Tax 101: How to lodge your tax return
WORKING while you study? Chances are you’ll have to lodge your tax returns too. But where to even begin? Here are the essentials every international student needs to know.
Unless you’re an accounting or finance student, you probably didn’t even realise tax time had started for the year. We don’t blame you for not noticing. It’s not exactly an event to look forward to.
But if you’re working while you study, the end of the financial year is now here, so it’s time to pull out those calculators and pay slips and lodge your tax return with the Australian Tax Office (ATO) by October 31. And yes, this applies to international students too.
Here are some of the essentials you need to know:
1. Figure out if you need to do a tax return
Deciding whether you need to do a tax return has nothing to do with how much you worked or where you worked.
Generally you have to do an income tax return if you’ve had any tax withheld from your wage in the 2011-12 financial year. The Australian financial year starts on July 1 and ends on June 30 of the following year.
Most employers use a system called Pay As You Go (PAYG) withholding. That means they take a percentage of tax out of your pay every time they pay you.
Sometimes employers take too much or not enough tax from your pay. When you lodge a tax return, the ATO corrects this. Any extra tax you’ve paid over the year is sent back to you in the form of a tax refund.
But if you don’t do your tax return, you don’t get that money back!
You’ll also have to do a tax return if you earned more than $6,000 this financial year. If you’re still unsure about whether you need to do an income tax return, use the ATO’s online income tax tool.
2. Figure out if you’re an Australian resident for tax purposes
Your residency status for tax purposes is not the same as the residency classification you got from the Department of Immigration or other government agencies. It has nothing to do with your visa type either.
Basically, you’re an Australian resident for tax purposes if your university/TAFE course here lasts for more than 6 months. If you’re unsure, you can use the ATO’s online residency tool.
Residents for tax purposes pay lower tax rates than non-residents. They’re also eligible for the tax-free threshold, deductions and offsets, all of which reduce the amount of tax you pay.
You can have a look at all the tax rates for residents and non-residents online.
3. Decide how you’ll do your tax return
There are a number of ways you can lodge your tax return. The most popular are e-tax and paper returns.
E-tax is a free software you can use to do your tax return online. E-tax is only available to PC-users at the moment, so if you have a Mac, you won’t be able to use it.
You can download e-tax from the ATO website. One of the great things about the software is that it has inbuilt checks and calculators to make sure you’re getting it all right.
The ATO has also released an instructional video on lodging your tax returns online:
If you’re lodging a paper return, you can pick up a Tax return for individuals 2012 form from most newsagents or download it online.
Once you’ve filled it in, you post the form to the supplied address. Paper returns take longer to process, so you can wait up to 42 days for your refund.
If you’re too curious to wait though, you can work out if you’re eligible for a refund by using the online tax refund calculator.
4. Collecting all the paperwork
Before you fill in your tax return, you’ll need:
- A payment summary from each of your employers or payers. That includes Centrelink if you get any government benefits (most international students don’t)
- Statements from your banks and any other financial institutions to work out how much interest you earned
- Receipts if you’re claiming deductions
- Your tax file number
You can get your payment summary from your employer. They must give it to you by July 14, so ask them if they haven’t already.
There are rules around what you can claim as a deduction. Deductions directly reduce the amount of tax you pay. You claim things like your work uniform as a deduction if it has the company logo on it.
For more info about all the documents you’ll need to do your tax return, visit the ATO website.
5. Deciding if you need an accountant
Most people can do their tax return themselves, especially if they only have one job and no shares, businesses or assets in their names.
If you need help, you can always contact the ATO on 13 36 77. You can also get some simple tax and superannuation information in 25 languages online.
Just remember Tax Time ends on October 31, so be sure to lodge your tax return before then or you could get a fine!
6. Beware of scams
We know it’s a lot to digest, but there’s one last thing you need to know about tax time.
There are people out there who pretend to be ATO officers in order to scam you. Often they’ll phone or send you an email saying they need your confidential details to process your tax refund. They might even ask you to pay a fee.
The ATO will never ask you to confirm, update or disclose confidential details via email or social media. They’ll also never ask you to pay money to receive a refund or payment. And they’ll never request credit card details from you to process a payment on your behalf.
Always keep your personal details, including your tax file number, secure. If you’re unsure if the person contacting you is really from the ATO, ask for their name and hang up. Then call the ATO on 13 36 77 and ask to be transferred through to that person.
For more information about scams, visit the ATO website.