Another financial year will be coming to a close soon, which means it is time to start planning for tax season. While this time can seem onerous and complicated, tax time need not be a burden. Generally speaking, if you have earned an income during the financial year, you must lodge a tax return in order to determine whether you are eligible for a tax refund or have a net tax debt.
The tax year is based on financial years as opposed to calendar years. The 2014/15 Financial Year spans the period from 1 July 2014 to 30 June 2015, and the deadline to prepare an individual tax return is 31 October 2015. However, if you use a registered tax agent such as MEDIQ Financial to prepare and lodge your returns, it is possible to be granted an extension for more time to lodge.
**It is important to note that if you go through the avenue of using a tax agent, you must have engaged them and be registered as a client on their books by 31 October 2015 to be eligible.
The Australian Tax Office (ATO) begins processing tax returns from 4 July 2015, and payment of any tax refunds usually begins from 16 July 2015.
Lodging your tax return has never been easier for individuals. There are a number of methods available, catering from online to paper lodgement.
If you are making your lodgement yourself, then the ATO has two online methods available: myTax and e-tax.
The myTax application and the e-tax system both allow you to quickly and conveniently complete your tax return online. They also pre-fill any available information for you, but it is important to check the accuracy of all fields and information as providing misleading information is not only an offence but mistakes will slow down the process.
The myTax application is available on desktop, tablet and mobile, and is suitable for those with relatively simple tax affairs. For example, if you were an Australian resident for the full year and your only source of income was from salary, dividends and interest, and your deductions are equally derived, then you can use this function.
E-tax is better suited to individuals that have more complicated tax situations. For example, in addition to your salary, you may have business income, rental income or capital gains or losses from investments. This system steps you through the process including relevant deductions and eligibility requirements.
If lodging your own return, using one of the online methods is the fastest method, with returns being processed within 12 days. On the contrary, the paper method can take up to 50 days.
In addition to the online self lodgement methods, you can also lodge your tax return through paper methods (by completing the ATO's paper tax return) or engage a registered tax agent to lodge on your behalf
Hiring a professional tax agent is another way to lodge your tax return, and this method is recommended because a trained tax agent is likely to get you much more bang for your buck than if you do it yourself.
For example, they know how much of your Internet costs can be claimed on tax if you occasionally work from home, and if you have a second job they can help to deduct the travel costs of travelling from one workplace to another.
These are the primary benefits of using a registered tax agent:
Lodging your tax return has never been easier for individuals. There are a number of methods available, catering from online to paper lodgement.
In order to prepare your tax return, you will require the following documents:
In addition to these documents, you will also need to know your Tax File Number and your bank account details for direct credit of any applicable tax refund.
If you operate as a business, such as a medical practice or a retail store, you will be required to lodge a Business Activity Statement (BAS) on either a monthly or quarterly basis, and always by a due date specified on each notice. You will be sent a notice in the mail for each period.
The BAS is used by the government to monitor your GST, PAYG (pay as you go instalments), and other tax obligations. This is where you can also claim GST credits, as a net of your GST remittance obligations. In terms of PAYG reporting, you must report on any tax withheld for employees and/or instalments you must pay towards your year end tax liability.
Lodging you BAS is simply a matter of accessing the ATO's business portal or, if you prefer, sending a paper document through the mail. If you meet certain requirements (for example, opt to report and pay quarterly or use the predetermined instalments) then you will simply receive a quarterly instalment notice instead of a BAS.
Due dates for your BAS are either at the end of each quarter (for quarterly reporting) or by the 21st of the following month (for monthly reporting).
After lodging tax returns and/or statements, the ATO will process it accordingly and issue a Notice of Assessment. This is an itemised statement of the amount of tax owing or the amount of the tax refund entitlement based on the information provided in the tax return. Tax owing will be required to be paid by the nominated due date, and tax refunds are automatically paid into your bank account via Electronic Funds Transfer.
If any mistakes have been made in the preparation of the tax return, they must be rectified and corrected. Contacting the ATO is the first step in this process. They may simply then be able to update your records, but in some cases a variation might be required. If you use a registered tax agent, they can lodge a variation on your behalf.
This checklist will help you make sure you have everything you need for preparing your tax return.
You can download a PDF version of the checklist below so that you can print it out and check it off as you go.
Download the Checklist hereMost people delay asking the professionals for help until they've gotten into trouble, or until they no longer have the time to deal with their tax. However, by this stage you could have lost thousands of dollars in potential tax refunds, so it's better to hire a professional accountant or tax agent as soon as you have more to consider than just your work income.
And additionally, choosing a finance service that can handle your accounting, investment, insurance and finance needs from one organisation will make your life much easier come tax time, so it's worth finding a service that specialises in these areas for your industry.
