All your FAQs about tax!
When you find yourself stepping into the world of ‘adulting’ it’s never long before you need to ask THAT question: ‘How do I do my tax return for the first time?’
More often than not, the jumble of answers you wade through makes you toss it in the ‘Too hard’ basket and put it off for a bit longer. Unfortunately, that’s never a good idea.
The truth is, tax really isn’t very scary. In fact, if you do it right, you can see a big chunk of your hard earned cash land back in your bank account each year, courtesy of the Australian Tax Office (ATO).
The problem is, the ATO seem to have a unique way of talking about tax – it’s in a language that no one else understands! A click through the pages of their website quickly makes you feel as if you’re a 3 year old trying to understand Game of Thrones.
Add to this the ATO’s reputation for having a pretty unfriendly response to mistakes and it’s no wonder so many of us would rather extract a tooth than attempt their annual tax return.
OK, so what can you do to make this ‘doing your tax return’ thing easier?
Simple, just read this page! We help you ‘adult’ right by getting you up to speed on tax, in no time.
So let’s get you tax savvy!
What is tax and who has to pay it?
The ATO collects a portion of everyone’s income to pay to the government. The government uses this money to pay for our roads, transport, hospitals, schools, living services and pretty much everything we need. Most people hate paying tax but without it, our country would pretty much grind to a halt. So don’t hate it, just don’t pay more than your fair share.
When do I start paying tax?
You start paying tax as soon as you start earning money. However, you may get this money back at the end of each tax year, if you earn less than $18,200 per year.
As soon as you start work, you need a tax file number (TFN) to be taxed correctly by your employer. If you don’t have one, your employer will take 49% tax from your wages. You don’t want that!
Your TFN is a 9-digit number that is part of your unique identity. This number is your TFN for your whole life and is also used by other government agencies and financial institutions to identify you. Always keep your TFN safe and do not show it to anyone.
So how much tax do I have to pay?
The amount of tax you pay depends on your income and circumstances. In general, the more you earn, the larger percentage of tax you pay.
Below is the current amount of tax you pay for each income bracket. You’ll notice that if you earn very little, you don’t pay any tax at all. If you earn a lot, you pay a lot more.
Tax Rates for 2024-25:
| Taxable Income | Tax rate |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16 cents for each $1 over $18,200 |
| $45,001 – $135,000 | $5,092 plus 30 cents for each $1 over $45,000 |
| $135,001 – $190,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $190,001 and over | $51,667 plus 45 cents for each $1 over $190,000 |
What do I need to do my tax return?
Income Records
Each of your employers sends an Income Statement to the ATO each year.
An income statement shows the amount you have been paid, the amount you were taxed, the amount of Superannuation your employer has paid on your behalf and any additional payments you have paid into your Super fund yourself. It also includes any allowances you were paid.
#1 IMPORTANT NOTE: You don’t need to get your income statement from the ATO
When you use a tax agent, like Etax, you don’t need to get your income statement from the ATO to do your tax return. We access the the information in your statement directly from the ATO, then prefill most of that information into your tax return.
When you use Etax you don’t need to go to myGov or myTax for anything tax related! You don’t even need to talk to them, we can do that for you too.
Other income records
You should also provide evidence of any other income you have received over the year, this includes:
- interest on savings
- income from any activity in the sharing community (Uber, AirBnB etc.)
- any freelance income
- rent you received from renting out a room privately
- rental income on any investment properties you own or have a share in
- any other form of income that you received.
Expense records
You need all your expense receipts to claim your tax deductions (see next item for more information on tax deductions). For most people, work related expenses make up the largest portion of their claimable expenses. You can claim work expenses IF the following are true:
- you spent the money yourself and weren’t reimbursed by your employer
- the expense was directly related to earning your income
- you have a record to prove that you spent the money
If you do not have a record for an expense, you cannot claim it as a tax deduction.
What are tax deductions?
Tax deductions are expenses that can be deducted from your taxable income. These help to increase the refund amount you get back from the ATO each year.
These include:
- work-related expenses
- self-education costs
- some insurances
- interest payments
- costs relating to an investment property
- charity donations
- memberships and licenses
- work related publications or subscriptions
- and more… Read everything you’ll ever need to know about tax deductions here.
