Tax Accounting 101: Tax Returns and How To Lower It
One of the most basic realities to face when you start working is that you will have to pay tax. The computation alone can be confusing enough, but the filing is another process entirely. To avoid the stresses of figuring out your own income tax returns, consulting with an accountant from the Gold Coast might prove to be helpful.
What Are Tax Returns?
Tax returns are the forms you file at your local taxation offices that report your income, expenses, and other tax details. This allows you to compute for tax liability, schedule tax payments, or request refunds for the overpayment of taxes. Different countries have differing specifics, but most require you to handle these at least once a year to comply with the law.
In Australia, the ATO has very strict rulings for the handling of tax returns, even when it comes to who should be submitting them. You may need to file a report if you fall under any of the following terms:
Your total assessable income exceeds the $18,200 tax-free threshold
You paid for a Pay As You Go Instalment Tax last year
You are a resident taxpayer earning less than $18,200, but has had tax withheld
You have been asked to submit a return by the Commissioner, regardless if there’s no assessable income to report
You are a resident minor whose received income from dividends or distributions is greater than $416, from which franking credits were attached or tax was withheld.
When Should Tax Returns be Lodged?
Lodging your tax returns should be done any day between July 1 and October 31 each year. Penalties will apply if the returns are not submitted within the time frame. If, however, you are not able to submit a return within the intended period, then a written notice must be submitted to the Commissioner to request for an extension of the deadline
The Tax-Free Threshold
While the deduction of tax from your income may not seem like a fair deal, the Australian government has imposed a ruling in which you will still be able to take home a veritable sum. A certain portion of your income is non-taxable, thereby called a Tax-Free Threshold.
This amounts to $18,200 of your yearly income, which can greatly reduce the amount of tax you pay per year. The rough equivalent in divisible portions would be a total of $350 a week, $700 a fortnight, or $1,517 a month. Any income beyond the initial $18,200 will be tax-deductible.
Other Ways to Reduce Tax
One of the biggest ways to reduce tax involves the deduction of work-related expenses. Spending money for items and services related to your job may be subject to tax reduction, such as uniforms, travel, or ongoing education. If the cost goes beyond $300, however, then evidence of the transactions must be supplied to prove the overall amount.
The Bottom Line
Filing tax returns is a basic component of your working life, which is why understanding how it works can help you avoid issues as your income increases. To fully understand the specifics of tax computations and returns, however, the expertise of an accountant is what you’ll need.
Are you looking for one of the best accounting firms in the Gold Coast to help you with your tax? At New Wace Accountants, we aim to minimise your tax to help maximise the income you take home. Get in touch with us and set a consultation with one of our licensed accountants today!