Income You Must Declare: Understanding Reportable Income for Your Tax Return

When it comes to lodging your tax return, knowing what income to declare is important for staying on the right side of the Australian Taxation Office (ATO). Here’s a guide to help you understand the types of income that must be reported.

What Income Must You Declare?

1. Employment Income: This includes your salary, wages, allowances, bonuses, and tips. Any reportable fringe benefits you receive are also considered part of your employment income.

2. Government Payments: Certain government payments such as JobSeeker or Youth Allowance are taxable and must be declared. However, some payments, like certain pensions, may be tax-free.

3. Investment Income: This includes interest from bank accounts, dividends from shares, rental income from properties, and any capital gains from selling assets. Remember, even if you reinvest your dividends, they still need to be reported as income.

4. Business and Sole Trader Income: If you run a business or operate as a sole trader, you must declare all income earned. This includes cash payments and any income from the sale of goods or services.

5. Foreign Income: If you’re an Australian resident for tax purposes, you must declare any income you earn overseas. This includes pensions, rental income, and wages.

6. Other Income: This category covers income from sources such as prizes, awards, and certain insurance payouts. If you receive a scholarship, it might also be taxable depending on its nature.

Common Misconceptions

• Non-Taxable Government Payments: Not all government payments are non-taxable. Always check if a payment is considered taxable before excluding it from your tax return.

• Reinvested Dividends: Just because you reinvest dividends doesn’t mean they’re not taxable. They must be declared as income.

• Foreign Income Exclusion: Some believe foreign income isn’t taxable in Australia, but if you’re a resident for tax purposes, it must be declared.

Examples of Non-Reportable Income

• Gifts and Inheritances: Generally, these are not considered taxable income.

• Lottery Winnings: Lottery winnings are not taxed, so they don’t need to be declared.

Gotax Advice

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Final Thoughts

Understanding what income to declare is essential for accurate tax reporting. By knowing what to include, you can avoid potential pitfalls and ensure your tax return is correct. For more helpful tips and tax advice, visit www.gotax.com.au.

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Be Aware: Tax law and interpretations of that law change on a frequent basis. This article is good at the time of writing. Always seek updated content when making decisions on Tax Deductions.