First Tax Return ….. MYTH

I had an appointment with a prospective client recently, who has just recently arrived in Australia and was preparing his first tax return. His friends had suggested that, as it is his first tax return, he would get all the tax paid during the year back.

As the interview progressed I pointed out to him that he wouldn’t be getting the full refund.

His reply was that his friends had stated that he should and that his friends had received the full amount back. This is when I suggest that his friends were incorrect and that I could not lodge his tax return based on his expectations. (I might add he argued the point and so I suggested he let his friends prepare his return as they were obviously more qualified).

MYTH:

As it is your first return, the tax office will refund all the tax paid on your PAYG Payment Summary.

FACT:

Whether it is your first or tenth tax return, the calculation is the same. Assessable income less allowable deductions equal your taxable income. The tax is calculated on the taxable income, Medicare levy is added and any offsets are taken away.

If the balance of tax payable + Medicare levy – tax offsets is less that the PAYG installments paid during the year, you get a refund.