Categories
Tax Returns

Income tax returns for individuals

Tax time can be confusing, frustrating and just an overall a time-consuming experience. Luckily, we’ve got all the answers to your income tax returns questions right here. Read on for advice on the latest tax rate changes, what to do if you receive a tax bill, how to lodge your tax return and why you should use a registered tax agent to make your life easier!

Changes in tax rates

The recent Budget 2020–21 focused on things like coronavirus recovery, creating new jobs and tax cuts. Most importantly for everyday Australians, they brought forward the personal income tax cuts in advance. That means you get to enjoy reduced tax rates right now.

So, it’s time to wrap your head around the updated tax rate changes – especially if you’re a sole trader or a business owner who takes care of your employees’ tax. How much you and your staff end up saving on tax will depend on a few different factors. So to help get across what’s new, we’ve included a few helpful lists of different living scenarios.

NOTE: The first figure (e.g. $40,000) relates to an earner’s income. The second figure in bold (e.g. $1,209) refers to the new tax-cut savings for 2020–21:

Single earner with zero children

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

Double-income-earning couple with young kids (with their salary split 50/50)

  • $40,000: $0
  • $60,000: $1,210
  • $80,000: $2,418
  • $100,000: $4,830
  • $125,000: $4,830
  • $150,000: $4,320
  • $200,000: $4,620
  • $250,000: $4,920

Double-income-earning couple with older kids (with their salary split 67/33)

  • $40,000: $955
  • $60,000: $1,559
  • $80,000: $3,020
  • $100,000: $3,020
  • $125,000: $3,960
  • $150,000: $4,725
  • $200,000: $4,845
  • $250,000: $4,590

Single retiree with no dependents

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

Lodging with a registered tax agent

Anyone who’s used a registered tax agent before will tell you that it’s a smart decision. Not only does it mean you aren’t spending hours staring at a screen – entirely frustrated – trying to compile your tax return every year, but a registered tax agent will do everything within the laws of the ATO. That means you won’t have to worry about the big, bad taxman knocking down your front door because you lodged something incorrectly!

 

The trick is finding a tax agent or accountant who is experienced and understands your specific circumstances. The good news is that there are over 166,000 professional members of CPA Australia active right now. So you really shouldn’t have any trouble finding an expert registered tax agent to meet your tax needs.

 

Here are some of the pros of using an accountant or tax professional:

 

  • No more wasted time: Tax returns take hours to complete, and even more if you’re a business owner with staff. Shifting that work to a registered tax agent means you can get back to running your business sooner.
  • Everything done by the book: Compliance and disclosure needs are taken off your hands with a registered tax agent. Plus, you can trust that they will follow all the ATO’s rules.
  • Forget about those pesky deadlines: Never again spend the approaching tax deadline tearing out your hair because there aren’t enough hours in the day. Leave it to a tax professional to organise everything for you.
  • They can do more than just tax: Yes, you might decide to only use a registered tax agent because you’re busy, but they can do so much more than lodge your tax return. Wouldn’t it be nice to have a professional who can also manage your BAS, payroll, bookkeeping and more?

Do I need to lodge a tax return?

If you work in Australia and earn over the tax-free threshold ($18,200 as of December 2020), then you are required to pay tax. That goes for everyone, whether you’re a resident or a foreigner working in Australia.

There may be some circumstances in which you won’t have to lodge a tax return for the 2019–20 financial year. They are:

  • 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.

So what type of rate can you expect to pay on your earnings? That depends, because the tax rate doesn’t always stay the same. For 2020–21, for example, the ATO has tweaked the taxable income brackets – this was mainly done to help people recover from the economic disruption of COVID-19.

Here’s what you can expect to pay in tax next financial year (2020–21):

  • 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

NOTE: These figures are particularly important for business owners. You’ll need to ensure these changes are applied to your employees’ earnings for the upcoming financial year – or else risk drawing the ire of the ATO!

Why did I receive a tax bill?

