Tax is one of those things in life you can’t avoid. Each year, tax season rolls around, and whether you’re prepared or not, you must lodge your taxes. Whether you’re planning on doing it by yourself or getting assistance, this 2022 master tax guide will be your roadmap to tax season.
Before lodging your tax return, you should probably know and understand the reasoning behind tax. Taxes are paid to the government and are used to finance state funded expenditure. In Australia, it is used to fund a variety of systems including the health, education sector, and the public recreational spaces.
The only way tax can be made easier is if you reach out for assistance. At Teamwork Accounting we can provide you with personal and business tax assistance. As accountants and tax advisory experts, we have all the information you need for a smooth tax season.
Tax income brackets
In Australia the rate of tax you pay is based on your level of annual assessable income. The income thresholds for the years 2021-22 are as follows:
- $0 – $18,200 per year incurs 0%
- $18,201 – $45,000 per year incurs 19c for each $1 over $18,200
- $45,001 – $120,000 per year incurs $5,092 plus 32.5c for each $1 over $45,000
- $120,001 – $180,000 per year incurs $29,467 plus 37c for each $1 over $120,000
- $180,001 or more per year incurs $ 51,667 plus 45c for each $1 over $180,000
How much tax do you pay in Australia?
If you are working for a business, your tax contributions will automatically be paid by your employer, but the actual amount payable is depended on multiple factors, such as:
- Your tax residency – where you currently live and/or if you are going to be moving to, or away from Australia.
- How much you earn
- The number of jobs you have and whether they are full time, part time, or freelance.
- If you have a tax file number
How do you pay tax in Australia?
If you need guidance on how to pay tax, this 2022 master tax guide holds the answer. Before you begin paying taxes, you need to apply for a tax file number (TFN) from the ATO. It is free of charge to apply for the TFN and needs to be done as soon as you become employed, or as soon as your business becomes operational.
You are eligible to obtain a TFN if you are an Australian citizen, have an Australian passport, and if you are 15 years or older. You can also apply for a TFN if you are a resident within Australia and you don’t have an Australian passport, if you’re a foreign resident who resides in Australia, and if you do not live in Australia but have an Australian-sourced income.
Additionally, you may need to apply for an Australian business number (ABN). Possible reasons include:
- You own and run a business either from home or from a different business property
- Your business has an aggregated annual turnover of more than $75,000 per annum.
- You pay your own tax as you do not have an employer who does this for you
- You need to pay for your own superannuation
- You are not insured for injury on duty
The role of a tax accountant during tax season
Tax accountants are there to streamline the process of lodging your tax. Their expertise, up-to-date knowledge and many years of handling tax affairs, can greatly assist you, particularly when it comes to complex tax matters.
At Teamwork Accounting our tax agents stay up-to-date with the latest tax laws and changes so that you don’t have to. We can help you maximize your claims and ensure your documentation and return is accurate.
Lodging a tax return
If you paid any tax amount between 1 July 2021 and 30 June 2022, then you need to lodge a tax return. You will also need to submit your tax return if your income was over the minimum bracket for Australian residents, listed above.
If you are a foreign resident who earns more than $1 in Australia during the tax year, you will also be liable to lodge a tax return during the same dates as mentioned above. If you are leaving Australia permanently, or at least for more than one tax year but you earn more than $1 in Australia, then you will also need to lodge a tax return.
The due date for taxes to be lodged is the end of October 2022. If you have lodged your return on time and through a tax agent, your due date may be extended until 15 May 2023. Processing for all tax returns for the year 2021 to 2022 began on 7 July 2022. If, as an individual, you are eligible to receive any refunds, you could expect payment at any time from 16 July onwards.
Are there any tax changes for 2022?
If Covid-19 has prevented you from working and you received Covid-19 disaster payments during the tax year of 2021-22, then you are exempt from income tax and you may not include the payment into your tax return.
On the other hand, if you have received pandemic leave disaster payment during the 2021-22 tax year, then you would be required to include it in your tax return, and it should be included as income. This is necessary because these payments were made to persons who were unable to earn an income because:
- They had to self isolate/quarantine at home
- They were caring for someone with COVID-19 and therefore could not work
There is a shortcut method that can be used to calculate your tax deduction that you can claim if you have been working from home since the pandemic. However this can only be claimed up to 30 June 2022.
The low and middle income tax offset (LMITO) that was announced in the 2018–19 federal Budget is still available for 2020–21. Stage two of the Personal Income Tax Plan was brought forward from 1 July 2022 to 1 July 2020. A tax offset cannot be seen as a refund, however, it can reduce the amount of tax you will need to pay at the end of the tax season. The amount can be different depending on each individual case. Factors that could affect the offset amount is the level of income and the amount of tax you have paid throughout the tax year. There was a maximum offset amount of $1,080 per year. This was increased by $420 in the 2022-23 federal budget bringing the total offset for 2022 to $1,500.
On 31 December 2020 the Covid-19 early release of the superannuation program closed. You will need to include the amount that you released in your tax return if you have accessed your super early. You will also need to include any amounts released under other compassionate grounds.
Deductions you can claim
Remember to claim all the deductions available to you when lodging your tax return. Here’s a few common ones that may apply:
- Vehicle usage
- Travel expenses
- Uniform & clothing
- Self-study costs
- Home office expenses
- Covid relief
- Tools & equipment
- Internet, phone & computers
- Interest deductions
You can download our 2022 individual tax checklist here to see what deductions you could apply for.
Keeping track of all your taxes can be tricky. If you’re feeling stuck or overwhelmed, Teamwork Accounting can provide you with expert business and personal tax services. Contact us to arrange a time to speak with one of our tax experts.