Filing tax returns as a self-employed individual can be a daunting prospect. Many of the obligations and requirements are different from those of the employed, so it is important to understand the process. This guide provides a comprehensive overview of the essentials you need to know when filing tax returns as a self-employed individual in Australia.
Understanding Your Tax Obligations
Generally speaking, you are responsible for keeping accurate records of your income and expenses and for lodging a tax return each year. Depending on your circumstances, you may also be required to register for and pay GST, pay quarterly instalments, and be eligible for various tax deductions.
It is important to understand your obligations as a self-employed individual and to determine what deductions you are eligible for. This will help you to save money and make sure you are not paying more than you need to.
Registering for GST
If your business has a turnover of more than $75,000 per year, you are required to register for GST. This means you must collect and remit GST on all of your sales. In addition, you can claim input tax credits on any GST you pay on business purchases.
To register for GST, you will need to complete an application form and lodge it with the Australian Taxation Office (ATO). Once registered, you must lodge quarterly activity statements with the ATO and pay any GST that you owe.
Calculating and Paying Income Tax
When it comes to income tax, self-employed individuals are responsible for calculating and paying their own taxes. This means you will need to keep accurate records of your income and expenses so that you can calculate your taxable income.
When calculating your taxable income, you will need to subtract any allowable deductions from your total income. This includes any business expenses, such as rent, travel, and equipment costs, as well as any tax deductions you are eligible for.
Once you’ve calculated your taxable income, you will need to lodge a tax return with the ATO and pay any income tax that you owe.
Lodging Your Tax Return
When it comes time to lodge your tax return, you will need to provide the ATO with accurate records of your income and expenses. It is important to make sure that you include all relevant information so that you can get the maximum refund.
You can lodge your tax return online or via paper form. If you are lodging your tax return online, you will need to register for a myGov account and link it to the ATO. This will allow you to access a range of services, including the ability to lodge your tax return.
For assistance with your tax as a self-employed individual, contact Perth Tax People. We can help you to understand your obligations and to make sure you are getting the maximum refund.