There are lots of reasons why you may have received a tax bill! Here are some of the most common:

  • Your boss didn’t withhold enough tax from your wages for the previous financial year.
  • You’re a sole trader and you didn’t pay the ATO the right amount of tax during the past financial year. All business owners should know how to report and pay tax.
  • You have a side business and didn’t pay any tax from earnings during the past financial year. You’ll need to rectify that by paying your tax bill after lodgement.

Using a helpful service like pay as you go (PAYG) withholding can help you avoid receiving any nasty tax bills in the future.

So, what exactly do you need to pay attention to on your tax bill? First, figure out the exact amount that you owe to the ATO. This amount will differ depending on whether you are a business owner, individual employee or sole trader – the ATO has a helpful guide to walk you through the key steps.

Once you’ve lodged your tax return, a Notice of Assessment (NOA) will be sent to you that includes how much you owe, the payment deadline, as well as your unique payment reference number (PRN).

In terms of actually paying your tax bill, you can do it via BPAY, credit or debit card, the new EasyPay service, or by calling the ATO on your phone. For hefty bills that you can’t pay off in one go, reach out to the ATO and ask if they can put you on a payment plan.

Lodging previous years’ tax returns

Sometimes life just gets busy. From work to family and everything in between, it’s easy to leave tax at the bottom of your to-do list. Thankfully, the ATO understands that Australians have their own lives to lead. That being said, they still want you to stay up to date with your tax returns. So if you’ve let some lodgements slip well beyond their due dates, make sure you take care of them ASAP to avoid paying any fines.

It’s really simple to find out whether you have any overdue tax returns:

Whether it’s been a few days or several years since you last lodged a tax return, it’s important that you take care of your obligations immediately. You can make your life so much easier by following the ATO’s recommendation of using a registered tax agent. They have comprehensive knowledge of all the due dates, lodgement rules and more. In short, they are probably your best chance for not having to pay fees – if you do it yourself, it’ll no doubt be a time-consuming and highly frustrating experience!

Tax withheld for individuals calculator

Visit the ATO’s website and you’ll find two different calculators for tax withholding. Tax withheld for individuals calculator is the standard and what you’ll probably end up using – it’s for regular employees and working holidaymakers. The second calculator, the voluntary agreement calculator, is used for sub-contractors.

Before you start using the calculator, make sure you’ve collected the following from your staff (usually when they sign their employment contract):

Once you’re all set with the above, it’s time to start entering the relevant information into the tax calculator. According to the ATO, you’ll need to enter the following (as appropriate):

  • Income tax rate
  • Medicare levy
  • Study and training support loan contributions
  • Worker status:
    • Resident
    • Non-resident
    • Working holidaymaker
  • Registration of employers of working holidaymakers
  • Tax-free threshold
  • Tax offset entitlements

Not getting the hang of the calculator? The ATO’s how-to guide will explain everything in greater detail.

Gillet & Associates are your tax, BAS, payroll and bookkeeping experts. We do all the hard work so you don’t have to! We are small business taxation specialists well-known for being able to maximise our clients’ tax efficiency. So take a load off and let the professionals handle your tax affairs.

For more expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

Categories
Tax Returns

Tax Withheld for Individuals Calculator

Tax is an annual certainty, but it’s not the same every year. In fact, some significant changes have been made for the 2020–21 financial year. New tax withholding schedules are in place, which means it’s time for employers to update their payroll processes to apply tax cuts.

Here, we explain what you need to know about the tax changes, and how to use a ‘tax withheld for individuals’ calculator to figure out the right amounts for your employees.

Why do I need to withhold tax?

As a business owner who employs staff, it is your duty to withhold a certain amount of tax from their wages under Australian tax law. By failing to carry out your tax obligations, you could face severe penalties from the Australian Taxation Office (ATO).

But what if you’re just a small business owner without a finance team to rely on? It’s up to you to work out how much tax to withhold according to each employee’s wage. To make your life easier, the ATO has provided two easy-to-use calculators..

