A Beginner’s Guide to Tax (Part 1)

Tuesday, 24th September 2019

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1. (Personal) Income Tax in Australia &ndash; what is it?&nbsp; As with many other countries, income tax is withheld from wages and salaries in Australia, often resulting in refunds payable to taxpayers. An employee must quote to employers their Tax File Number (TFN) so the employer can withhold tax from their pay.&nbsp; 2. Tax Return? Do I lodge one? If tax has been withheld from any income you&rsquo;ve received (and you fit any of the following criteria) you need to lodge a tax return: If your total assessable income exceeds the $18,200 threshold If you earn less than the $18,200 threshold, but had tax withheld from that income If you own a business (regardless of income or loss) If you&rsquo;re a taxpayer who&rsquo;s been asked to submit a return by the Commissioner If you are a resident minor (under 18 on 30th June) who received income from dividends or distributions greater than $416 and franking credits were attached or tax was withheld). If you&rsquo;re a taxpayer who last year paid pay as you go instalment tax irrespective of income (if you wish to recover the tax) Tip! Make sure you have a tax file number (TFN), as you will have more tax deducted from your pay without one, and you can&rsquo;t lodge your return. 3. Tax-free threshold &ndash; what is it? As an Australian resident, the first $18,200 of a yearly income isn&rsquo;t taxed and is known as the tax-free threshold. You can use this threshold to reduce the amount of tax that is withheld from your pay during the year. When starting a new job, the employer will provide a TFN declaration to complete or they will ask for a TFN to complete on your behalf. Centrelink will also provide this form if there are payments being made. The $18,200 tax-free threshold is equivalent to: $350 a week $700 a fortnight $1,517 a month. When a taxable income exceeds the tax-free threshold, tax is paid on anything above that $18,200. If there is more than one job, generally it is required to only claim the tax-free threshold from the payer who pays the highest salary. Continue reading here: A Beginner's Guide to Tax (Part 2)