As a business owner, you need to file for an income tax return which is very important in Australia. The Australian government decides the amount and means of individual and business enterprise expenses based on the income tax return.
This provides an essential platform for an individual to meet all the legal obligations and claim a maximum return. The people who file for personal income tax returns earn a specific income amount and fall under the tax bracket, but those who are not liable also file for it.
Tax Returns in Australia
Your tax return falls under your responsibility, and if you generate income in Australia. You are required to have a tax file number and pay tax on the money you earn. The money you are required to pay in taxes for a particular year is calculated via your annual tax return.
The employer pays your income tax throughout the financial year from July 1 till June 30. If you are employed, you need to pay your income tax during this year.
At the end of every financial year, you have to file a tax return, and your tax return will calculate the exact amount of tax you need to pay for that year. If you have already paid the amount and it is not correct. You will be issued a bill for the extra tax you need to pay or a refund.
Benefits of Filing Income Tax Return
The benefits of filing an income tax return in Australia are as follows:
Easy loan approval
When you file the income tax return, it will help you apply for a vehicle loan, a house loan and many more. All major banks will ask for a copy of tax returns as evidence of income statements.
Claim tax refund
There might be some times when tax has been deducted from your income even if your total taxable income is not more than the basic exemption limit and you have no tax liability for that year.
In such cases, you need to claim a TDS refund, for which you need to file an individual income tax return at all costs.
Carry forward your losses
If you file your income tax return within the due date, you can carry forward the losses to the following years that can be used to set off against the income of later years.
This indicates you can deduct specific losses from your income that can help reduce tax liability for future income. This is not possible if you do not file an income tax return.
Quicker refund process
After you file your income tax return as a business owner or a serviceman, you can claim the excess tax refund you paid in the financial year. If the advance tax, deducted TDS tax and self-assessment tax are higher than the total tax liability, there is a situation of excess input credit.
If you want to be refunded early, you must file your individual income tax return before June 30. one important thing to remember is that the tax refund application procedure is done on a ‘first come, first serve’ basis.
Losses can be compensated.
There are always chances of suffering losses in a business. So if you or any enterprise suffers any investment loss falls under various categories like long/short term, recurring/capital, speculative/non-speculative, you are eligible for tax exemption.
You can carry forward these losses against capital gains you made in the corresponding years. But you need to file an income tax return, or you will not be exempted from taxes on the losses you made. Tax agents can help you to know more about this.
Legal repercussions can be avoided.
If you file an income tax return after the due date is over or do not pay taxes in time. So you may need to bear legal implications, pay fines or suffer economic drawbacks. As per the rules, the penalty can be thousands of dollars.
If you do not lodge tax returns, ATO will release official notes and punish you as an individual or a business owner. Sometimes, you may even be imprisoned and have to pay a maximum penalty. You can seek help from a professional tax advisor if you do not want to fall into such trouble.
If you plan to visit any other country, you need to apply for a visa. And a visa application requires income tax return receipts to produce. Countries with developed economies like Canada, the United States, the United Kingdom and Australia always ask for ITR receipts for the financial year.
This is because the income tax return file can be the perfect evidence for how much you earned and the tax you have paid. So visa authorities will find the information helpful and do a necessary evaluation to provide you with the visa. You will know if you can visit a foreign country or not.
If you do not know how the government invests in various fields and receives funding, the answer is tax, though it is not the only source of income for the government. But it can be considered a primary source of revenue for the country.
The government collects taxes through the exchequer amount and invests in healthcare, infrastructure, defence and other areas. A government launches various schemes for individuals, businesses, and societies throughout the year.
This indicates that the tax you are paying is coming back to you in the form of schemes, development, relief plans and infrastructure. As long as you pay personal income tax on time, you are doing your duty and eligible for citizenship rights.
Associate with a Tax Agent in Perth
Whether you are a service person or a businessman. So you need to pay your income taxes, which is very important for you. You need to pay your taxes on time to avoid legal consequences; filing an income tax return is mandatory in Australia.
If you have difficulty understanding income tax rules and regulations, you can hire a tax agent in Perth. They can help you to fill up tax applications and get the most from your tax return; they can provide ways to improve your business and ensure that you pay your taxes on time.