Which calculator should I use?

The ATO provides two different calculators for tax withholding purposes. The first and most common is the tax withheld for individuals calculator. This is the one most Australian business owners will use – it’s the standard for regular employees and other types of workers (e.g. working holidaymakers).

The second is for sub-contractors who are subject to voluntary agreements, called the voluntary agreement calculator.

For the purpose of this blog, we will assume you run a standard business and will use the individuals calculator.

What information do I need from staff to use the calculator?

Before being able to use the tax withholding calculator properly, you will need three declarations from your employees. Typically these will have been collected when they first signed a contract to work for your company:

 

What will the calculator do?

Once you have all that information and know the exact income of each person you employ, you can start using the calculator. There is a fair amount of information to enter, however the calculator itself is very simple to use. According to the ATO, the calculator will take into account:

  • Income tax rate
  • Medicare levy
  • Study and training support loan contributions
  • Worker status:
    • Resident
    • Non-resident
    • Working holidaymaker
  • Registration of employers of working holidaymakers
  • Tax-free threshold
  • Tax offset entitlements

If you’re still unsure how to use the calculator for tax withholding, there is a helpful how-to guide to walk you through the process.

Lodging tax return Burnie

Sure, you can use online calculators to figure out how much tax should be withheld, but if you’re a business owner who has to manage tax obligations for multiple employees it can become a mind-numbing, time-consuming process. It’d be so much easier to have a local tax expert take care of the numbers for you. That’s why lodging tax return Burnie is the smart move.

At Gillet & Associates, we do all the tax, BAS, payroll and bookkeeping work so you don’t have to. We specialise in small business taxation, and are renowned for helping our clients maximise their tax efficiency. Why do all the heavy tax lifting yourself when we can do it for you?

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

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Tax Returns

I forgot to lodge my previous year’s tax return – what now?

Missing the tax lodgement deadline isn’t the end of the world, but you do need to take care of it as soon as possible to avoid facing hefty fines from the Australian Taxation Office (ATO). Here, we explain what happens if you haven’t lodged a tax return for the previous year, and why a registered tax agent is the smartest choice to fix the problem.

What happens if I haven’t lodged tax returns for previous years?

From the moment we first start earning an income, it’s drilled into us that we need to hit the ATO tax return deadline every single year or risk the taxman knocking down our door. Reality isn’t so far-fetched, but that doesn’t mean you can forgo your tax obligations – especially if you’re running a business.

We understand that sometimes life and work get in the way and it’s hard to lodge your tax return on time. The ATO understands that as well. That’s why they recommend you get up to date with your tax returns as soon as possible to avoid a fine – even if it’s been a while since you lodged your last tax return.

Do I really need to lodge all my tax returns?

The ATO needs to understand your tax situation every year you are either working for an employer, working for yourself or running a business with employees. In most cases, that will mean lodging your previous years’ tax returns.

The good news is that it’s easy to find out whether you need to lodge your return for a certain year. For financial years 2018–19 and 2019–20 you can use the ‘Do I need to lodge a tax return’ tool through your myGov account. For financial years starting from 2013–14 you can access the tool without a myGov account – find out how to do that here.

If you haven’t lodged tax returns for earlier income years, it’s advised you contact the ATO immediately and explain your situation. With any luck, you won’t incur any financial penalties.

Lodging with a registered tax agent

It doesn’t matter if you’ve missed this year’s lodgement date by a day or it’s been several years since you last submitted a tax return – the key is to take care of it right now. You can save yourself a world of headaches by doing as the ATO recommends and lodging with a registered tax agent.

A qualified tax professional will understand all the due dates for lodging tax returns, as well as the rules around submitting tax returns from previous years. They may also help you avoid paying a penalty since they are familiar with tax laws and are in constant contact with the ATO.

