A tax file number (also known as a TFN) is a unique nine-digit number issued to individuals and organizations by the ATO to help them keep track of everyone’s tax affairs.

The official word from the ATO is that you do not need to list a tax file number (TFN) on your tax return in order for it to be processed. However, not listing a TFN may delay your assessment and prevent you from getting your refund as quickly as possible.

Furthermore, if you don’t give your employer your tax file number, taxes will be withheld at the maximum rate, which is likely much higher than necessary. A TFN could help you keep more of the money you earn over the course of the year.

Getting a tax file number has myriad other benefits that are not just restricted to filing taxes. Having a TFN will help you

• lodge a tax return
• ask the ATO about your tax affairs
• apply for income assistance or support payments, such as pensions or benefits from either the Department of Human Services (Centrelink) or the Department of Veterans’ Affairs (DVA)
• claim the Family Tax Benefit (FTB) – your FTB claim cannot be processed without one
• make or receive payments under the pay as you go (PAYG) withholding system
• start work or change jobs
• submit a Tax file number declaration or a Withholding declaration form
• have savings accounts or investments that earn income
• receive payments under the Higher Education Loan Program
• join a super fund
• keep track of your super
• receive a super co-contribution
• have an active Child Support Agency case

As you can see, it’s a pretty long list. The pros of having a TFN clearly outweigh the cons of getting one.

For more TFN-related questions, such as how to find your TFN and how to apply for one if you don’t have one, refer to this prior E-Lodge blog post.

Even though the ATO will accept a return without a tax file number, you still need one to lodge your return through E-Lodge. They help us keep track of everyone’s accounts and ensure that your return is lodged swiftly and accurately – and you get your refund as soon as possible.

Photo via Tomi Tapio on Flickr.

The post Do You Need a Tax File Number to Lodge a Tax Return? appeared first on Advice on Australian Tax Returns & Online Tax.

E-Lodge’s tax calculator has been updated for the 2012-2013 financial year. It now allows you to estimate your tax refund or the tax you owe for the 2013 financial year.

The tax calculator takes only a few minutes to complete and contains three basic steps:

1. Income and Personal Information – such as gross taxable income, deductions from income, total tax withheld, etc.

2. Income Test Items – such as reportable fringe benefits, employer superannuation contributions, tax-free government pensions, etc.

3. Other Details – such as marital status, number of dependent children, number of dependent students, etc.

All of this information makes E-Lodge’s tax calculator the most accurate one out there.

Many other tax calculators only ask for your income, and then spit out a uniform amount of how much tax you’ll owe based on the rates. These calculators don’t take into account the complexities of the tax code and give you no indication of whether you can expect to receive a refund or pay tax, or how much either will be.

Even though the E-Lodge tax calculator gives you the most accurate estimate of your tax situation, you should still keep in mind that it is an estimate. The calculator is not aware of every detail, and may not be able to include all the offsets and deductions you can take advantage of to lower your tax liability.

The only way to have a completely accurate idea of how much you will owe or get back is to actually prepare your tax return. Thankfully, E-Lodge makes this easy.

You can start preparing your return for free – you only have to pay before you lodge. So if you want the best estimate of your tax refund – or you want to see if E-Lodge can nab you a larger refund than the other guys – you can completely prepare your return and see how much you’ll get back without paying anything. Then, if you’re happy with the number, you can proceed with lodgment.

You can prepare your 2013 return on E-Lodge starting 15 June 2013. Until then a visit to our tax calculator will give you the best idea of what you can expect to face come July.

 Photo via Alan Cleaver on Flickr.

The post Estimate Tax Return 2013 appeared first on Advice on Australian Tax Returns & Online Tax.

Australia’s progressive tax code is divided into five different income brackets, each with its own tax rate. You can see the brackets and rates for the 2012-2013 financial year here.

The tax rate of the lowest income bracket, that which falls between taxable incomes of $0 and $18,200, has a tax rate of 0%.

This means that you only pay tax on the income that falls above this lowest bracket. If all of your income is within this first bracket, you pay no tax at all. And even if your total income falls into a higher bracket, you still pay no tax on the first $18,200 of your income.

When you factor in the Low Income Tax Offset (LITO), you can earn up to $20,542 without paying any tax.

The $18,200 upper limit of the lowest bracket is what’s known as the tax-free threshold, because the first $18,200 of your income is not taxed.

Recent changes

The new 2012-2013 tax-free threshold of $18,200 is more than triple last year’s 2011-2012 tax-free threshold of $6,000. The increase, announced by the Gillard Government on 10 July 2011, is part of the Clean Energy Future package that brought the carbon tax to Australia.

