Understanding Tax Returns: A Quick Guide For Beginners
If you’re a law-abiding citizen, it means that you pay your taxes on time. The thought of paying your taxes can be daunting, but it’s one of your duties as a citizen of your country. When you pay taxes, it’s often done during “tax time”. In some countries, tax season runs between January to April in a year.
In Australia, however, it runs from July to October. Aside from paying taxes, you should also include other documents such as financial statements. If you ignore your tax duties, the government will come after you, and you certainly don’t want that to happen.
The good news regarding paying taxes is that there are possibilities of deductions in your payments. These deductions are known as tax returns. If you don’t understand how tax returns work, it’s important to know, as you are the taxpayer, after all. Below are some things that you need to know about tax returns.
The Tax-Free Threshold
Some countries, including Australia, implement the tax-free threshold, where people who earned less than $18,000 in the past financial year are exempted from paying taxes. This amount of untaxed income is then up to the citizen to use, such as investments.
This is where the tricky part comes in: if you earned below $18,200 in the past year, do you still need to lodge a tax return if your income is lower than the threshold? Read on further below.
Lodging Your Tax Returns
You will need to lodge your tax return unless your income falls below the $18,200 mark. Not only that, but you will also need to file a Non-Lodgement Advice (NLA) form. This form will tell the Australian Taxation Office (ATO) that you’re not going to file a tax return and make sure that they don’t mark you as having a significant tax return. It can arouse suspicions, and authorities may very well watch you.
As for the dates where you can lodge your tax return ran from July 1 to October 31 last year. If you still haven’t done it yet, you better hurry since time can catch up quickly. The date where you can claim your tax return extends to May 15, 2021, if you appoint a registered tax agent.
It should also be noted that even if your income is less than the tax-free threshold, you may still be required to lodge a tax return. Keep in mind that this only applies if you paid taxes on your income. A tax return is required so you can get back the taxes you paid.
By not declaring taxable income in your financial statements, it can result in significant penalties. Below are the types of income that you have to declare:
Superannuation pension payments
Life insurance annuities
It’s essential to take note that some incomes can be exempted from the declaration. These include government pensions, allowances, educational payments (including student allowances, scholarships and grants), insurance payouts, and even hobby income.
Unless you aren’t well-informed, paying taxes is not something you should worry about. You only need to lodge the correct and necessary documents. If you do, you get tax refunds that go back straight to you. The key to getting a significant sum of tax returns is to understand everything when it comes to paying taxes, so make sure to keep this guide in mind!
Keeping your taxes in order can be stressful, and can also feel heavy at times. An accountant is the best person who can help you when it comes to this matter. If you’re looking for accountants in Gold Coast, New Wave Accounting has got you covered! We can help you with your financial affairs, be it tax-related or otherwise. Contact us today and allow us to help you!