If lodging your tax return sounds more stressful than building IKEA furniture, this is the guide for you
At the end of each financial year, around 14 million Australians need to start prepping their tax returns.
But the feeling of collating all your documentation, validating your income and detailing tax deductions can feel more terrifying than meeting your partner’s parents for the very first time.
And since only 3.5 million tax returns have been lodged so far, chance are you haven’t thought about your taxes yet.
But once you get to know the process, it’s actually not that difficult.
We’re going to walk step by step through the process of filing a tax return using the government’s myTax tool, through myGov.
Sweet! So what does the process actually look like?
Just a quick note: if you’ve submitted your tax return in the past, you can skip to Step 3.
If you’ve never lodged your tax return online before, you’ll need to create a myGov account.
myGov is a central portal where you can link all your government services in one place…like the ATO.
To create your account, head to mygov.com.au. You’ll then need to enter some basic details such as your name, address, phone number.
Once your account has been made, you can go into it and link the ATO as a service.
Click view and link services, and then the link button next to ATO.
Once you’ve linked the ATO, you’re in myTax.
Before you start the tax return process, you need to tackle the personal ID side of things.
You’ll need to make sure you have the following information on hand:
Note: if you’ve filed your tax return via MyTax before, a lot of this information should already be pre-filled.
You should be able to see your tax return from the last financial year in myTax with a button on the right hand side that says “Prepare”.
If you don’t see your tax return, scroll down to “manage tax returns” > “not lodged” > then “prepare”.
There should be a message in your myGov mailbox saying that your employer has finalised your end of year statement.
That means your employer has filled in your income and you can start filing your return.
As we mentioned earlier, your contact details should already be pre-filled into myTax if you’ve lodged an online tax return before but it doesn’t hurt to double check all the details, especially if you’ve changed addresses or phone numbers.
You don’t want someone else getting your tax return in their account!
You’ll also be asked to tick whether or not you were a resident of Australia for tax purposes in the financial year, and whether or not you had a spouse in the financial year.
If you have a spouse, your incomes will be combined as one household, and this can have some tax benefits.
Here, you need to select your sources of income from the last financial year and whether or not you’ll be claiming any deductions.
Go through the line items carefully and select the options that apply to you. Some options may be preselected if you’ve filed a tax return with MyTax before.
For most of us, we’ll be selecting the first box “you received salary, wages, or other income…” as this includes your salary paid by your employer, and the third box “you had Australian interest or other Australian income…”, as this includes interest earned from your bank accounts, and dividends from any stock investments you might hold.
FYI: Australian interest doesn’t include any interest reduced via an offset account - there’s no tax paid on that.
Most of us will likely also select the “you had deductions you want to claim” to claim expenses that can reduce our taxable income (legally).
Once you’ve selected all the relevant boxes, click next.
This is where you’ll add other sources of income to get a total figure of your assessable income.
But for simplicity, we’ll use an example.
Let’s say you’re earning $85,000 per annum.
You are an Australian resident for tax purposes and have no spouse.
You have some dividend income on top of your salary, and some work-related expenses.
You’ll be able to enter in your dividend income from individual companies using dividend statements.
The companies you hold shares with should have sent you a dividend statement everyone you get paid.
The statement will also have a breakdown of what you need to declare for tax - you can plug those numbers straight into myTax.
Note: this applies to dividends from individual companies only. For ETFs, you’ll need to declare dividend income under “managed fund distributions”.
Once you’ve added all your other income, and claimed your relevant deductions,
This is the mega finale of the tax return, it’s where the maths comes into play, but it’s also the part where you get to reduce your taxable income.
Following on from our example above, let’s assume you’ve got some work-related expenses:
Assuming you’ve got receipts, you can claim all of your work-related expenses by entering in the amount and details of what you’re claiming.
If you don’t have receipts, you’ll only be able to claim up to $300 of work-related expenses.
If you’re keen to understand more about how to claim work-from-home expenses, we’ve broken it down with thorough examples in the Tax Academy.
Also, a quick PSA to always keep your receipts from work-related expenses so you can claim them when tax time comes around!
Tick the relevant boxes that apply to you.
All Australian residents have to pay a 2% Medicare levy as part of their tax return.
There are some exemptions and special rules that apply - that’s what this section is for.
We’re juuust about at the end! You’ll be asked if you completed your tax return by yourself, and if you’ll need to lodge an Australian tax return in the future.
Finally, you can calculate an estimate of your tax return to get an idea of how much you’ll be getting back (or how much you’ll owe the ATO).
Run your eyes over your tax return once more to make sure it all looks correct and then you’re ready to lodge your return and in a couple of weeks, you should have your return hitting your bank account.
Quick legal note before we close off:
Everything referenced today is general, factual information. We don’t take into account your personal circumstances, and we can’t recommend or give opinions about any products, services, or companies.
This article is a general guide to tax returns. If you have a more complicated tax return, it’s recommended you see a professional tax accountant.
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