Thanks to these changes up to million low-income earners will not have to lodge a tax return for the 2012-2013 financial year.

Claiming the tax-free threshold

When you claim the tax-free threshold, you reduce the amount of tax withheld from your wages over the course of the year. In terms of PAYG withholding, claiming the tax-free threshold can amount to an extra

• $350 per week
• $700 per fortnight
• $1,517 per month

If you are an Australian resident for tax purposes, you must let your payer (including Centrelink) know that you wish to claim the tax-free threshold by marking “Yes” when you fill out your Tax file number declaration. If you have more than one payer, it’s generally best to claim the tax-free threshold from the one that pays you the most.

Part-year residents

Not everyone gets to claim the full tax-free threshold of $18,200, including those who

• entered Australia permanently during the year
• left Australia permanently during the year, and
• are not an Australian resident for tax purposes

For this financial year, part-year residents can claim a tax-free threshold of at least $13,464. The remaining $4,736 is then pro-rated, depending on how many months out of the financial year they were a resident for tax purposes.

The tax-free threshold is just one of the many benefits you can take advantage of when you lodge your return. Take advantage of E-Lodge to make sure you maximise your refund.

Photo via adesigna on Flickr.

The post 2012-2013 Tax-Free Threshold Australia appeared first on Advice on Australian Tax Returns & Online Tax.

No one expects lodging a tax return to be easy, but every year when tax season rolls around again, it’s hard not to wonder if there’s an easier way somewhere out there.

Old-fashioned accountants

Everyone knows about brick-and-mortar accountants, but they’re just so expensive. An undergraduate accountant could run you $100 an hour. And if you want a senior or principal accountant, you’re looking at shelling out up to $275 an hour.

Plus you have to actually, you know, get off the couch, get dressed, and interact with another human being. In the age of tablets and smartphones this just seems a little antiquated.

E-tax from the ATO

Thankfully there are several ways to lodge a tax return online. The first option is using e-tax, the ATO’s free tax return preparation software.

The major benefit is the fact that it’s free. But the cheap price comes at a cost: its quality is pretty much what you’d expect of the ATO.

• You actually have to download the software and install it on your computer, a major inconvenience.
• It doesn’t even work for Mac or Linux, so if you use one of those systems you’re out of luck.
• It is notoriously hard to use – the very antithesis of user-friendly.

Don’t believe me? Here’s what some satisfied E-Lodge customers had to say about the e-tax system:

“I have used other e-tax programs before, but this is by far the best one I have used. I would recommend this to everyone.”
~Catherine from Salisbury, QLD

“Much better than e-tax (which was a disaster when I used it last year).”
~Traci from Goulburn, NSW

“Everything has been super easy and I appreciate the fact that I was able to lodge my tax from my MacBook, as I’m sure you know, the ATO are a bit slow with making e-tax available to everyone.”
~Kate from Sunset Beach, WA

“This got me a better refund than e-tax and the ATO. Very happy!!”
~Christopher from Raceview, QLD

“What a fantastic service! So much easier than the e-tax service provided by the ATO. This is actually a website that is clear and precise!”
~Brynley from Burleigh Heads, QLD

E-Lodge makes it easy

Thankfully, there is another way. E-Lodge allows you to lodge a tax return online without having to go through the inefficient ATO system.

To get started on E-Lodge all you have to do is create an account and then follow the instructions. The tax application will guide you through your return, collecting all of the necessary information.

After you submit your information an accountant will prepare your return and check it for accuracy. Then they’ll lodge it electronically with the ATO.

The combination of online preparation and review by a real, live accountant makes E-Lodge the best of both worlds.

If you’d like more information about E-Lodge, you can visit our pricing page here. And if you’re ready to get started on your return, you can create an account here.

Photo via  Alan Cleaver on Flickr.

The post How to Lodge Your Tax Return appeared first on Advice on Australian Tax Returns & Online Tax.

The time period covered by Australia’s tax returns does not correspond to a regular calendar year. Instead the returns cover a separate financial year that runs from 01 July to 30 June of the following year.

Tax season starts as soon as the financial year ends, running from 01 July to 31 October. During this time you must lodge a return for the income you received during the immediately preceding financial year.

This year, for example, you must lodge a return between 01 July 2013 and 31 October 2013 covering income you received for the 2012-2013 financial year which ran from 01 July 2012 to 31 June 2013.

What if I lodge late?

