Are you required to lodge an Australian tax return?

Australia taxation can be quite complicated. Very often, clients ask me: do I need to lodge a tax return at all? Their situations are different. Sometimes, it’s a pensioner who doesn’t any income other then their pension.  It could be someone who’s under 18 years old, only works part time earning a few thousands a year and a few dollars bank interest. Or, it’s some who’s new to the country, worked part of the financial year and also received some rental income from overseas.

Most people are genuinely not sure what to do with their unique situation. Occasionally there would be someone who wants to try their luck with ATO.

“I made some money from this side gig. Do I REALLY need to report this in the tax return? Very likely tax office won’t know this.”

“If I lodge a tax return, I’d have to pay more tax. Do you think if I don’t lodge a tax return, the tax office will just let it go?”

Taxpayers who must lodge a tax return include:

1. Most resident individuals whose total assessable income exceeds $18,200 for the 2020 income year. However:
   1. Persons who received certain Australian Government allowances will not need to lodge a tax return if they only had income from this source or if their taxable income was not more than $20,542.
   2.  Persons who received certain Australian Government pensions or who are entitled to an aged pension will not be required to lodge a tax return unless their rebate income is more than:
      1. $32,279 if at any time during the year they were single, widowed or separated
      2. $31,279 if at any time during the year the person and their spouse had to live apart due to illness or the person or their spouse was in a nursing home
      3. $28,974 if at any time during the income year the person and their spouse lived together
   3. A person who was an Australian resident for only part of the year will be required to lodge a tax return if their taxable income exceeds their adjusted tax-free threshold ($13,464 plus ($4,736/12) x number of months or part month the person was an Australian resident)
2. Every person who, during the year, was not an Australian resident for tax purposes and derived income (including capital gains) that is taxable in Australia, other than franked dividends, interest and royalty income subject to withholding payments
3. Every person carrying on a business or profession regardless of profit or loss.
4. A person who has had tax withheld under the PAYG withholding system other than amounts withheld from:

   1. franked or partially franked dividends where the amount of the dividends or distributions received and any franking credits totalled less than $18,200

   2. dividend, interest and royalty payments received by foreign residents
   3. Departing Australia Superannuation Payments
   4. payments made to persons participating in the Seasonal Labour Mobility Program
   5. certain superannuation lump sum payments made to a person with a terminal medical condition
5. A person who has a Reportable Fringe Benefits Amount (RFBA) or a Reportable Employer Superannuation Contribution (RESC) shown on their PAYG Payment Summary or Income Statement, regardless of income.
6. A person who paid Pay As You Go Instalment Tax during the income year, irrespective of income.
7. A person who has made a loss (including a capital loss) during the income year or has a carried forward loss (including a capital loss), which they can claim in the current year .
8. A person who was entitled to the private health insurance rebate but did not claim the correct entitlement as a premium reduction, and their spouse (if they had one) is not claiming the rebate for them in their income tax return.
9. A person, 60 years old or older, who received an Australian superannuation lump sum that included an untaxed element or it is a superannuation lump sum death benefit paid to a non-dependant
10. A person, under 60 years old, who received an Australian superannuation lump sum that included a taxed element or an untaxed element or it is a superannuation lump sum death benefit paid to a non-dependant.
11. A person who is liable to pay or is receiving child support through the Child Support Agency (CSA) unless their adjusted taxable income is below $25,575 (for the 2020 income year) and they have received a government pension, allowance or payment for the whole period.
12. A person who has made personal contributions to a complying superannuation fund or retirement savings account (RSA) and is eligible to receive a super co-contribution.
13. A person who has made concessional superannuation contributions exceeding their concessional (pre-tax) contributions cap.
14. A person who has made personal superannuation contributions exceeding their non-concessional (after-tax) contributions cap.
15. A person who was entitled to a distribution from a trust or had an interest in a partnership and the trust or partnership carried on a business of primary production.
16. A person who is a special professional covered by the income averaging provisions. These provisions apply to authors of literary, dramatic, musical or artistic works, inventors, performing artists and active sportspeople.
17. A person who was an Australian resident for tax purposes and had exempt foreign employment income and $1 or more of other income (Module 10).
18. A person who derived assessable income from dividends and distributions and franking credits that was more than $18,200 (or $416 if aged under 18 at 30 June 2020).
19. A person who has been asked to submit a return by the Commissioner. A full tax return is required even if there is no assessable income to report.
20. A person who is a minor (under 18 years old on 30 June) and whose income was more than $416 (excluding salary and wages or other payments for work that was personally performed) or whose income from dividends or distributions and franking credits was more than $416. A minor whose unearned income is less than $416 will still be required to lodge a tax return if they have had tax withheld.
21. Foreign residents with an accumulated Higher Education Loan Programme (HELP) debt, VET Student Loan or an accumulated Trade Support Loan (TSL) (as of 1 June immediately preceding the income year) if their repayment income, and any foreign-sourced income, was more than $11,470 for 2019-20. The return must also be lodged electronically.
22. A person who derived Australian sourced taxable income (excluding any superannuation remainder or employment termination remainder) of $37,001 or more whilst they were on a working holiday visa (417 or 462).

Hope this long list helps! With Australian end of financial year fast approaching, it’s best to get your head around and be prepared for any financial implications.