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What You Need to Know About Income Taxes in Australia

Income tax in Australia is a government-imposed tax on money earned by an individual. Taxes are the primary source of revenue for the state's programs, so they need to collect these from citizens. There are three sources of income tax in the country—personal income, business income, and capital gains.

Personal income comes from wages and salaries. Meanwhile, business income is from fees received from the regular practice of a profession. Payments for products or services, whether in a brick-and-mortar store or an ecommerce business are also taxable income. 

Capital gains, the third source of income tax, is derived from sales of land, property, shares, or managed fund investments. Here are a few other things you need to know about income taxes in the country

When are taxes due in Australia?

In the country, the fiscal year starts 1 July and ends on 30 June the next year. Most people report their income between July and October every year, and revenue is taxed annually. The Australian Taxation Office has information on how to lodge a tax return and the tax schedules for the current fiscal year. 

What are the TFN and ABN?

The TFN or tax file number and ABN or Australian business number are tax IDs. Personal income tax is withheld at source, on wages and salaries. Employees must provide their TFN to employers, who calculate deductions based on tax brackets. 

Business income, though, is not taken at source. The person producing the invoice and receiving the payment is the one responsible for retaining part of their income to meet tax liabilities at the end of the fiscal year. Seeking the services of online accountant services will help you stay on top of these files and avoid problems with the ATO.

A bank or financial institution will always ask you for your TFN or ABN. It is not a crime to fail to provide these numbers; however, if you don't give your tax ID, the bank or institution will put you in the highest tax rate. Furthermore, all taxpayers in Australia are required to contribute to the national healthcare program, even if they are not eligible for it.

How are tax deductions computed?

Since there are various sources for taxes, the computations for these deductions also vary considerably. What one taxpayer submits to the government might be greater or lesser than what his neighbour does, owing to various factors. 

Some things, though, cannot be taxed by the government, like electricity, uniform or work clothes, and the internet, among others. You can claim these expenses as tax deductions.

Keep receipts and invoices that will support your claim when you designate these as non-taxable expenses. Items deductible from your taxes vary from year to year, so it is best to consult a CPA when it is time to file your taxes.


Income taxes can pile up every year, but they are a requirement for all working individuals in Australia. You could claim tax refunds when you file your annual returns. Doing this is easy enough for people who are regularly employed. However, if you are a freelancer, or if you have a complicated financial situation, it is not so clear-cut. Getting an accountant to sort your income statement is the best course of action.

If you are a freelancer or an online business owner, you need an accountant to help you with your tax liabilities. Let The Ecommerce accountant help you— we are an online accounting firm in Australia assisting small business owners with their tax needs. Book a free strategy session or get in touch today to learn more!

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