If you don’t lodge your return by the end of tax season on 31 October, you may have to pay a penalty.

The ATO is pretty generous, however, and usually doesn’t apply a penalty if you

• lodge the return voluntarily, and
• do not owe any tax payable

You probably will have to pay a penalty if

• you have more than one tax return outstanding
• you have a poor lodgment history, or
• you have not complied with a request to lodge your tax return

If you’re due a refund, there’s no reason not to file. After all, it’s your money you’re getting back. And if you owe the ATO, don’t think you can escape them by not lodging a return. The ATO could issue you a default assessment warning letter (DAWL). If you don’t lodge, the ATO will estimate your tax liability, often for more than you actually owe because they don’t know all of the allowances and deductions you could be eligible for.

Early lodgment

It is possible to lodge a return before the end of the financial year, but only in two very limited circumstances.

1) You are a foreign resident for tax purposes (an Australian nonresident for tax purposes) and you

• are leaving Australia permanently, and
• will no longer derive Australian-sourced income other than interest, dividends, and royalties

2) You are an Australian resident for tax purposes and you

• are leaving Australia
• will cease to be an Australian resident for tax purposes, and
• will no longer derive Australian-sourced income other than interest, dividends, and royalties.

All of this may sound confusing, but if you use an online tax preparer like E-Lodge, it will all be taken care of automatically. You can start preparing your 2012-2013 return on June 15th and start lodging on July 1st!

Photo via AlicePopkorn on Flickr.

The post Australian Tax Year Dates appeared first on Advice on Australian Tax Returns & Online Tax.

Tax season is only a few short months away, which means it’s time to start thinking about lodging your 2012-2013 tax return.

Dates for tax returns 2013

Tax season begins on 01 July: this is the earliest date that the ATO will accept returns. You then have four months, until 31 October, to lodge your return.

You can prepare your 2013 return on E-Lodge starting on 15 June. While you can’t lodge your return until 01 July, you can submit your completed return to E-Lodge early. Our accountants will then prepare and review your return so that it can be lodged at the earliest possible moment.

Preparing your return early is the fastest way to get your refund and get your taxes out of the way. And remember, you don’t have to prepare your return all at once. You can save your information and come back at any time. If you’re still waiting for tax documents, such as a payment summary (PAYG) from an employer, you can fill in all of your other information early to speed the process up once those documents arrive.

Calculate your tax return 2013

If you’d like to get an idea of how much tax you will owe this year, or how big a refund you can expect, you can visit E-Lodge’s tax calculator. Just enter personal information, such as your age and residency, information about your income, and other major factors that might affect your tax situation. Remember, the calculator can only provide an estimate, and can’t take into account every offset or deduction you might be eligible for.

For a more accurate assessment of your tax refund/tax payable, why not try preparing your return on E-Lodge? It’s free to create an account and prepare your return. At the end of the process you can see your exact liability before you commit to filing. It’s the most accurate calculator there is – and a great way to see if E-Lodge could save you more money than your tax agent.

How to prepare your 2013 return

It couldn’t be simpler with E-Lodge. All you have to do is create an account and then follow the instructions. E-Lodge’s tax application will gather the necessary information, making sure you take advantage of every available offset and deduction, and then prepare your return. Our team of accountants will review your return and lodge it with the ATO. Best of all, E-Lodge works on Mac and iPad.

Don’t forget, you can also lodge a return for any financial year from 2004-2005 to 2011-2012. It’s best to get caught up on any prior year tax returns you may have forgotten about before you lodge your 2013 return.

Photo via www.learningDSLRVideo.com

The post Australian Tax Return 2013 appeared first on Advice on Australian Tax Returns & Online Tax.

With the 2013 tax season only a few short months away it’s time to start thinking about lodging those tax returns. One of the most basic tax topics – and one that affects you the most – is that of rates. These are the rates that will ultimately determine how much you owe the ATO, or how much you get back as a refund.

Just as a reminder, these are the tax rates for the 2012-2013 financial year. They are in effect for the income you earn between 1 July 2012 and 30 June 2013. This is the income you will pay tax on during the tax season that begins in July 2013.

Residents

The following are the tax rates that apply to those who are Australian residents for tax purposes. Note that tax residency is different from immigration residency and many foreign citizens may actually qualify as Australian residents for tax purposes.

Note that these rates do not include the Medicare levy, which is an additional 1.5% of taxable income. There are some exceptions to this rule. If your income is below the lower threshold amount, you don’t have to pay the Medicare levy, and if it is between the lower and upper thresholds you only have to pay part of it. Alternately, those with incomes above the MLS thresholds who do not have private insurance cover have to pay the Medicare levy surcharge, which is an additional 1%.

