Step by step guide to file your own tax returns in Australia. It is not as hard as you think.

Many of us think filing our own tax returns are hard. When you understand the concept of tax, it is not as hard as you think. Eventually, it helps you to understand more concepts, saves your time and money.

Moreover, I believe preparing our own tax returns provide more knowledge in tax and makes it easier to understand any future changes that had happened in the tax world. I attended some courses and this helped me to understand tax in a better way.

Moreover as a student, you may have simple expenses that you can claim in your tax by yourself. Thanks to MyGov Account; this made tax application easier and can be completed in minutes:

What is Tax Refund?

1. Assessable income: This is the income earned through working for a company in provision of your services and paid tax.
2. Allowable Deductions: These are the expenses that are incurred and can be allowed to be deductible from the gross income calculated to reduce the amount of income subject to income tax

For example: the total income earned is (Assessable income)    $30,000

                         Allowable deductions                                  :        $3,000

                         Taxable income                                            :      $27,000

This means you would have paid initial tax on $30,000 but eligible to pay only on $27,000. The difference between tax paid for $30,000 and the tax paid on actual entitlement of $27000 is a refund. The system automatically calculates for any tax offsets available and the Medicare Levy Exemptions applicable. 

If you are new to Australia:

Tax returns is a yearly process that you need to file with Australian Taxation Office with your income earned. Sometimes, as a student, you may not earn any income for the first year, even then you need to file your tax returns unless you do not own any Tax File Number (TFN).

The potential expenses you can claim as a student:

1. Course Fee: This can be claimed as a deduction if you are working in the relevant field of your study. For example, you are working as an Accounts clerk; completion of your Accounting degree enhances your skill and helps you to gain better employment in Accounting. In this case, you can claim course fee.
2. Laptop and any software: If you bought any software or laptop to use for your job; then you can claim this as allowable deductions.
3. Mobile Phone Usage: The percentage of the mobile towards your work can be claimed as a deduction. For example, if you are working for a tax firm and using your mobile phone to discuss any new changes with your colleague or manager; then you can use that portion as work related deduction
4. Travel: If you use your vehicle for work related that relates to your occupation, for example, if you are working for a restaurant as a delivery boy and used your vehicle for that purpose. You can claim the kilometres as a deduction. For example: 60% of your vehicle is used for work purposes and 40% for personal use. Hence, you can claim 60% of your expenses as work related deduction.
5. Train tickets: Travelling between work to work can be claimed as a deduction
6. Uniforms: If you have uniform with a logo, the cost you paid for it can be claimed as a deduction; shoes that are specifically designed for safety (steel cap) can be used as a deduction
7. Stationary and books: As mentioned in point 1, if your job is related to your study, then you can claim stationary and books you purchased as a deduction.
8. Laundry: Laundry can be claimed $0.50 per mix load and $1.00 for single load. For example; you have uniform that is washed separately from your normal clothes once a week. Then you can claim 52 weeks multiplied by $1.00 per load ie $52.00. If it is mixed with other clothes, then 52 weeks multiplied by $0.50 ie $26.00.
9. Union and Professional fee: Any fee paid towards seminars, professional membership and Union membership. You can claim these expenses as deductions. For example, attended seminar to upgrade your software or application skills, paid membership for CPA or related to your occupation etc.
10. Gift and Donations: Gifts of $2 or more to an approved institution or group can be claimed as a deduction.Gather the following documents before applying if you are an international student:
    1. Think and note down what work and study related expenses you had during the year, if you had written it somewhere on a piece of paper or copies of documents. Gather them all together.
    2. Ensure you have PAYG summary from your employer/s with all the tax withheld details
    3. Ensure you have medicare levy exemption certificate, just check how you can apply here. If you are a Permanent resident and holder of Medicare Card, you are not eligible for this exemption.

     

    Let’s see how we can fill the above information in the ‘Mygov’ account:

     

    Step 1: Go to www.my.gov.au. Enter your login and password. If you do not have an account with mygov; create an account. After login, click on Australian Taxation office icon. 

    

    Step 2: After clicking on Australian Taxation Office, the below screen appears:

    

     

    Step 3: After clicking on lodge the below screen appears retrieving your prefill details:

    

    Step 4: It asks whether your personal details are up to date; if not, you can update as required. If you do not have your details; you enter details as requested. 

    Step 5: Click on next at the bottom of the page, the below screen appears. Please note I have used 2016-17 Financial year return to explain.

    

    Step 6: Click on Salary, Wages based on your PAYG summary; sometimes the interest earned in your bank account are automatically retrieved as below. If not, enter as what earned.

    

    Step 7: The interest earned by your everyday account or savings account are pre-filled with the information; sometimes if you do not provide TFN number to your bank, they withheld tax in the second column of ‘your share of TFN amounts withheld’

    

    Step 8: The below is the deductions section which allows you to calculate tax refund: As mentioned above, you can enter the nature of expenses you can claim as ‘eligible deductions’                                                                                                                                                                             Step 9: Enter if you have used tax agent in the last financial year. Ensure you have enough receipts to provide as evidence when requested by ATO                                                                                                                                                                               Step 10: Enter you partner details and dependants if you have and their income                                                                                                                                                                                                                                                  Step 11: click on tax estimate and the below screen appears.                                                                                                             

    Important factors to consider while claiming the deductions:

    1. You cannot claim deductions if you have used your friends’ car for work purposes. The car must be registered on your name
    2. You cannot claim the travel to and from university
    3. In relates to laundry and uniform, if you exceed $300 in claim, ensure you have evidence for the whole amount claimed.
    4. If you are not confident with the above steps, step into any tax agent office and look how much refund you can get. If you get more than what you did; go with them and otherwise you can say ‘no’ to claim on your behalf.
    5. Ensure you keep evidence of every expense and claim only the eligible deductions.Some articles if you are interested:  1. Dodgy claims                                                                                                                                                                                                                                                             2. Claiming home work related expenses                                                                                                                                                                                                                      3. ATO red flags for 2018                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Disclaimer: The above steps are for basic tax returns, if you have questions about eligible deductions, you can refer to ATO website or an experienced tax agent.