Filing tax returns can be a rather confusing process. This is mainly due to a general lack of knowledge of this process. Now, this isn’t something that you should be ashamed of as it’s understandable not to know how to navigate this process. To help you out, we thought it would be useful to go through some common questions that people have on filing tax returns. If this is something that you’re interested in learning more about, read on as we answer the four most common questions about doing tax returns.
Why Do You Have to Do an Income Tax Return?
Your income tax returns are a means of declaring your income and expenses during the year. This gives you a pretty accurate estimate of what your tax returns will likely be once everything is filed.
Do You Need to Do a Tax Return If You’ve Done Your Business Activity Statements?
The main thing you have to understand about this is that there are a slew of different taxes that you have to pay. Goods and Services Tax relates directly to your Business Activity Statement. Basically, this means that all you’re doing when you’re doing your Business Activity Statemen is working out the difference between the Goods and Services Tax that you’ve collected and the Goods and Services Tax that you’ve paid during the quarter.
Income Tax is separate from Goods and Services Tax as it is concerned with your income. Now, if you’re not registered for Goods and Services Tax and do not file Business Activity Statements then any income you receive or expenses you pay can be included in your tax return in full.
What Do You Need to Include as Income?
While this question seems obvious, there’s more to it than you may think. Basically, anytime you are paid for a good or a service it’s best to record this for income tax purposes. With that being said, the amount you are paid will matter as it will dictate whether or not you need to pay tax for it. If you are an Australian resident taxpayer, the first $18,200 of income that you receive is tax-free. This is called the tax free threshold
What Can You Include as Expenses?
If the expense is tied to your income then you have to include it in your tax return. With that being said, expenses that are valued over thousands of dollars are subjected to specific rules set by the Australian Taxation Office (ATO). To add to this, there are also specific items that the ATO does not allow to be claimed as an expense. The tricky thing about this is that it changes each year so it’s best to keep up to date with their policies.
Hopefully, this article proves to be useful when it comes to helping you accomplish your tax returns. While this process can be rather tedious, the information that we’ve laid out here should help you navigate any issues you may have. If you have more specific questions that we didn’t get to cover here, it would be best to consult with professional tax consultants.
SMB Accounting has knowledgeable tax consultants who can help you get started with taking care of your tax refunds. We make sure that our clients use their tax refunds wisely, and we also offer other services such as accounting and business advice. Contact us today for a consultation!