Taking control of personal income tax
Income tax is money paid to the federal government based on the amount of money you earn in a financial year less the expenses your incurred to earn that money. This is called taxable income. Assessable income – allowable deductions = taxable income.
The more you earn, the higher your tax rate. The Australian Tax Office (ATO) is the federal government department that is responsible for collecting your income tax and ensuring its accuracy.
If you are an employee, your employer is required to withhold some of your earnings and pay this to the ATO in instalments. Otherwise known as ‘pay as you go withholding’ (PAYG withholding).
The government uses your taxes to provide public goods and services to the community including health, aged-care, defence, infrastructure, education, social security and transport.
How to lodge your tax return
- Keep receipts for all expenses. If you can’t prove it, you can’t claim it.
- Get professional advice from a registered tax agent. Ignorance is not an excuse when it comes to tax. If you make a mistake, you are responsible for that mistake.
- Prepare and lodge yourself using the ATO’s free online portal myTax.
- Lodge your tax return on time so that you don’t receive a ‘default assessment’ with penalties.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2