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When a person earning income in Australia first enters the tax system, they do so by applying for a tax file number (TFN). This number is issued to them after satisfying a series of identification points, and remains with them throughout their working life. This number is used for taxation purposes only and is not used, nor should it be requested, to provide proof of identity by other organisations. It is provided to an employer in the first 48 hours of starting work so that the employer can deduct the correct tax from the employee’s wage or salary. Keeping the TFN safe is essential when it comes time to complete a tax return. Personal tax returns in Australia are due to be lodged with the Australian Taxation Office (ATO) by 31 October for the preceding financial year which runs from 1 July to 30 June. The ATO provides tools free of charge to assist taxpayers to complete their returns if they are not using the services of a tax agent. The most popular tool is the e-Tax software available for download from the ATO website, but there is also a paper-based booklet called a Tax Pack available from newsagents and post offices which contains the tax return itself and a series of instructions on how it should be completed. For the computer literate, the e-Tax software is relatively easy to use, and comes complete with explanations where confusion arises as to what information is required to be entered. However it does require access to a computer, and the skills necessary to use the software as well as a reasonable understanding of what information is required. The Tax Pack is a large booklet with pages of information relating to several different types of tax returns and while all the resources are contained in it for a taxpayer to complete their own return, most people find it overwhelming. Australia’s taxation system is quite complex and although there have been moves to simplify it, not a lot has changed in the short term and a large industry still provides assistance to 80% of Australians in preparing and lodging their tax returns. This industry includes registered tax agents and accountants Narangba and the accountants, particularly, are sought out by people who, while still being wage or salary earners, have accumulated investment properties. The task of keeping track of things like depreciation and the other expenses involved in holding and managing the properties is not one that the average person wants to do, and since accountants already have the expertise, most people choose this option. Accountants keep up to date with changes in ATO rules and regulations, and are better able to ensure that, when they complete personal tax returns on behalf of their clients, they have covered everything.
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