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Tax returns

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The main tax that Australians will know about first-hand is income tax, such as that levied on salary and wages, investment income and business income. Generally, taxpayers pay income tax during the year as it is earned – for example, employees will see a portion of their wages held out by their employer for income tax. The amount of income tax you pay is linked to how much you earn and whether you're an Australian resident. The more you earn, the higher your rate of tax.

At the end of the income year (June 30), most people need to lodge an annual income tax return to notify the government (through the Tax Office) how much income they received, tax they paid, and to list any deductions or offsets. Employees will get most of this information on a payment summary their employer prepares.

The annual tax return is a person's declaration of income received and if there is anything that may reduce tax, such as tax already paid during the year, deductions and tax offsets. Apart from declaring your income, the tax return also allows you to tell the government if you have any deductions to claim, are entitled to any offsets or if there are any special circumstances which will affect the amount of tax you paid – such as your age or other situations.

The Tax Office examines the information you provide on the form, and calculates if you have paid the correct amount of tax (for example, through PAYG withholding throughout the year), if you are entitled to a refund, or if you owe the Tax Office money.

There are several ways to fill in a tax return. The cheapest and easiest is e-tax, and there is also individual tax return instructions (in replacement of the TaxPack). You can also approach a professional tax agent to calculate your tax for you – they will submit your return on your behalf. Find out what to expect from your tax agent here.

The tax year ends on June 30. You have from July 1 to October 31 to lodge your tax return unless it is prepared by a registered tax agent (in which case you are likely to qualify for an extension). If you do not lodge your return in time, you may be penalised. The Tax Office contact number is 13 28 61. If you need to lodge your return early, find out how by reading early lodgement.

See also: An extra day can be dangerous to your tax health

Last reviewed 26/07/12