Do I Need To Lodge A Tax Return?

If you earn income in Australia, or from overseas, you will generally be required to lodge a tax return.  It is important to include income from overseas as you may be entitled to a tax offset for the tax you paid in another country.

Australia has tax treaties with more than 40 countries. Tax treaties are also referred to as tax conventions or double tax agreements (DTA). They prevent double taxation and fiscal evasion, and foster cooperation between Australia and other international tax authorities by enforcing their respective tax laws.

Australia has also entered into a number of tax information exchange agreements to promote international cooperation in tax matters through the exchange of information. You must also declare foreign income that is exempt from Australian tax as the ATO may take it into account to work out the amount of tax you have to pay on your assessable income.

There are several situations where you do not need to lodge a tax return.  For most of them you should advise the Tax Office that you are not required to lodge. If you are an Australian resident for tax purposes for a full year, you pay no tax on the first $18,200 of your income. This is called the tax-free threshold. If you earned less than the tax-free threshold you don’t need to lodge a tax return unless you had tax taken out of your income. If tax was taken out, you need to lodge a tax return as you will be entitled to get your tax back.

If your income is below the tax-free threshold but you received certain payments from Services Australia (Centrelink) or you have a Child Support case, you may need to lodge a tax return or talk to the Department concerned directly to advise them of your income. If you don’t, it can affect your benefit entitlement or how much child support you are entitled to or have to pay.

Certain income is also classed as exempt income. Exempt income is income you don’t pay tax on (that is, tax-free).

Exempt income includes, among others:

Certain Australian Government pensions, such as the:

• Disability support pension paid by Centrelink to a person who is under age-pension age,
• Invalidity service pension paid under the Veterans’ Entitlements Act 1986 where the veteran is under age-pension age.

Certain Australian Government allowances and payments, such as the:

• Carer allowance, which is different to the Carer Payment,
• Child care subsidy.

Other amounts that are not taxable.

Generally, you don’t declare amounts you receive for:

• Rewards or gifts on special occasions, such as cash birthday presents and gifts from relatives given out of love (however, gifts may be taxable if you receive them as part of a business-like activity or for your income-earning activities as an employee or contractor),
• Prizes you won in ordinary lotteries, such as lotto draws and raffles,
• Prizes you won in game shows, unless you receive regular appearance fees or game-show winnings,
• Child support and spouse maintenance payments you receive.

If you entered Australia with the intention of residing here during the financial year, your tax-free threshold will be adjusted. Your tax-free threshold will be lower than the full year’s threshold available to most resident taxpayers.

Your adjusted tax-free threshold has two components:

• a flat amount of $13,464
• an additional $4,736 – apportioned for the number of months you were in Australia during the income year, including the month you arrived.

If you’re a non-resident, you’re not entitled to the tax-free threshold. This means you pay tax on every dollar of income you earn in Australia.

If you have worked in Australia under a subclass 403 visa in the Seasonal Worker Program (SWP), your income is not included if you lodge a tax return.

If you have worked in the SWP, your employer must withhold tax at a flat rate of 15% on all payments made to you. Workers under the SWP are non-residents of Australia for tax purposes. This means that you pay tax on every dollar of income you earn in Australia.

***Seasonal workers are not required to lodge tax returns unless they have other Australian or foreign income outside of the program. You do not declare the income earned and cannot claim any work-related deductions. If a seasonal worker does lodge a return, you should not include your income from the SWP in your tax return. Only other Australian or foreign income is declared.

Should you require any additional assistance please don’t hesitate to contact us.

Other Individual Tax Information & Articles:

• April 2023: No more Low and Middle-Income Tax Offset (LMITO) to lower tax bills or increase tax refunds.