For the vast majority of Australians, taking care of tax is just part and parcel of living and working in this country. However, if you’ve never had to pay tax before, if you’ve started a higher-paying job, or if you’re running a business for the first time, you may be unsure of your tax obligations. Read on to find out everything you need to know.
Who is obligated to pay tax?
Anyone who works in Australia and earns over the tax-free threshold (currently $18,200) is obligated to pay tax – whether you are an Australian resident or a foreigner working in the country.
Are there any scenarios where I won’t have to lodge a tax return?
Yes, but these instances are rare and it’s unlikely you will fall into this category unless you are a very low earner. If you receive payments and allowances from the government, you won’t have to lodge a tax return for the 2019–20 financial year so long as:
- You only received government payments and allowances, and your taxable income is $20,542 or lower.
- Tax wasn’t withheld from your payment.
- Your adjusted taxable income is under $25,575.
Speak with your tax agent or contact the ATO for non-lodgment information regarding the 2020–21 financial year.
What tax rates can I expect to pay on my income?
The tax rate is not static, and for the 2020–21 financial year there have been significant changes. The ATO has altered the taxable income brackets and the tax rate for each bracket in order to help boost the national economy in the wake of COVID-19.
Here’s what you will pay in tax for the upcoming financial year, according to your taxable income:
- 0 – $18,200: No tax paid
- $18,201 – $45,000: 19 cents for each $1 over $18,200
- $45,001 – 120,000: $5,092 plus 32.5 cents for each $1 over $45,000
- $120,001 – $180,000: $29,467 plus 37 cents for each $1 over $120,000
- $180,001 and over: $51,667 plus 45 cents for each $1 over $180,000
If you run a business where you employ staff, you’ll need to make sure you’re across these changes for the upcoming financial year so you don’t run afoul of the ATO. Alternatively, you can hire a small business tax specialist to manage all your accounting and tax needs.
How do I lodge my tax?
Many Australians choose to DIY their tax lodgments. You can do this via the myTax platform, which you can access through your myGov account. However, bear in mind that you are entirely responsible for your tax lodgment. That means if there are errors and you are audited, fines (or worse) may be applicable. Plus, you will need to collect all the paperwork and spend several hours completing your tax on your own every year.
Instead, you can go through an accountant or tax specialist who understands your employment circumstances and can do all the heavy lifting for you. They will charge you a nominal fee and get you the best tax return possible, all while staying within the ATO’s legal requirements.
Where can I find accountants near me for taxes?
Whether you’re an employee, a sole trader or a business owner who employs staff, it’s easy to get frazzled as the end of financial year approaches. But before spamming your Google search bar with terms like ‘accountants near me for taxes’, make sure you understand your tax obligations and then seek out a well-regarded accountant or tax agent nearby.
At Gillet & Associates, we specialise in small business taxation and we can help you maximise your tax efficiency. BAS, bookkeeping, payroll and tax – we take care of it all so you can get back to doing what you do best: running your business.
For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.