Tax returns

Do I have to file a tax return?

If you earned more than the minimum taxable income you must file a tax return. The threshold changes over time. Don't just assume you don't have to – check with the ATO or your tax agent.

Even if you have to lodge a tax return it does not necessarily mean that you will in fact pay income tax.

For instance, if you earn more than the minimum taxable income but have sufficient allowable deductions, you may receive a rebate that in effect means you don't pay tax. However, you must still file the return.

Self assessment
The primary responsibility for deciding whether a tax deduction is legitimate or not belongs to the taxpayer. The Tax Office's policy of self-assessment (introduced in 1992) means it generally accepts the figures the taxpayer presents, but these can always be checked either randomly or in an audit.

It is therefore essential that you take every care in the preparation of your tax return.

Tax file numbers
All taxpayers may be issued a tax file number. Although it is not compulsory, there are financial disadvantages if you do not have one.


It is designed to identify taxpayers and stop tax avoidance. It must also be disclosed when opening a bank account (higher tax rates can otherwise apply).

Once you get a tax file number you don't have to reapply for one if your circumstances change e.g. you move interstate, change jobs, or change your name.

Do I need professional help?
Of course this is up to you, but it is always worth keeping in mind that tax law is not only complicated but ever changing through various Rulings and Determinations issued by the ATO, apart from the changes to the tax legislation itself.

You can see a registered tax agent or a lawyer (a person can be both). These expenses are tax deductible. In general only tax agents can charge fees for the completion of a tax return.

If you cannot afford a tax agent you can get in touch with Tax Help, a free ATO service that is confidential. Tax Help is a network of community volunteers who provide a free and confidential service to help people complete their tax returns at tax time.

They are not Tax Office staff, but they receive training and support from the Tax Office. Ring 13 2861 (no charge). There is a means test for the use of this service. You cannot receive assistance with:

  • business tax returns
  • partnership and trust matters
  • capital gains tax (CGT)
  • rental property.

Tax Help is only available from July to October each year.

Tax Pack
This is a large booklet (actually more like a magazine) produced by the ATO. It is mailed to taxpayers and is also usually also available free of charge from Post Offices and newsagents, and can be downloaded from the ATO website. In effect the Tax Pack collects returns with details as to their completion.

In general you will find that many of the items in the Tax Pack do not apply to the PAYE taxpayer so don't be daunted by its size.

Allowable deductions
From taxable income you are permitted to subtract allowable deductions.

In general these deductions are the money you spend in order to earn the assessable income in the first place.You cannot claim an expense which has been (or will be) paid back to you by your employer.

You must be able to prove the validity of the deduction you claim. In some circumstances strict documentary evidence is not required to substantiate certain "employment related expenses" under a specific sum, but in general you cannot simply claim a deduction on the basis of your word – you must have some objective documentary evidence. These include:

  • a receipt or similar, with some evidence as to what was paid for. In other words, it will not be sufficient to merely have a receipt from a cash register and use that to justify the claim. The receipt must indicate the name of the business, the date of the purchase and a clear description of the item;
  • a diary for small items that do not exceed a specified amount for the year. Check the Tax Pack or speak to your tax agent as to whether this is possible;
  • special proof for the use of cars that are used to earned income. Check the Tax Pack or speak to your tax agent.

In some circumstances it is possible to deduct losses where they are incurred in gaining or producing assessable income, or incurred in the carrying out of a business.

There are severe limits to these types of deductions, especially if the taxpayer does not run a business.

For instance, payments made to cleaners and nannies, even if they are necessary to allow the taxpayer to earn income, are not permitted as deductible expenses.This is because the ATO views these payments as private, much the same as any private expense.

Capital expenses
In general you cannot deduct a capital expense (such as office equipment) but you can deduct those expenses required to maintain the item.

You may be able to deduct a sum for depreciation (a capital asset, such as a car or machinery, used in earning your income, spread over its effective life), but you cannot deduct the cost of the item, even though it is needed to earn income.

Your tax agent will be able to determine whether the payment is capital in nature.

Although superannuation is now available for most workers, the payments made by employers are not available as deductions.

Deductions may be available for the self-employed or workers who do not receive employer contributions. You will need professional advice to take this further.

Work journeys
You might think that the test of deductibility i.e. expenditure in order to earn an income, would encompass journeys to and from work. After all, you have to get to your job in order to earn your wage!

However, the ATO does not recognise this as a work related expense. It is sometimes possible to have journey expenses deducted, but this will usually be in circumstances where the journey is to a place other than your usual workplace to do or complete a work task. Check with your tax agent.

There are some exceptions e.g. you need a car because you have to carry bulky tools or equipment and you cannot leave them at work.

For a donation to be deductible it must be to an approved organisation. A donor can be an individual, company, trust or other type of taxpayer.

You will get a special receipt that can be used to substantiate the deduction. For a donor to claim a tax deduction for a gift:

  • the payment must be truly a gift;
  • it must be to an entity called deductible gift recipients (DGR);
  • be a gift of money or property that is covered by a gift type; and
  • comply with any relevant gift conditions.

Some 'gifts' that are not generally eligible for a deduction include:

  • raffle or art union tickets;
  • chocolates, pens, etc;
  • fundraising dinners, even if the cost is greater than the value of the dinner;
  • school building funds as an alternative to an increase in school fees;
  • payments where the payment will be used to provide a benefit for the 'donor'.

Last Updated – April 2010