How to cash in on your tax
Australian workers will be seeing extra cash in their pay packets from this month under early tax cuts promised by Treasurer Josh Frydenberg.
But with a looming tax deadline, getting that extra cash might seem pointless if you're hit with a late fee from the taxman.
The Australian Taxation Office (ATO) will start handing out fines to people who don't lodge their tax returns by the looming deadline which is just a couple of days away.
To avoid getting fined by the taxman, you need to lodge your tax return before October 31.
According to ATO assistant commissioner Karen Foat, there are still people yet to lodge their tax return which is usually done around mid-year.
"If you plan to lodge with a tax agent, you may have a later lodgement date, but is important to contact your agent and get on their books now," she said.
"You still need to lodge your tax returns on time if you can, even if you can't pay by the due date."
If your tax return isn't lodged by the due date, you could receive a late penalty that can equate to a maximum of $1110 if left too long, according to Chartered Accountants Australia and New Zealand senior tax advocate Susan Franks.
"The crucial date individuals need to know is October 31, which is the tax return due date if you're lodging your tax return yourself," she said.
The ATO will penalise anyone who doesn't lodge their tax return by the cut-off date with a $220 fine each month - and will continue to send these fines for up to five months until lodged.
If you don't have time to lodge your own tax return, you could go directly to a tax accountant. But you still need to employ an accountant before the cut-off to avoid the fines.
There's assistance available for those who have been affected by COVID-19 or other financial hardships.
"For those struggling to find the cash to pay their tax, there is the option of engaging in a tax debt payment plan with the ATO, to help you pay existing and ongoing tax liabilities," Ms Franks said.
"Anyone struggling with the financial impact of COVID-19 should discuss this with the ATO, or your chartered accountant, rather than hoping the ATO goes away."
Ms Foat said that the ATO will assist anyone who is unable to pay, but said "the earlier you seek help, the easier it will be to get back on track".
"Once we understand your situation we can discuss whether a deferral or a payment plan is best for you," Ms Foat said.
"If your circumstances change, you can suspend, vary or cancel your payment plan. We will also make sure you are not charged interest on the outstanding debt while you are affected by COVID-19."
To lodge your tax return, you need all of your income information, how much you've earned over a year and all the information about the deductions you want to claim, like your receipts.
"The ATO will have pre-filled a lot of information in your tax return - such as salary and wages, interest and dividend income, medical insurance and bank account details to send your refund to," Ms Franks said.
"You will need to confirm that these details are true and correct, that you have reported all your income and have the necessary records to support your deductions."
Before you lodge, you should have on hand your tax file number, income sources, bank account details, Medicare information and, if you are married, details of your spouse's taxable income, she advised.
"It's vital you declare all your income. Any income received from second jobs will also need to be reported, as well as any government payments," Ms Franks said. "This includes money earned from providing ride sharing or accommodation services."
Thanks to Treasurer's tax cuts brought in to help stimulate the economy, we're all in for a bit of extra cash this year.
The average income earner with an $80,000 salary will get around $2160 cash back for the financial year. Those on a $60,000 salary will get even more - around $2415 - roughly the same as those earning $100,000 or more.
Workers earning $150,000 or more will get a tax cut of $2430 for the financial year, while those with a salary of $40,000 should expect $1209.
But you won't get it all in one go. The payments will be split roughly in two with half being delivered through your pay from this month and the other half coming in next year's tax return.
Anyone earning less than $90,000 - the majority of Aussie workers - will get around $1080 divided up in their pay from this month and then another $1080 when they lodge their tax return next year.
A portion of the tax cut should start coming into your pay this month and the other half won't be seen until mid next year depending on when you do you 2021 tax return.
It will be made up as a mix of payments into your salary and another payment as a lump sum in your tax return next year.
The tax cut could be around $20 a week back in your pocket, depending on your income. You'll see the payments paid directly into your salary as less tax paid for each pay cycle until the end of the financial year.
The payments are backdated from July 1 this year until your employer starts paying the amount from as early as this month. This retrospective amount will be the lump sum that's paid mid-next year when you do your tax return.
Originally published as How to cash in on your tax