The ATO says that last year about half a million Australians lodged a tax return for the first time, with a similar number if not more expected to lodge by the time the looming October 31 deadline arrives for getting your tax return in to the ATO. Top 10 tips for first time lodgers.
Of course given that close deadline, perhaps the first bit of advice should be to get your tax return done NOW if you haven’t already… or have a tax agent do it for you, as they automatically get an extension of time to lodge returns (until either the end of March or the middle of May next year, depending on circumstances). Not only that, but their fee is tax deductible (for next year’s tax return).
For first-time lodgers however, the ATO is aware that the whole procedure can seem a bit intimidating, which is why it has put together the following 10 tips to make lodging your first tax return a smoother process.
- ONE Make sure you have a tax file number (TFN)
- TWO Check if you need to lodge
- THREE Know your options
- FOUR Access the ATO’s online services
- FIVE Claim your work-related expenses
- SIX Declare your fair share
- SEVEN Fix mistakes as soon as possible
- EIGHT Patience is a virtue
- NINE Lodge by October 31
- TEN Track your progress
ONE Make sure you have a tax file number (TFN)
No-one has to have a TFN, but without one you will have more tax deducted from your pay and you will not be able to lodge a tax return (so no tax refund, if you’re entitled to one). It might be too late for 2016, but you can always find out how to apply for next tax time by visiting this ATO web page. And if you already had a TFN but lost it, check out this page for clues.
TWO Check if you need to lodge
Not sure if you need to lodge a tax return? Come tax time, you will be able to use the ATO’s online ‘Do I need to lodge?’ tool, which will work it out for you. Just make sure you wait until the right year’s version is available.
THREE Know your options
Everyone has a choice about how to lodge. For example, myTax is the ATO’s quick, easy, safe and secure online lodgment service. You can use it on any device — smartphone, tablet and computer — when and wherever it suits you. But keep in mind the above points about the advantages of using the services of a registered tax agent.
FOUR Access the ATO’s online services
To access the ATO’s online services, including myTax, you will need to create a myGov account and link it to the ATO. To link your account, call the ATO on 13 28 61 and press 5 at the prompt to get your unique linking code to verify your account. In myGov, go to the services page and link to the ATO. Select ‘I have a linking code’ and enter your linking code when prompted.
See the video at the end of this article for guidance on creating a myGov account and linking it to the ATO.
You may be able to claim a tax deduction for expenses related to your job – for example, if you have to work outdoors you can claim a deduction for the cost of your hat and sunglasses.
There are different rules depending on your job, but generally you will need to satisfy the three golden rules:
- you must have spent the money yourself and not been reimbursed,
- the expense must be related to your work
- you must have a record to prove the expense.
To check out what you may be entitled to, see this ATO page.
If you have a lot of work-related expenses, you might want to consider the ATO’s myDeductions tool. This tool, in the ATO app, is an easy and convenient way for people to keep track of their expenses on the go. MyDeductions users can share their deduction records directly with their tax agent via the app, or upload their deductions directly to their tax return. To start using myDeductions download the ATO app from the links in the above ATO app page.
It is possible that you may be part of the sharing economy without knowing it. If you earn money from odd jobs such as transporting passengers or renting out a room or house, it counts as assessable income and you will need to declare it on your tax return. Check this page to see if you are part of the sharing economy.
SEVEN Fix mistakes as soon as possible
The ATO is well aware that one of the things people most worry about when completing their own tax return is making a mistake. If you think you have made a mistake or forgot to include something on your tax return, let the ATO know as soon as possible. You can amend your tax return by accessing the ATO’s online services via your myGov account. If you lodged using a tax agent, all you have to do is contact them.
EIGHT Patience is a virtue
Each year, the ATO receives and matches more than 650 million transactions to the information provided in tax returns. For many people, this means all they have to do is double-check the information it has pre-filled for them, enter any deductions they have and then hit submit.
The ATO expects to receive most pre-fill information by August, which for next year means if you can wait until after then, completing your own tax return should be even quicker and easier, and you’ll be far less likely to make a mistake.
NINE Lodge by October 31
As mentioned, the deadline for lodging your own tax return is the end of October. But if you are planning to use a tax agent, the important thing to remember is that you have to contact them before then to allow them to meet their own lodgment deadlines.
And if you use a tax agent, it is important to make sure they are registered. Only a registered tax agent can charge a fee for doing your tax return. A searchable list of registered tax agents is available on the Tax Practitioners Board website.
TEN Track your progress
Tax returns lodged using myTax or a registered tax agent are usually processed within two weeks. You can check the progress of your return using the ATO’s online services via your myGov account.
How to create a myGov account, and link it to the ATO