than the amount you've already paid, entitling you to a refund. When the reverse occurs—as when you have a financial windfall or a profitable investment pays off—your return might show that you owe more than you've paid, and a bill will be issued.
Getting Help Lodging Your Return
Lodging an accurate return with the ATO is critical. Mistakes and inaccuracies can creep into even the simplest return, and they have the potential to result in either an overpayment you'll have to pay back or an underpayment that carries its own set of penalties plus interest. Reaching out to a professional tax agent greatly reduces the risk of accidentally lodging an inaccurate return that you'll have to correct later.
Another advantage of recruiting professional help with your return is in meeting the October 31 filing deadline. Not only does recruiting a tax agent put you in touch with an expert who knows the deadlines and requirements for filing, it can even qualify you for an extension of the filing deadline.
If you're concerned about submitting a properly prepared report, within the required time frame, don't hesitate to reach out to our team of professional tax experts. We're available to answer your questions, and we're able to help you lodge accurate, timely returns year after year.