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How to Lodge Your First Tax Return

  • December 24, 2021
  • 4 min read
How to Lodge Your First Tax Return

We know that for some people, the idea of lodging their first tax return is a little scary. But don’t worry!

There are many professional accountants and taxation experts who can help you lodge your first tax return without any hassle at all. However, if you’d like to try it out yourself we have put together a simple guide on how to lodge your first tax return.

Do I need to lodge a tax return?

The simple answer is: it depends. You will need to lodge a tax return if fit the following:

  • Most resident individuals whose total assessable income exceeds the $18,200 tax-free threshold for the income year
  • A taxpayer who last year paid Pay As You Go Installment Tax irrespective of income (if you wish to recover the tax)
  • Every individual carrying on a business regardless of income or loss
  • A resident taxpayer earning less than $18,200 who’s had tax withheld from that income
  • A taxpayer who’s been asked to submit a return by the Commissioner. A full tax return is required even if there’s no assessable income to report
  • A resident minor (under 18 on 30 June) who received income from dividends or distributions greater than $416 and franking credits were attached or tax was withheld.

ATO has the right to ask you to lodge a return even if you don’t fit into the above categories.

You can lodge a tax return online or via a paper form. If you’re unsure about what to do, then it might be best to seek professional help from an accountant or taxation specialist.

What is the tax-free threshold?

The first $18,200 of your yearly income is tax-free. This means that you will not be taxed on this amount. However, if your assessable income exceeds this threshold, you will need to pay tax on the excess.

The $18,200 tax-free threshold is equivalent to:

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

If you’re self-employed as a sole trader you also qualify for the tax-free threshold. However, when your income exceeds this threshold you’ll be required to pay taxes on amounts exceeding the threshold.

When are the deadlines for lodging a tax return?

The income tax year for Australia runs from 1 July to 30 June. The deadline for lodging your tax returns from1 July and before 31 October (last day for lodgement) each year. 

Are there fines or penalties for late or past year tax returns? ATO may apply a “failure to lodge on time penalty” (FTL). The penalty is calculated at the rate of one penalty unit for each period of 28 days or part thereof that the return is overdue, up to a maximum of five penalty units. Size tests also apply, so that the penalty for larger entities is multiplied by either two or five. 

How does the tax return process work?

Once you submit your tax returns, ATO will process your information and compare it with the information they have on file. If there are any discrepancies, they will contact you to clarify. Once everything is in order, ATO will issue a Notice of Assessment which outlines how much tax you need to pay, as well as any entitlements or deductions you may be eligible for. This process can take between 7 and 14 days but can take a little longer with some cases.

What’s the best way to lodge your first tax return?

For your first time, it might be best to seek help from a professional accountant or taxation specialist. They can guide you through the process and make sure everything is done correctly. Additionally, they can provide you with valuable tips for next year’s return and thus help you to know how to save on your tax burden.