You must also factor in the low-income tax offset, the threshold of which recently increased to $37,000. You can claim the offset if your taxable income is below $66,667.

Foreign Residents

The following are the tax rates that apply to foreign residents, or Australian nonresidents. Generally foreign residents are only taxed on their Australian-sourced income.

Note that foreign residents do not need to pay the Medicare levy.

Remember, E-Lodge is a great place to lodge your 2012-2013 return, whether you’re an Australian or foreign resident.

Photo via bortescristian on Flickr.

The post 2012-2013 Tax Rates appeared first on Advice on Australian Tax Returns & Online Tax.

If you’re a working holidaymaker visiting Australia, you’ll probably need to file taxes. But before you can lodge your return with the ATO, or even prepare it, you’ll have to figure out if you are an Australian resident for tax purposes.

Who qualifies as a resident?

Residency for tax purposes is different from immigration residency, so you’ll have to make a fresh determination when you do your taxes.

You qualify as an Australian resident if you

• have always lived in Australia
• moved to Australia and now live here permanently
• have been in Australia continuously for six months or more and for most of that time you worked the same job and lived in the same place
• have been Australia for more than half of the financial year, unless
  • your usual home is overseas
  • you do not intend to live in Australia

The Determination of Residency tool on the ATO site can help you make the determination if there’s any ambiguity.

It’s a good idea to figure out your residency status early on so you can make sure your employer is withholding taxes at the appropriate rate.

What difference does it make?

Residency makes a big difference in terms of how you are taxed.

First off, residents are taxed on their worldwide income. Nonresidents, on the other hand, are taxed only on their income from Australian sources.

Residency also changes the tax rate you have to pay. Starting on 1 July 2012, the marginal tax rate for Australian nonresidents earning less than $37,000 will shoot up from 15% to a whopping 32.5%. This means that all Australian nonresidents making less than $80,000 are taxed at 32.5%.

Australian residents, by contrast, aren’t taxed at all beneath an income threshold of $6,000, are taxed at 15% between $6,001 and $37,000, and at 30% between $37,001 and $80,000. So, Australian residency can be quite advantageous from a tax perspective.

What if my residency changes?

It’s not uncommon for people who begin the financial year as nonresidents to become residents halfway through. If that’s the case, answer “Yes” on your return to the question, “Are you an Australian resident?”

Your income will be taxed at the same rate as an Australian resident, but because you were a nonresident for part of the year, you will be taxed at a lower tax-free threshold. You are entitled to a pro-rata tax-free threshold for the number of months you were an Australian resident.

Don’t forget, nonresidents don’t have to pay the Medicare levy, so you can claim an exemption for the number of days that you were a nonresident. Also, once you officially become an Australian resident, you will need to declare the worldwide income you receive from the time you become a resident.

The post Am I an Australian Resident for Tax Purposes? appeared first on Advice on Australian Tax Returns & Online Tax.

A working holiday in Australia is full of so many wild, foreign, eye-popping experiences, the last thing you want to think about is taxes. But if you earn money in Australia you’ll have to. Taxes will likely be withheld from your wages and the Australian Taxation Office – known as the ATO – will likely require that you file a return.

Don’t despair quite yet – there’s a good chance you could get tax back in the form of a nice refund. So here, in rapid-fire succession, are AustralianTax’s top 15 tips for navigating, well, Australian tax.

1) Claim your tax back - When you file you can in all likelihood expect a refund. In fact, the average backpacker gets about $2,000. So don’t dodge lodging a return. Use a service like AustralianTax to make sure you get the most out of a foreign tax code.

2) Lodge = file - Just as Aussie’s insist they live in Oz and spend the weekends getting their wobbly boot on, they also have a special set of slang when it comes to taxes. Lodging a tax return is what the rest of the world would refer to as filing a tax return.

3) The financial year runs from 1 July to 30 June of the following year - That’s right. Australia has a unique financial year. When you lodge your taxes during the 2012 season, you’ll be reporting the income you earned from 1 July 2011 to 30 June 2012.

4) Tax season runs from 1 July to 31 October - Most Australians lodge their tax return sometime in July, but you’ve got until the end of October to get it in to the ATO.

5) You can lodge your return early - If you are leaving the country, that is. Foreign residents leaving Australia permanently who will not derive any more Australian-sourced income can lodge a return before the end of the income year.

