This document provides information about preparing a tax return in Australia. It discusses who needs to file a tax return, how to prepare the first return including what software and documents are required, how to calculate capital gains, and tips for completing the return. It recommends getting help from an accountant if you have a business, investment properties, complex deductions, or are being audited by the tax office.

1. GENC3003Personal Financial PlanningAndrew Hingstonandrew.hingston@unsw.edu.auUnit 8: Tax returns

2. 2Preparing a tax returnThe responsibility is yoursWho has to lodge one?Preparing your first returnWhat you need before you startCalculating Capital GainsTipsWhen to get help

3. 3Preparing a tax returnThe responsibility is yours …Australia works on a “self-assessment” system.ATO trusts you to:Work out your own tax liabilityAsk for the help of an accountant if neededSubmit a correct tax return that calculates how much you owe them (or they owe you)The ATO then conducts random and also some targeted audits on people / companies.ATO imposes heavy fines if you breach their “trust”.ATO “monitoring” has improved significantly in recent years with better database systems.

4. 4Preparing a tax returnWho has to lodge a tax return?You must lodge a tax return if:You paid tax during the yearYour taxable income > $6000 (for residents)You received a Centrelink allowance or payment and you had received other income, and your taxable income was more than $6,883

5. 5Preparing a tax returnPreparing your first returnTwo options:Tax Pack (paper version)E-Tax (via software / Internet)E-Tax is much easier because:You are not inundated with irrelevant information (questions are conditional on previous answers)The software calculates totals and checks your answersYou can click on icons for detailed help on questionsRefunds are paid quicklyCan carry forward basic information from year to yearDownload software from ato.gov.au … Individuals.

6. 6Preparing a tax returnSections of a tax returnIncome – to calculate assessable incomeDeductions – to calculate allowable deductionsLosses carried forwardTax offsetsPrivate Health InsuranceMedicare Levy issuesVarious AdjustmentsSupplementary sections for some investments

7. 7Preparing a tax returnWhat you need before you startCopy of last year’s assessment or other documents from ATO to prove your identify.Tax File NumberPAYG Summary Statement(s) from employer(s)Centrelink summary statementsYour June bank statement that summarises interest and fees for the yearReceipts for any deductionsTax summaries for any managed fundsBuys, sells and dividends for any shares

8. 8Preparing a tax returnCalculating capital gainsWhen you sell an asset for more than you bought it then the gains are treated as assessable income and taxed.Unless it is an exempt asset (eg. Family home); orIt was purchase before 19 September 1985For assets purchased after 21 September 1999 and held for more than 12 months:Calculate the gainDeduct permitted “costs” associated with investmentMultiply by 50%Add this to your assessable incomeIf you hold for less than 12 months then no 50% discount

9. 9Preparing a tax returnTax return tipsDue by October 31!But can get extension if you call ATO 1+week beforehand with a good sob story!Keep a special tax folder during the year and put any relevant documents in it as you receive them.Make sure you have everything before you start your tax return.If your spouse or parents prepare your tax return then watch them do it this year and do it yourself next year … it’s an important life skill!Keep all records for 5 years

10. 10Preparing a tax returnWhen to get helpGet an accountant if you have:Your own businessInvestment propertiesDepreciation calculationsLots of tax deductionsA “questionnaire” from the ATO asking you how you derived your calculations for last year’s tax return (a prelude to an audit).

11. Stop and readNow read:Chapter 11Taxation11