How to Do Your Tax Return: Australian Tax Basics

They say two things are certain in life… death and taxes. While tax is certainly inevitable, understanding how to do your tax return in Australia isn’t always straightforward. Whether you’re new to the workforce, stepping into business ownership, or lodging your own tax return for the first time, it can feel overwhelming.

At Shoebox Books & Tax, we’ve helped thousands of Australians understand and manage their tax obligations. Our team of experienced registered tax agents and bookkeepers work with clients across the country to take the stress out of tax time. We stay up to date with the latest Australian Taxation Office (ATO) changes to ensure everything is accurate, compliant, and on time.

In this guide, we’ll walk you through the essentials of the Australian tax system: when and how to lodge your tax return, what taxes might apply to you, and how to maximise your refund – all in plain English.

Why Do We Pay Tax & Where Does It Go?

We pay tax to the Australian Government based on all your income, including employment, business, investment income, and government payments like the Family Tax Benefit. The money collected forms a significant portion of the federal budget, funding services such as education, healthcare, infrastructure, and support through government agencies like Centrelink.

The Australian Taxation Office (ATO) manages the collection and enforcement of taxes. How much you owe depends on your taxable income, your deductions, and whether you have any outstanding tax returns or obligations like a child support assessment.

How Much Tax Do You Need to Pay?

Australia uses a progressive income tax system. That means the more you earn, the higher your tax rate. There is a tax-free threshold where the first $18,200 of your income isn’t taxed. Once you earn above that amount, your tax return will reflect tax on the remaining income, scaled across set brackets.

Need help estimating your income tax? Use the ATO website calculator or speak with a registered tax agent or accountant to make sure your calculations are accurate.Read our recent article if you’re wondering why you’re getting taxed so much.

What Types of Taxes Might Apply to You?

Just to keep things interesting, there are a plethora of taxes applicable to individuals and businesses in Australia. In fact, Australians pay at least 125 different taxes each year! From luxury car tax and agricultural levies to motor vehicle and property taxes, tax is well and truly part of our day-to-day life.

Tax for Individuals

Income Tax: Total assessable income (wages, business income, interest, rent, and dividends) minus deductible expenses.

GST (Goods and Services Tax): You pay 10% GST on any goods and services, such as prepared food and beverages, and service-based businesses. GST is paid when you settle the account for the service – it does not need to be paid in your tax return.

Fringe Benefits Tax: Taxable non-cash benefits provided to employees by their employer such as use of a company car, housing allowances, and payments of private expenses. Read this simple guide on Fringe Benefits Tax.

Capital Gains Tax: Tax imposed on gains resulting from the sale of assets. Capital gains are included in your assessable income and taxed at your applicable income tax rate.

Medicare Levy: A Medicare levy is taxed at a flat rate of 2% of your taxable income. If you do not have private health insurance, a 1–1.5% additional levy surcharge may apply.

Tax for Companies

• Company Tax: Paid by companies out of their profits. Company tax is calculated at 25% of the profits for small businesses with less than $2 million in revenue.
• GST (Goods and Services Tax): The 10% GST you have charged your customers for goods and services must be paid to the government.
• Luxury Car Tax (LCT): 33%. If you’re planning on buying or importing luxury cars into Australia from overseas, prepare to be hit with a flat rate tax of 33% if the vehicle is valued at over $60,000 or $75,000.
• Superannuation Tax: Each employer must pay superannuation on top of their employees’ wages on their behalf. The Super Guarantee is the minimum you must pay, which currently stands at 11% of your employee’s earnings.
• Payroll Tax: Determined by each Australian State and Territory, payroll tax is imposed on employers whose annual paid wages exceed the state-set amount. Generally, it is between 3% and 7%.

Read our recent article to ensure your company is legally compliant.