Find your small business taxation Burnie specialist

Need to lodge your previous year’s tax return but not sure where to begin? Make your life easier – and never again have to worry about an audit from the ATO – by finding a small business taxation Burnie specialist to manage all your previous and future tax lodgements.

Gillet & Associates are small business taxation specialists committed to helping you maximise your tax efficiency. We do it all – tax, payroll, BAS, bookkeeping and more – so you can stay focused on running your business.

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

Categories
Tax Returns

Why did I receive a tax bill?

No one likes paying tax, but even worse is after you’ve paid your taxes and you are still on the hook for an additional bill! So why did you receive a tax bill? There are a number of reasons actually. Here, we discuss the circumstances in which you may be obligated to pay a tax bill, and what you can do to avoid them in the future.

Why do I have to pay a tax bill?

There are several reasons why you may need to pay tax after lodging your return – and when the bill is unexpected, it can really sting!

  • Individuals may be liable for a tax bill if your employer didn’t withhold enough tax in your regular pay over the course of the financial year.
  • Sole traders may need to pay a bill if you haven’t paid enough tax to the ATO throughout the financial year. As a business owner, it’s important you acquaint yourself with how to report and pay tax.
  • If you have a second job or a side business where no tax is withheld, you will need to pay the required tax amount after lodgement.

Business owners and sole traders can prevent a tax bill in future by going through pay as you go (PAYG) withholding to help meet your yearly obligations.

What do I need to pay attention to on the tax bill?

The first thing you’ll want to do is determine how much you owe. You can do this in different ways depending on whether you are an individual employee, sole trader, business owner or registered agent – the ATO will walk you through the necessary steps.

After lodging your tax return, you will receive a notice of assessment that will include the amount you have to pay, the due date for payment, and a unique payment reference number (PRN).

When it comes time to pay, you can do it online via BPAY, with your credit or debit card, with the Government EasyPay service, or over the phone. If the bill is large and you won’t be able to pay it off in full by the due date, make sure you contact the ATO and request a payment plan.

A Burnie tax agent can do the hard work for you

Receiving a tax bill – especially an unexpected one – can be both stressful and frustrating. So how can you avoid the same thing happening next financial year? Find yourself a local Burnie tax agent who understands your employment circumstances and can help you get the best tax return possible.

At Gillet & Associates we work with sole traders and small business owners across all industries, and avoiding tax bills is one of the most common reasons why people come to us. So if you’re ready to stop wasting time – and money – doing your own taxes every financial year, let the experts take care of them for you.

Choose the best Burnie tax agent for all your tax needs

Gillet & Associates is a Burnie tax agent servicing Tasmanian businesses. Why do our clients love our services? Because we are small business taxation specialists who use our experience and expertise to maximise your tax efficiency. Whether you need your tax returns managed, BAS organised, payroll streamlined or regular bookkeeping support, we can do it all so you can focus on your business.

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

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Tax Returns

Do I need to lodge a tax return?

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.

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Tax Returns

How to lodge your tax with a registered tax agent

Hearing the word “tax” is enough to make some people throw their hands in the air and groan. As one of life’s two certainties, there’s not much that’s fun about tax (even with the latest tax cuts). Business owners, employees, sole traders – we all have to do our taxes. Or do we?

Let’s explore whether you should do all the heavy lifting yourself, or invest in a registered tax agent to make your life easier.

Should I lodge with a registered tax agent?

The short answer is yes. Lodging your annual tax return through a registered tax agent is a smart decision. It takes away the frustration and long hours spent putting together your tax every year. Plus, with a registered tax agent you know you can trust them to do everything by the book. That means the ATO won’t be knocking on your door in a few years’ time because you got your numbers wrong.

“Where are all the accountants near me?” we hear you ask. There’s more than you think. As of December 2019, there were over 166,000 professional members of CPA Australia. Even here in Burnie, Tasmania you’ll find expert accountants and tax agents to service your tax needs.

