The tax system which operates in Australia is known as Pay-As-You-Go, which means that every month the employer continuously withholds a constant amount for tax from the employees’ wages, without paying the total amount at the end of the period. In every pay slip, the employer has included the breakdown of the salary with the amount withheld for taxes. This article explains how to do tax returns in Australia, in detail.
Tax Returns in Australia
In every year, 30th June is the end date of the financial period in which one needs to submit a tax return to the Australian Taxation Office (ATO). Then ATO decides whether the amount of tax paid by them is sufficient with respect to their wages. If a person has paid a lesser amount of tax then he gets a tax bill. If he/she pays more taxes then he/she gets a tax refund.
According to the tax law in Australia, people who earn an income of more or less than $6000 per year must lodge a tax return. Also, if the employer has withheld any portion from the salary of the employees for tax purposes, then they must lodge a tax return. Although it is a legal requirement, in some cases, it would be an advantage for the employees to lodge tax returns as more than 98% of the people are entitled to tax refunds.
The working holiday makers believe that if they lodge the tax return, they can receive all the tax back. Most of the working holiday makers in Australia receive a large amount of refund based on the following factors.
– The total sum of the income earned
– The total amount of tax withheld by the employer
– Period of stay in Australia within a financial year
– Amount of the allowable deductions e.g. expenses related to work
The Ways to Do Tax Returns in Australia
The financial period in Australia for tax purpose is from 1 July – 30 June every year. Tax return is due on 31 October in the next period. That means, for the period of 1 July 2014-30 June 2015, tax return is due on 31 October 2015.
To do tax returns in Australia, only a few documents are required; such as payment summaries, form of identification, and tax file number. One can either lodge the tax return online using etax or mytax application or can do it on a paper and email it. The tax payment is refunded in twelve business days if lodged electronically or in fifty business days if lodged as a paper return. If the details of a valid Australian bank account is provided then the refund payment is made directly to the account. If there is a due tax debt, then the payment needs to be made on or before 21 November.
Further details can be found on Australian Tax Office site.
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