Income Tax Return
Filing your tax return is something most people in Australia need to do each year, and understanding how it works can make the process much easier. This guide explains what a tax return is, how to submit it, and what to expect after you’ve lodged it. You’ll learn how long it usually takes to get your refund, how to work out what you owe or are owed, and what kinds of income and expenses you need to include. We also look at how tax is calculated based on your income, what you can claim to reduce your tax, and what information you’ll need to prepare your return. Whether you’re doing it yourself, using a tax agent, or wondering if your partner’s income affects your refund, everything is covered. You’ll also find details on the current income tax rates, how to check the progress of your return, and tips on getting the most out of your refund.
What is an Income Tax Return?
An income tax return is a formal statement that individuals or businesses submit to the government, usually through the Australian Taxation Office (ATO), detailing their income, deductions, and tax obligations for a specific financial year. It is used to assess how much tax you owe or whether you are entitled to a refund. When you lodge a tax return, you report your total income from various sources such as employment, business activities, investments, government payments, and any other earnings. You also include eligible deductions like work-related expenses, donations to charity, or investment-related costs. These deductions can reduce your taxable income and potentially lower the amount of tax you have to pay. If you have paid more tax during the year through pay-as-you-go (PAYG) withholding or other means than what you owe based on your final income and deductions, you may receive a tax refund. On the other hand, if your withholding was not enough to cover your tax liability, you will need to pay the difference. Lodging a tax return is a legal obligation for most working individuals in Australia, and failing to do so can result in penalties. The tax return process also helps you keep track of your financial situation and is important when applying for loans, government benefits, or visa applications.
How do I File Income Tax Return?
Filing an income tax return in Australia involves a series of steps that can be done online, with the help of a registered tax agent, or by submitting a paper form. The tax return covers the income year from 1 July to 30 June, and if you need to lodge a return, you must do so or engage with a registered tax agent by 31 October. The easiest and most common way to file is through the Australian Taxation Office (ATO) via your myGov account. Once logged in, you can access your pre-filled return, which includes income and other data from employers, banks, health funds, and government agencies. You must review this information carefully and add any missing details such as deductions, income from investments, or other earnings. Accuracy is crucial to avoid delays or penalties. If you prefer not to lodge it yourself, you can appoint a registered tax agent to handle the process, but you must contact them before the deadline. Paper returns are still an option, though they take longer to process. After lodgment, you will receive a Notice of Assessment showing whether you owe money or are eligible for a refund. Filing correctly and on time ensures compliance with tax obligations and helps manage your finances effectively.
How long Does Income Tax Return take?
If you lodge your tax return online through myGov and your details are complete and accurate, the Australian Taxation Office (ATO) usually processes it within two weeks. However, if there are errors, missing information, or the return is selected for review, it will take longer. Paper returns take significantly more time, often up to ten weeks or more to be processed. Using a registered tax agent may also affect the timing, depending on when they lodge on your behalf. Delays can also occur if your return is complicated or if the ATO is experiencing a high volume of lodgments, especially during peak tax season in July and August. It is important to ensure all your details are correct and to include all necessary documents to avoid unnecessary delays. You can check the progress of your return through your myGov account linked to the ATO. The time it takes to receive your income tax return in Australia can vary depending on how you lodge it and whether there are any issues with your submission.
Tax Brackets Australia
Here is the current tax brackets for Australian residents for the 2024–2025 financial year.
Australian Resident Income Tax Rates (2024–25)
| Taxable Income | Tax Rate | Tax Payable |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16 cents for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 plus 30 cents for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 plus 37 cents for each $1 over $135,000 |
| $190,001 and over | 45% | $51,638 plus 45 cents for each $1 over $190,000 |
Notes:
These rates exclude the Medicare Levy, which is typically an additional 2% of your taxable income.
The tax-free threshold is $18,200.
Tax rates are different for non-residents and working holiday makers.
How to Calculate Income Tax Return?
Calculating your income tax return involves determining how much tax you owe or how much you are owed by the Australian Taxation Office (ATO) based on your total income, deductions, tax offsets, and the amount of tax already paid throughout the financial year. To begin, you need to total all your taxable income, which may include salary and wages, interest, dividends, rental income, business income, and other sources. Then, subtract any eligible deductions such as work-related expenses, self-education costs, charitable donations, and costs related to managing your tax affairs. This gives you your taxable income.
Next, refer to the current income tax brackets for residents to work out how much tax you owe on your taxable income. If you are eligible for any tax offsets or rebates, such as the low and middle income tax offset, these will reduce your total tax payable. After calculating the total tax liability, subtract the amount of tax that has already been withheld from your income during the year by your employer or other payers.
If the tax already paid is more than the tax you owe, the difference will be refunded to you as a tax return. If you have underpaid, you will need to pay the remaining amount to the ATO. Calculating your return correctly requires accurate records and supporting documents. Many people use myTax via the ATO website or seek assistance from a registered tax agent to ensure everything is calculated correctly and all entitlements are claimed.
