Tax Virgins
Whatever your age, GoTax has you covered if this is the first time you will be lodging your tax return.
We know what a daunting experience it can be for first timers. So, we’ve done a few things to bring you up to speed. We want to make you informed as we believe information will make the whole tax process a little less daunting for you.
Get a basic understanding.
All Australian taxpayers must pay tax. That gives the government (assuming they don’t waste it) the money to provide the infrastructure, education, defence, social security and services that the country needs to operate.
There are a few ways that the government taxes society to raise these funds, however the method that affects you is the taxation that you pay through your wages.
Each period (usually weekly) your employer deducts an amount of tax, according to a scale, and sends it into the government bank account. This transaction is noted against your name. Some weeks you might be taxed heavily (because you earned lots), other weeks you might not get taxed at all because your weekly wage was a bit low for that week.
If you earn the same amount of wages each week, you’ll find the system is designed to take out the correct amount of tax to cover you.
Where wages fluctuate or there are expenses that you have spent for your job, these things will determine whether you receive a tax refund or have tax payable (ahhhhhhhhhh), more on that later.
Also other income such as interest, dividends, rent you receive all get added into your income and if you haven’t already paid tax on those types of income, you soon will.
All those wages and the taxes you pay go into a bucket until the end of the year then we empty the bucket and add up how much you earned and how much tax you paid.
So now it comes to tax time.
What’s the purpose of lodging your tax return?
It’s the governments way of checking that you have paid your fair share and met your tax obligations for the year.
This happens every year. The tax year is different to the calendar year and runs from the 1st of July to the 30th June.
So when you add up all that income (the bucket) it becomes know as “Taxable Income”.
From Taxable Income you can deduct any costs that you had to pay to earn that income. Those expenses are called tax deductions.
Tax deductions need to be directly related to the work you do. There are rules on what you can claim as a tax deduction.
Then you subtract the tax deductions from the income, you get a net figure called Taxable Income
It is this “Taxable Income” that you pay tax on.
Hope that helps, we have more great knowledge and tips in our special First Timer blogs:
And remember if it’s your first time doing a tax return it is FREE with us.
