Calculating your tax return in Australia can be a complex process, but it is essential to ensure that you are paying the right amount of tax and maximising your tax refund.
In this article, we will guide you through the process of how to calculate your tax return step-by-step.
1. Gather Your Documents
Before you start calculating your tax return, you need to gather all the necessary documents. These include your PAYG payment summary, any bank interest statements, dividend statements, and any other relevant documents related to your income and expenses. Its always handy to have a copy of your previous year’s tax return.
2. Determine Your Taxable Income
Your taxable income is the amount of income that is subject to taxation. To calculate your taxable income, you need to subtract your deductions and offsets from your total income. Deductions are expenses that you can subtract from your income, such as work-related expenses, charitable donations, and self-education expenses. Offsets are deductions that reduce your tax liability dollar for dollar, such as the low-income tax offset and the senior Australians and pensioners tax offset in previous years.
3. Calculate Your Tax Liability
Once you have determined your taxable income, you can calculate your tax liability using the tax tables provided by the Australian Taxation Office (ATO). The tax tables are based on your income level and your residency status (resident or non-resident).
4. Determine Your Tax Credits
Tax credits are deductions that reduce your tax liability dollar for dollar. There are several tax credits available in Australia, such as the private health insurance rebate, the child care rebate, and the research and development tax incentive. To determine which tax credits you qualify for, you need to review the eligibility requirements for each credit.
5. Subtract Your Tax Credits from Your Tax Liability
After you have determined your tax credits, you can subtract them from your tax liability. This will give you the total amount of tax that you owe.
6. Determine Your Tax Withholdings
Your tax withholdings are the amount of taxes that have already been withheld from your pay by your employer. To determine your tax withholdings, you need to review your PAYG payment summary.
7. Compare Your Tax Liability to Your Tax Withholdings
Once you have determined your tax liability and tax withholdings, you can compare the two amounts to see if you owe taxes or if you are due a refund. If your tax withholdings are greater than your tax liability, you will receive a refund. If your tax liability is greater than your tax withholdings, you will need to pay the difference.
8. Lodge Your Tax Return
After you have calculated your tax return, you need to lodge it with the ATO. You can lodge your tax return through a registered tax agent like Accountants Direct. The deadline for lodging your tax return is usually October 31st of each year, but if you use an agent this can often be extended a further 6 months trough to May the following year.
In conclusion, calculating your tax return in Australia requires careful consideration of your income, deductions, offsets, and tax credits. By following these steps, you can ensure that you are paying the right amount of taxes and maximising your tax refund.
For a lot of Aussies, it can all be too much. As such for a couple of hundred fully tax deductible dollars, we can do it quickly and accurately.
Book here https://accountantsdirect.com.au or call 1300 TAX SHOP (1300 829 746)