What you’ll get from a registered tax agent

While you will have to pay a registered tax agent to manage your tax affairs, the benefits far outweigh the cost. Some of the biggest pros include:

  • Time savings: Doing your own tax takes hours at a time – and even more if you have employees. Passing everything over to a registered tax agent means you can use those hours on your business instead.
  • Total compliance: Worried about compliance and disclosure when doing your own tax? No longer! Your registered tax agent will abide by all the ATO’s rules.
  • No need to worry about deadlines: As the tax deadline approaches, Australians get more and more stressed about having to do it. Wouldn’t it be nice to no longer have to worry about tax deadlines?
  • Long-term relationship: You might think about using a registered tax agent as a one-off when you’re busy, but there’s a good chance you’ll be back again next year. Plus, having an accountant on call means you can ask them about other concerns, such as BAS, payroll, bookkeeping and more.

Where can I find accountants near me to lodge my tax?

It’s simple enough to type a generic “accountants near me” search into Google and get page after page of suggestions. But just like you care about who you bank with, you should also care about who looks after your tax. After all, a professional tax agent is more likely to get you the best possible return while staying within the legal boundaries outlined by the ATO.

At Gillet & Associates, we’re pride ourselves on applying intelligent tax solutions for business owners. Not only can we take care of your company’s tax obligations, but we also offer a wide variety of services and advice to support your business as it grows. That’s why we’re the best small business taxation specialists around.

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

Categories
Tax Returns

Changes in tax rates 2020: All you need to know

The coronavirus pandemic has impacted every Australian in some way. Job losses and financial stress are common concerns, while Victorians have endured the lengthiest lockdown yet. The good news is that the Federal Government has announced personal tax cuts to help stimulate the economy and get people back on their feet.

Here’s what you need to know about the tax rate changes.

What are the tax changes announced in the Budget 2020–21?

On 6 October 2020, the Federal Government revealed their delayed Budget 2020–21. Much of it focused on recovery support, jobs creation and tax cuts. Most notably, they brought forward personal income tax cuts that were meant to take effect two years from now. Instead, Australians get to enjoy reduced tax rates right now, rather than from the 2022–23 financial year.

While it’s great news all round, it means you need to wrap your head around the changes. This is particularly true if you are a business owner with employees, or a sole trader who does their own taxes.

Individual income tax rate changes

How much you end up saving on tax will depend on a variety of circumstances. Business owners will need to understand these different situations so they can apply the tax changes. Failing to put in place these changes could mean an uncomfortable phone call from the Australian Taxation Office.

To help get your head around these tax changes, here are some of the different lifestyle types of Australians. The first figure is their income, with the second figure how much they will save from tax cuts for the 2020–21 financial year:

Single with no children

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

 

Double-income couple with young children (salary split 50/50)

  • $40,000: $0
  • $60,000: $1,210
  • $80,000: $2,418
  • $100,000: $4,830
  • $125,000: $4,830
  • $150,000: $4,320
  • $200,000: $4,620
  • $250,000: $4,920

 

Double-income couple with teenage children (salary split 67/33)

  • $40,000: $955
  • $60,000: $1,559
  • $80,000: $3,020
  • $100,000: $3,020
  • $125,000: $3,960
  • $150,000: $4,725
  • $200,000: $4,845
  • $250,000: $4,590

 

Single retiree

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

Note: These figures are approximates and will depend on a variety of factors. Speak to your accountant or financial advisor for more information.

Where to find the best accountant in Burnie

Whether you’re a business owner or sole trader, these changes will likely impact your tax obligations. You will also need to apply these changes to your current payroll so your employees get the right amount on their paycheques.

We understand these changes can be confusing and even frustrating. If you’re looking for the best accountant in Burnie to help take care of your tax needs, reach out to Gillet & Associates today. We are small business taxation specialists who can help maximise your tax efficiency. From tax returns to BAS, payroll, bookkeeping and much more, we’ll take the hard work off your hands so you can get back to running your business.

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.