Example: Calculating Your Income Tax Return
Emma is a full-time employee living in Australia. During the 2023–24 financial year (from 1 July to 30 June), here is a summary of her financial details:
Total income from salary: $75,000
Work-related deductions (e.g., uniforms, travel, phone usage): $2,000
Other deductions (e.g., donations to registered charities): $500
Tax withheld by employer: $15,000
Step-by-step Calculation:
Calculate Taxable Income
Emma’s taxable income = $75,000 − $2,000 − $500 = $72,500Apply Tax Rates for 2023–24 (Resident tax brackets):
$0 – $18,200: Tax-free
$18,201 – $45,000: 19% = 26,799 × 19% = $5,091.81
$45,001 – $72,500: 32.5% = 27,499 × 32.5% = $8,937.18
Total tax payable before offsets = $5,091.81 + $8,937.18 = $14,028.99
Subtract Tax Withheld
Employer withheld tax = $15,000Calculate Refund or Payable Amount
Since $15,000 was withheld but tax owed is $14,028.99:Refund = $15,000 − $14,028.99 = $971.01
Result:
Emma will receive a tax refund of $971.01 after lodging her tax return.
Emma might also be eligible for tax offsets like the Low and Middle Income Tax Offset, which could increase her refund. It’s always best to use the ATO’s online tools or consult a registered tax agent to make sure the return is accurate.
How Does Income Tax Return work?
An income tax return works as a formal way for individuals or businesses to report their earnings, deductions, and taxes paid to the Australian Taxation Office (ATO) for a given financial year. In Australia, the income year runs from 1 July to 30 June. When you lodge a tax return, you declare your total income from various sources such as salary, wages, business income, investments, and government payments. You also include any allowable deductions such as work-related expenses, donations, or interest on investment loans. These deductions reduce your taxable income, which means you may owe less tax or even receive a refund.
Once your tax return is lodged, the ATO reviews the information and calculates how much tax you were required to pay based on your income and applicable tax rates. They then compare this amount with how much tax was already withheld by your employer or paid in advance. If you paid more than necessary, you will receive a refund. If you paid less, you will be asked to pay the shortfall. The ATO also considers any tax offsets or credits you may be eligible for, which can further reduce your tax liability.
After processing your return, the ATO issues a Notice of Assessment. This document outlines your taxable income, the amount of tax you owe or are refunded, and any outstanding amounts. Keeping accurate financial records throughout the year helps ensure your tax return is complete and correct. Many people choose to lodge their tax return online using myGov, through a registered tax agent, or using tax preparation software.
What to Claim on Income Tax Return?
When completing your income tax return in Australia, there are several types of expenses and items you may be eligible to claim to reduce your taxable income. These claims are known as deductions and can help increase your tax refund or lower the amount of tax you owe. Common work-related deductions include expenses for uniforms, tools and equipment, travel, and home office costs if you work from home. You can also claim the cost of work-related education or training that directly relates to your current job.
Other deductions you can claim include donations of $2 or more to registered charities, the cost of managing your tax affairs such as paying for a registered tax agent, and interest or fees on investment loans. Self-education expenses, union fees and subscriptions to professional associations.
It is important to keep detailed records such as receipts, invoices, or bank statements for all claims. You should only claim expenses that are directly related to earning your income and have not been reimbursed by your employer. The Australian Taxation Office may request evidence to support your claims, so accuracy and documentation are essential. If you are unsure about what you can claim, speaking to a tax agent or referring to the ATO’s official guidance can help you avoid mistakes and ensure your return is correct.
How to Lodge Tax Return?
Lodging a tax return in Australia is an important responsibility for individuals earning income during the financial year, which runs from 1 July to 30 June. If you are lodging your own tax return, it must be submitted by 31 October each year. Before lodging, it is essential to check whether you are actually required to lodge a tax return. If you find that you are not required to lodge, you must still notify the Australian Taxation Office (ATO) by submitting a non-lodgment advice form.
You can lodge your tax return online using the ATO’s myTax service, through a registered tax agent, or by paper if necessary. Using myTax requires a myGov account linked to the ATO. The online system is user-friendly and pre-fills many of your income details to make the process easier. If you use a registered tax agent, you usually have more time to lodge, but you must be on their client list before 31 October.
To lodge your tax return, you’ll need key pieces of information, including your bank account details (BSB and account number) for any refunds, your income statement or payment summaries from all employers, and payment summaries from Centrelink if applicable. You will also need receipts or records for the deductions you wish to claim, your spouse’s income details if you have a partner, and information about your private health insurance if you have a policy. Gathering these documents in advance helps ensure your tax return is accurate and avoids delays in processing. Keeping good records throughout the year will make the process easier and help ensure you claim everything you are entitled to.