Do I need to lodge a tax return?
To help you work out if you need to lodge a tax return, use the Do I need to lodge tool. This tool asks you a series of questions to determine whether you need to lodge a tax return. It takes 5 to 10 minutes to complete.
What happens if I don't lodge my Tax Return on time?
If you can’t lodge by the due date, you should contact ATO as soon as possible to reduce the risk of a penalty.
Lodge online with myTax
You can lodge your return using myTax, the ATO’s free online tax return. You need a myGov account linked to the ATO to lodge online. Returns lodged this way are usually processed within two weeks.
Declare all your income
Most of your income will be pre-filled from details the ATO receives from your employer and financial institutions. There may be other income you need to add yourself.
Common types of income that must be declared includes:
- employment income
- government payments
- super pensions and annuities
- investment income (including interest, dividends, rent and capital gains)
- income from the sharing economy (for example Uber or Airbnb)
- compensation and insurance payments
- foreign income
Visit the ATO’s website for more information on income you must declare.
Claim your tax deductions
Tax deductions can help to reduce your taxable income.
You may be entitled to claim a deduction for work-related or investment expenses.
To claim a deduction for work-related expenses:
- you must have spent the money yourself and weren’t reimbursed
- the expense must be directly related to earning your income
- you must have a record to prove it (usually a receipt)
If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.
Here are some common work-related expenses you may be able to claim.
Car and travel
You may be able to claim the work-related use of a car you own when you drive:
- between separate jobs on the same day
- to and from an alternative workplace for the same employer on the same day
- between home and work in limited circumstances, such as when you carry bulky tools and equipment
You can’t claim a deduction for:
- normal trips between your home and work, even if you live a long way from your usual workplace or work outside normal business hours
- if your car is held under a novated lease in the name of your employer or spouse
Clothing and uniforms
You can claim the cost of work-related clothing if it falls under one of the following categories.
Compulsory uniform – To claim the cost of a work uniform, it needs to be distinctive to your employer. You must also be explicitly required to wear the uniform by a workplace agreement policy.
Protective – You can claim a deduction for the cost of clothing and footwear you wear to protect yourself from injury or illness at work. The clothing must have features or functions that distinguish it from regular clothing, for example steel-capped boots. There must also be a link between your work-related activities, the risks presented by your work environment, and the protective clothing.
Occupation specific – You can claim a deduction for occupation specific clothing that is associated with a particular profession, trade, vocation, occupation or calling. For example, a judge’s robes or a chef’s chequered pants. This does not include items that are traditionally worn by a number of professions. For example, work wear worn by tradespeople.
If the study directly relates to your current job, you may be able to claim expenses. For example, course fees, textbooks, stationery, internet, home office expenses and professional journals. The study must maintain or improve your skills or knowledge, or be likely to increase your income, from your current job. You can’t claim a deduction if your study is designed to help you get a new job.
Tools and other equipment
The cost of tools or equipment can be claimed as a deduction if you use them for a work-related purpose. Tools and equipment are generally depreciating assets. If they cost you more than $300, you can only claim a deduction for its decline in value over the life of the asset.
Working from home
If you’re an employee who works from home, you may be able to claim a deduction.
For the 2021-22 income year, there are three ways you can choose to calculate your working from home deductions:
- temporary shortcut method (available between 1 March 2020 and 30 June 2022)
- fixed rate method
- actual cost method
As long as you meet the eligibility and record-keeping requirements, you can choose the method that gives you the best outcome.
The ATO has more information about how to calculate working from home expenses.
Other items you can claim include:
- union fees
- the cost of managing your tax affairs
- income protection insurance (if it’s not paid through your super fund)
- personal super contributions you paid to your super fund
- gifts and donations to organisations that are endorsed by the ATO as deductible gift recipients
You may be able to claim the cost of earning interest, dividends or other investment income.
- interest charged on money borrowed to invest
- investment property expenses
- investing magazines and subscriptions
- money you paid for investment advice
The ATO has more information about investment income deductions.
Keep a record of your expenses
To claim a deduction, you must have a record to prove you incurred the expense and how you calculated your claim.
Keep receipts using the myDeductions tool in the ATO app to make it easier to do your tax return. You can record:
- expenses and deductions
- vehicle trips
- income (if you’re a sole trader)
- photos of your invoices and receipts
It’s a convenient way to keep your records in one place. Then at tax time, you can upload the data directly into your tax return or email a copy to your tax agent.
Salary packaging is when you and your employer ‘package’ your salary into income and benefits. It’s also known as salary sacrifice.
How salary packaging works
Salary packaging is when you arrange to receive less income after tax, in return for your employer paying for benefits out of your pre-tax salary. The benefits could be things like a car or a phone.
For example, you might package a salary of $100,000 so that you receive:
- $85,000 as income
- $15,000 car as a benefit
This reduces your taxable income to $85,000. You can benefit as you may pay less income tax.
You need to arrange your salary package before you get paid. You can’t package your salary after you’ve earned it.
Salary packaging is usually more effective for people on middle to high incomes. You may want to get professional tax advice to work out if salary packaging is right for you.
For more details about salary packaging, see salary sacrifice arrangements for employees on the Australian Taxation Office (ATO) website.
What you can salary package
You can salary package benefits you would normally pay for with your after-tax income, such as computers, cars, child care or super. But it depends on what your employer offers and you may have to pay tax.
Most employers will offer salary sacrifice for super to all employees, but may restrict who can package other benefits.
Benefits fall into three categories: fringe benefits, exempt benefits and super.
Fringe benefits can include:
- salary sacrifice for a car
- health insurance
- loans (usually for a car)
- school fees
- childcare fees
- other personal expenses
Your employer pays fringe benefit tax (FBT) on these benefits. See fringe benefits tax on the ATO website for more information.
Exempt benefits include:
- portable electronic devices
- computer software
- protective clothing
- tools of the trade
Your employer will not have to pay fringe benefits tax on these.
Putting some of your pre-tax income into super has benefits for you and your employer. Your super fund will tax these contributions at 15% — the same as your employer’s contributions.
For most people this will be lower than their marginal tax rate. See salary sacrifice and personal super contributions for more information on how this can benefit you.
Get help from a registered tax agent
If you want to use a professional to do your tax return, make sure you use a registered tax agent. You can check if the accountant or agent is registered on the tax practitioner register.
Most registered agents have special lodgment schedules and can lodge returns for their clients later than the 31 October deadline.
Whichever way you choose to lodge your tax return, remember you are responsible for the claims you make. Make sure your deductions are legitimate and you include all your income before you or your agent lodges your return.