1. I am three years behind in lodging my tax returns. Will I get into trouble?

You should lodge your outstanding tax returns as soon as possible and before the Australian Taxation Office takes any action to have you lodge these tax returns. Once they have begun any action, it could result in a court conviction. The ATO may charge a penalty of $170 for every 28 days that the return is outstanding. The maximum penalty is $850 even if you are due a refund.In addition, the ATO will charge interest. This is called the general interest charge and is levied on any outstanding monies. H&R Block can assist you to lodge your late prior year returns.

 

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2. My wife stays home to care for our children. During the year she worked for one week and has received a payment summary showing that she earned $480 and a small amount of tax was taken out. She has no other income and doesn't think she needs to lodge a return because her income is less than the tax free threshold. Is she correct?

Your wife does need to lodge a return even though her income is below the tax free threshold. Any earnings that have had tax withheld, no matter how small, are required to be reported on a tax return. This is also the only way to get a refund of the tax paid.

 

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3. I received an additional PAYG Payment Summary (group certificate) after I completed last year's tax return. Can I put it in this year's return?

No, you cannot do that. A PAYG Payment Summary from a past year cannot be included with the current year tax return as the income on it was not earned in the current year. It can only be included in the return for the year to which it relates. You will need to submit an amendment to last year's tax return.

 

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4. I usually lodge my own return but will be unable to get it in to the tax office by October 31 this year. What can I do to avoid getting into trouble with the tax office?

If you owe tax and lodge your return late, any amount owing will be payable on 21 November this year and a general interest charge will be calculated from then until payment is made. The ATO may charge a penalty of $170 for every 28 days that the return is outstanding. Unless you use a registered tax agent, you have from 1 July until 31 October to lodge your return. If you need an extension of time either contact the ATO.

 

 

5. I am leaving to travel overseas; do I need to complete my tax return before I leave?

It isn't necessary to complete a return before leaving Australia unless you will not be back before the due date for lodgement of your return (31 October). If you won't be back until after that date contact the Australian Taxation Office.

 

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6. I am in Australia because I have a two year contract with a local employer and have a temporary working visa. I have been told that I am classified as a temporary resident of Australia. Why is this important?

Since 1 July 2006 there has been a separate category for people who are temporarily living in Australia. A permanent resident is generally taxed on all income in and out of Australia but a temporary resident is exempt from paying tax on certain classes of income. People who exhibit the behaviour of a 'resident' and hold a temporary visa granted under the Migration Act of 1958 will be taxed at resident rates. Temporary residents may also be liable to pay the Medicare levy unless they are eligible to apply for an exemption.

 

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7. I have been backpacking around Australia on a temporary working visa picking up a few temporary jobs to help with expenses. Some employers deducted tax. Will I get this all back when I put in a tax return?

 You would be considered to be a non-resident for tax purposes because you have not settled in any one place and established a home during your stay in Australia. You may not get all your tax back when you lodge a tax return because you will be charged non-resident tax rates. This means that you have to pay tax on every dollar of your taxable income. You will not have to pay the Medicare levy though.

 

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8. What is the difference between resident and non-resident tax rates?

Non-residents pay tax on Australian source income. They pay tax on every dollar of taxable income as declared on their tax return but do not pay Medicare. Residents have to declare all income earned in and out of Australia. A tax free threshold of $18,200 (for the 2014 year) is available to them and a resident may be entitled to claim some tax offsets (rebates) that are not available to non-residents. Depending on their income, a resident may also have to pay the Medicare levy and Medicare levy surcharge.

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