PAYG & Business Obligations

Running a business or side hustle? You may need to manage:

• PAYG Withholding – Deducting tax from employee wages
• PAYG Instalments – Paying estimated tax quarterly on business income
• GST Reporting – If registered, reporting GST through a BAS

The PAYG Withholding

As an employer, you have a responsibility to help your employees and contractors meet their end of financial year taxation liabilities. You collect PAYG withholding amounts from payments you make to employees, contractors and businesses that haven’t provided you with their ABN (Australian Business Number). You will need to register for PAYG withholding and report the amounts withheld on your activity statements. The amounts you have withheld from wages and other payments must be paid to the ATO. Your employees and other payees should be provided a PAYG withholding payment summary.

PAYG Instalments

PAYG instalments apply to individuals, organisations or trusts who earn a certain amount of income. There are special rules and exceptions applicable to different business and company structures. PAYG Instalments are quarterly payments towards the expected income tax payable for the financial year. This system helps you and your business meet your annual income tax obligations and keep on top of profitability and cash flow.

What Is the Tax-Free Threshold?

If you’ve ever filled out a Tax File Number Declaration, you may recall the option to claim the tax-free threshold. This allows you to earn up to $18,200 per income year without being taxed. If you have more than one job, you can only claim the threshold from one employer. In most cases, this would be the job with the highest earnings.

When you begin work with a new employer you’re required to complete a Tax File Number Declaration form. At question 8 the form asks “Do you want to claim the tax-free threshold from this payer?” You’ll need to answer ‘yes’ in order to claim the threshold.

When Can I Lodge My Tax Return in 2025?

You can begin to lodge your tax return online from 1 July 2025 via the ATO website or myGov. However, in most cases, your income statement from your employer won’t be finalised until late July, so it’s smart to wait until it’s marked ‘tax ready’.

How Long Do You Have to Do Your Tax Return in Australia?

The Australian tax return deadline is 31 October 2025 if you’re lodging your own tax return. If you’re using a registered tax agent, you may have more time, just make sure you’re on their client list before the due date.

How to Lodge Your Tax Return

You have several options when it comes to lodging:

• Lodge online via myGov using pre-filled information
• Use a registered tax agent to lodge for you
• Submit a paper tax return (less common and slower)

Make sure you gather all relevant details: your income statement, bank interest, dividends, health funds statements, and receipts for any eligible deductions or home expenses.

Can I Do a Tax Refund Myself?

Absolutely. Lodging your own tax return through myGov is free and straightforward if your finances are simple. You’ll need a myGov account linked to the ATO. However, if you’ve had a prior year return to catch up on, multiple income sources, or a child support case, consider working with a tax agent.

How Can I Maximise My Tax Refund?

To maximise tax returns:

• Track all expenses and eligible deductions
• Declare all your income, including gig work or side hustles
• Review your investment income, including rental properties or shares
• Include bank interest and dividends from savings and investments
• Ensure private health cover info and health funds details are up to date
• Lodge on time — penalties apply to previous year or submissions after the tax return deadline

An experienced tax agent can help you find deductions you may miss and ensure your return is compliant.

What If You Have Outstanding Tax Returns?

If you missed lodging in a previous year, it’s important to catch up quickly. The ATO may impose interest charges or penalties. If you’re unsure where to start, a registered tax agent can assist with reviewing your records and getting your outstanding tax returns up to date.

ATO’s Tax Avoidance Taskforce

The Tax Avoidance Taskforce, launched by the ATO, monitors underreporting and false claims. Lodging honestly and with the right support is always the best approach.

If tax avoidance is identified, you can be penalised for:

• Making a false or misleading statement or taking a position that is not reasonably arguable
• Failing to lodge a return or statement on time
• Failing to withhold amounts as required under the PAYG withholding system
• Failing to meet other tax obligations

Penalty amounts are calculated using a formula based on the amount of tax avoided, your behaviour, or in nominated multiples of a penalty unit. The current penalty unit for an infringement which occurred on or after 7th November 2024 is $330.

Tax Can Be Confusing, But We’re Here to Help

Whether you’re filing your first return, catching up on a prior year, or maximising deductions, Shoebox Books & Tax is here to help. Our friendly team of registered tax agents and bookkeepers make tax easy. We’ll help you lodge your tax return, keep records in check, and make sense of income tax.

We use the latest software and know the ATO systems inside out. Ready to tackle tax time with confidence?

Contact Shoebox Books & Tax today to get started.