Australian Income Tax Basics
In Australia, the amount of income tax that you are supposed to pay is calculated by the Australian Taxation Office, rather than self-assessment
. This therefore requires that you report all taxable income to the Australian Taxation Office who is then to determine the tax amount.
For you to make sure that you declare all your taxable income, you need to know what these taxable incomes constitute in the first place. Unlike in self-assessment where you do not want to 0overstate your taxable income, the big problem here is trying to avoid coming out as someone who is trying to con the system through under declaring your taxable with the aim of evading taxation.
The most common type of income that people know about and which everyone must report - unless specifically exempted - is the income from employment. This is the income that you will receive as salary or wages for the job that you have been employed to do. Apart from that, there are also the other allowances and other employment income. Allowances such as car allowance, entertainment allowance and so forth are taxable. You also need to declare other employment income such as tips, gratuities, and lumpsum payments that you may receive as a result of your employment.
Apart from employment income, you also need to declare your pension income. In most cases, pension income will be as a result of the job that you did before. However, closely related to pensions are the government payments that one may receive as part of the government policy. These include, youth allowance, old age allowance and so on. Though some of these are not taxable and need not be reported, some are and need to be reported so that you may be taxed accordingly.
You also need to declare the income that you receive as interest or dividends or rent or capital gains. Income from these sources will be taxed at specified rates and will therefore require you to declare them to the Australian Taxation Office. Capital gains tax may seem quite strange for those people moving into Australia because a good number of countries do not have the capital gains tax.
In addition to declaring the income that you have received from dividends, you also need to declare the income from partnerships and trusts. When it comes to partnerships, ensure that you do not Declaring your income, take great care to ensure that you do not declare your income twice. For example, if you are part of a partnership which pays you a salary and also allows you to receive profits, declare these sources of income separately.
There are other items that you will need to look at to make sure that you have all the information right. If you have a complex income scenario where you receive employment income and also receive income from dividends, it is advisable that you get advice from a reliable tax consultant.
by: David de Souza
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