Keeping your expense receipts
It’s important to keep receipts for all your expenses that you think you may be able to claim. If you’re not sure, a tax agent will confirm what you can and can’t claim.
We advise all our clients to photograph receipts, using the Etax app, or to scan them and keep electronic copies. They are much easier to keep track of this way – which means you don’t miss any. It’s also much easier to organise your receipts as you go like this, rather than trying to sort through a year’s worth in one go. Seriously, who has time for that?! :(
How do I do my tax return?
There are three ways to do your tax return
- By yourself, using the ATO’s software
- Use a traditional tax agent
- Or do it with an online tax agent, like Etax.com.au
How should I do my tax return—and what’s the difference?
ATO
If you do your tax directly with the ATO, you need to put your personal details into “myGov” then use their myTax system. It’s a fairly convoluted process and it does take some time to set it all up and complete a return. Doing your tax return by yourself with the ATO can also be a little complicated, especially if you’re not familiar with tax.
Remember, it’s the ATO’s job to collect revenue for the Government, NOT make sure you get the biggest tax refund you’re entitled to!
Traditional tax agent
A tax agent will help you make sure you lodge a correct tax return and that you claim all the tax deductions you’re entitled to. Basically, a traditional tax agent’s job is to do your tax return for you. The negative of using a traditional, shopping centre based tax agent is that you need to attend an appointment, during business hours and, depending on where you go, they can be quite expensive. You then take all your expense records and receipts to the appointment and sit with the tax agent while they prepare your return. This can take quite a long time.
Online tax agent
An online tax agent, like Etax.com.au, combines online convenience with the confidence of using a tax agent. You can do your tax return anywhere, at a time that suits you. Most online tax agents have affordable fees. The best thing is, that fee is actually tax-deductible too!
Various online tax agents work differently, offering different levels of service and support.
With Etax.com.au – Australia’s #1 online tax agent – you receive a full, care orientated tax agent service.
You’re provided with as much or as little help and guidance as you need as you enter your details into our simple, user friendly online tax return. You can watch how-to videos, ask questions as you go; using live chat, or our ‘any other questions’ feature – or simply send us a secure message.
The whole process, from starting to signing your tax return, usually takes just minutes.
PLUS next time, your details are pre-filled from both the ATO and any prior year returns you have with us saving you up to 80% of the time it takes to fill out a return manually.
After you enter your details, our team gets to work. Any messages you send are read and responded to as part of our tax return review service (included in the cost). Your return may be adjusted to complete or correct any areas you weren’t sure about. This review is also where we make sure that you haven’t overlooked anything that can boost your tax refund.
Your accountant will get in touch if they notice anything out of place or if they think you may have extra deductions. Tax accountants can spot an out-of-place number a mile away!
When will I get my tax refund?
It stands to reason that the next big question to follow ‘How do I do my tax return?’ is ‘When will I get my tax refund?’
The answer is usually between 6 and 10 business days from lodgement with the ATO, though it can be faster. There are occasions that a refund will take longer, usually because the ATO want to look at certain aspects of your return – or during very busy periods. If you used a tax agent, they can contact the ATO on your behalf to see what stage your tax return is at in their system. However, the ATO does not accept enquiries until 30 days after lodgement of a return.
BEWARE: “My friend got an instant refund – how do I get one of those?“
Let’s be clear about this one: An instant tax refund is not actually a tax refund at all, it’s a loan. A loan that you could end up paying back if the ATO decide to withhold money or pass your refund on to another government department, like Centrelink. This does happen more frequently that you might think – in fact this is the main reason that a tax refund can turn out to be less than the original estimate. If you previously received over-payments from Centrelink or owe the ATO any money, you may not know or remember by the time you lodge your tax return.
What happens then? If you received a loan from an “instant” tax agent, you have to pay EVERYTHING back immediately. If you can’t, you could find yourself on a costly payment plan with high interest rates and extra fees that dig into your wallet.
It’s totally understandable that sometimes you want or need your tax refund fast, and most people do get the whole refund they are estimated. But do you want to chance spending the money and then having to pay it all back? It really isn’t worth taking the chance.
Want to learn more about tax?
Etax have you covered
