Tax time

Tips for teenagers

If you're a teenager with a job, there are two really good reasons to find out about tax returns and whether you need to do one. One good reason is that you could get money back if you've paid too much tax. Another is that you find out if you should be paying more tax before it gets out of hand.

Even if you've never done a tax return before, you might have noticed lately that there have been ads on TV about tax agents. Maybe you've heard people you know talking about doing their tax. That's because it's tax time and returns are due at the end of October. It's the right time for you to think about whether you need to do one too.

If you've never done a tax return before, here's a few pointers to help get you started.

Tip The deadline for lodging a tax return that you have prepared yourself is Wednesday 31 October 2007.

 

What's a tax return?

In a nutshell, a tax return is a form that people who earn money fill out for the Australian Taxation Office to make sure they pay their fair share of tax.

It's all about the money you earned, the tax you paid and the tax you should have paid in a financial year. A financial year starts on 1 July and ends on 30 June.

How much tax you pay depends on your circumstances and as a general rule, the less you earn, the less tax you're expected to pay. By doing a tax return, you give the Australian Taxation Office the information they need to work out whether you've paid the right amount of tax.

The Australian Taxation Office will then send you a Notice of Assessment. This is an account of your tax that is based on the information provided on your tax return. If you paid too much tax during the year, you will get a refund of the difference. If you haven't paid enough, your payment advice will be on the bottom of the assessment.

Do I have to do a tax return?

As a general rule, when you earn more than $6,000 in a financial year or have had tax withheld from your pay, you have to do a tax return. Consider it your rite of passage into adulthood!

How much tax have I already paid?

If you're an employee, your employer takes the tax out and pays it to the Australian Taxation Office on your behalf. At the end of the financial year, your employer will give you a payment summary that shows how much money you've earned and how much tax you've already paid. Payment summaries are usually given to employees in July. You should get a payment summary from each of your employers if you had more than one job. When you've got all your payment summaries together, add up the figures for 'Total Tax Withheld' to find out the total amount of tax you've already paid.

What if I don't get paid by an employer?

A lot of people work for themselves so they get paid by their clients instead of an employer. This is true for people who have started their own small business or work as a contractor, say for example, a tradesperson.

As a self-employed person, the tax responsibilities fall on you. You'll need to do a tax return at the end of the financial year like everyone else. To find out more about the tax you need to pay and how often, contact the Australian Taxation Office.

Tip Paying your tax is a lot like moving a pile of bricks. Tough for anyone to do it all at once - much easier if you can move a few bricks at a time. In the same way, it's easier to put a bit of money aside for tax each time you have money coming in. Building up what you need gradually is much easier than trying to find it all in one go.

 

How do I do my tax return?

If you've never done a tax return before, there are two ways you can do it. One way is to do it online using e-tax. E-tax is free and can be accessed anytime of the day or night from the Australian Taxation Office website. See ATO website. The great thing about e-tax is that it helps you get it right the first time and does most of your calculations for you.

The other way to do your own tax return is on paper by using a Tax Pack. You can get a copy from your local newsagent or tax office. Otherwise, you can get one sent to you by calling 1300 720 092. The Tax Pack has the form you fill out and information about the questions so that you know what details are being asked for.

It doesn't matter whether you choose e-tax or Tax Pack. What matters is that you're accurate and able to back up your claims. The tax office does not take responsibility for checking that the details on your tax return are correct - that's your responsibility.

The Australian Taxation Office may review your tax return at a later date and if necessary increase or decrease the amount of tax payable.

Tip If it turns out that your tax affairs are simple, you may be able to do a short tax return over the phone next year. Ask the Australian Taxation Office for more details.

 

Australian Taxation Office help with your tax returns

The Australian Taxation Office provides a lot of good information on its website to help people do their tax return. See ATO website. The great thing is that it's always accurate and free! For anything about tax, it's the best place to start.

The tax office information explains all about tax returns. It tells you what records and receipts you need to keep so that you can back up your claims. It also explains how you lodge your tax return with the tax office.

There's a special homepage for teenagers. See ATO Youth.

There's a lot more information for people who have their own business. See ATO Businesses.

For people who are eligible, there's also free face-to-face support on offer through Tax Help. It's actually a government scheme that trains and coordinates volunteers that can help people with their tax returns. If you earn less than $35,000 a year, it's worth checking out if you're eligible. See ATO Tax Help or call 13 28 61.

Tip Even if a family member or friend helps you to prepare your tax return, you must sign it yourself and you are still responsible for the information on your tax return.

 

More information

You can find out a lot more about money decisions when you start work. See Starting Work.