6) Gather the necessary financial documents - You will most certainly need a PAYG payment summary from each of your employers. Depending on your residency status and situation you may also need statements from financial institutions, dividend statements, etc.

7) Collect PAYG payment summaries from your employers - Before you leave a job, request a payment summary from your employer. Even if you’re only fruit picking, do your best to get some sort of payslip. If you didn’t, give your employer a call and have them send it to you.

8) Determine your residency status - You will have to determine whether you qualify as an Australian resident or nonresident for tax purposes. Generally if you have been or intend to stay in Australia for at least six months, and have worked mostly in the same location, you are resident.

9) Get your tax file number (TFN) - If you have a TFN, you can find it on your payment summary. If not, you’ll have to apply for one from the ATO. Permanent migrants or temporary visitors, including working holidaymakers, can apply online.

10) Claim work-related expenses - You may be able to boost the amount of your refund by claiming a deduction for work-related expenses, such as car expenses, travel, clothing, phone calls, union fees, training and conferences, books, etc. Just be sure to save those receipts!

11) Check the status of your refund - The ATO has a nifty little online tool that can help you track the progress of your tax return. It should give you some idea of how soon you can expect your refund.

12) You may have to wait 4-8 weeks - Like most government tax bureaucracies around the world, the ATO is not the most efficient of machines. Refund times vary depending on the time of year and your circumstances, but be prepared to wait several weeks or even months.

13) Watch out to get hit by higher taxes - Australia just raised the marginal tax rate for nonresidents earning less $37,000 from 15% to 32.5%. Now all nonresidents making less than $80,000 are taxed the same. This means you may end up paying more than you anticipated.

14) Claim back your superannuation - In addition to the normal tax withheld, your employer may also have put 9% of your earnings in a superannuation fund, a retirement scheme for Australians. Once you leave the country, and your visa expires, you can claim that money back.

15) Don’t worry about reentry - Claiming your superannuation won’t affect your ability to come back to Australia on a different visa, so you can relive your Australian adventure all over again.

Well, there you go mates. Good luck lodging those returns!

Photo via garryknight on Flickr.

The post 15 Backpacker Tax Tips appeared first on Advice on Australian Tax Returns & Online Tax.

Australia requires foreigners who spend a working holiday in Australia to file taxes. But this isn’t entirely cause for lament – there’s a good chance you could get tax back!

Before you launch into the Australian tax  filing process, there are a couple things you should know:

Australia has a unique tax year that begins on July 1 and ends on June 30 of the following year. This means that when you file a current year tax return you will be reporting and paying tax on income earned between July 1, 2011 and June 30, 2012.

The tax season then runs from July 1 until October 31, which means that you can file your tax return any time between these dates. If you haven’t filed by the end of October, your return will be considered late.

There is a special exception to these dates for people who are leaving the country. If you will no longer be in Australia as of June 30, you can file before tax season starts. Doing so is not only convenient but can help you get your refund faster.

Forgot to file a return when you were working in Australia? Has it been several years since you left? Never fear. You can still file a late tax return. Not only can you still file, you may still be eligible for a refund.

If you worked in Australia between July 1, 2003 and June 30, 2011 you can file a late tax return with E-Lodge! Refunds in Australia are available for the last 7 years, so if that return is from the 2005-2006 tax year or later, you could get tax back.

The major question you have to answer as a working holidaymaker is whether or not you have to file as an Australian resident. This makes a huge difference when it comes to how you will be taxed.

According to the ATO, if you are a working holidaymaker, you are NOT considered an Australian resident if you are

• visiting Australia for more than six months and for most of that time you are travelling and working in various locations around Australia
• holidaying in Australia, or
• visiting for less than six months

Basically this means you ARE an Australian resident if you are working in Australia for more than six months in the same place for most of that time.

Clearly there are a million shades of gray when it comes to residency issues, which is why the ATO created a Determination of Residency tool as well as a series of hypothetical scenarios to help shed light on your situation.

Generally it’s better to be a nonresident, as you will only be taxed on the income you earn in Australia, as opposed to your worldwide income, and you won’t have to pay the Medicare levy.

Completing a tax return in your native country can be complicated enough, filing in a foreign country is near impossible. Let E-Lodge take care of your return in as little as 10-40 minutes and lodge it with the ATO so you can get your tax back.

Photo via paul bica on Flickr.

The post In Australia on a Working Holiday Visa – How to Lodge a Tax Return appeared first on Advice on Australian Tax Returns & Online Tax.