Taxation
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What is income tax?
Income tax is money that is paid to the federal government from money (income) that you earn. Income tax is used by the government to fund and pay for services like health, education and Centrelink benefits.
What is Pay As You Go (PAYG) tax?
A Pay As You Go (PAYG) taxation installment is a single, 'all in one' system for reporting and paying income tax installments on business and investment income.
What is Goods and Services Tax (GST)?
The Goods and Services Tax (GST) is a tax of 10% on most goods and services. You can get further information about GST from the Australian Taxation Office (ATO).
What is an income tax return?
An income tax return is a document which must be completed and sent every year to the ATO. The income tax return gives details of all income you earn and any claim you can make for deductions allowed by law.
Do I have to lodge a tax return?
If you are an Australian resident, that is, a person who is entitled to live in Australia, either because you are a citizen or because you hold an appropriate visa, you must lodge an income tax return if you receive income above the amount of money which a person may earn before they are liable to pay tax (this is called the tax free threshold).
If you are a non-resident whose income can be sourced to Australia you will also have to lodge a tax return.
Tax is payable by individuals and companies, although there are some exceptions e.g. religious, scientific, charitable or public education institutions.
Income tax returns must be lodged by individuals by 31 October each year.
You can get further information from the ATO or your tax agent or accountant.
If you are on Centrelink benefit, you should check with the ATO to see if you need to complete an income tax return.
What happens after I lodge the tax return?
Once you lodge your tax return, the Commissioner of Taxation assesses the amount of tax you have to pay and then a notice of assessment which shows whether you owe tax or will get a refund will be sent to you.
I don't believe the ATO assessed my tax correctly, what can I do?
If you believe that your assessment is not correct, you can ask for an amendment or lodge an objection with the ATO.
Amendments are for simple errors you notice on your tax return or your assessment. The mistake could be something you made on your tax return or a simple mistake the ATO made.
Objections about your assessment are for more complex matters. Complex matters include things that are not simple amendments or if you don't agree with a decision made by the ATO. You can get your objection form from the ATO.
Are there any time limits to lodge my objection?
Yes. There are different time limits for different decisions and different types of taxpayer (e.g. as an individual or if you own a small business).
If you don't lodge your objection before the time limit, it may affect your options. Contact the ATO or your tax agent or accountant for further details.
I am not happy with the decision made by the ATO. Can I appeal it?
Yes. If your objection is not allowed, you can appeal the decision to:
- the Administrative Appeals Tribunal
- the Small Taxation Claims Tribunal, for disputes less than $5000
- the Federal Court
- or you could also apply to the ATO for your case to be funded through the test case program.
What is the test case program?
The test case program is a program set up to test tax laws that are of significance. Sometimes the ATO may pay part of your legal costs depending on the importance of your tax dispute. You can get further information from the ATO about this program.
If I don't lodge a tax return or if I give false information to the ATO is it an offence?
If you are required by law to lodge a tax return and you fail to do so or you provide false information to the ATO, you are committing an offence. Penalties for tax offences can be severe and can include an order to pay penalty tax (that is, extra tax payable because the required payments were not made at the correct time), a fine and possibly jail.
You should get legal advice if you are charged with a taxation offence.