Simple Tips for Income Tax Problems
What is an income tax in Australia?
In Australia, the income tax is the most significant revenue stream within the Australian taxation system. There are several forms of taxation in Australia. Individual, tax payers, and companies within Australia can be required to pay taxes to all levels of government—local, state, and federal. These taxes are collected to pay for public services and transfer payments, which is a distribution of economic wealth. Income tax problems are usually cases involving taxpayers, companies, and businesses.
The income tax is levied upon three sources of income for individual taxpayers, namely personal earnings (pertaining to salary and wages), business income, and capital gains. Generally, these three sources of income tax account for 66% of federal government revenue and 57% of total revenue across the three tiers of government. Within Australia, the financial year runs from July 1 to June 30 of the following year. Income tax problems arise because not everyone is able to come up with their taxes year after year. Income tax is applied to the taxable income of a taxable entity. Taxable income is calculated by applying allowable deductions against the income of a taxable entity.
Same with most other countries, Australia withholds income tax from wages and salaries of taxpayers. This often resulted in refunds payable to taxpayers. To minimize income tax problems, a nine-digit Tax File Number (TFN) should be given to employers for employees to have withholdings calculated using the various tax brackets.
Ways to fix income tax problems
As a taxpayer, you need to know how to fix income tax problems that you are dealing with. The Australian Taxation Office, or ATO, has a complicated and difficult tax process, so you must make sure that you comply during the right time period. If you are coping with difficult income tax problems, then it would be advised that you read the following steps:
1. You need to earn enough money to be able to fix your income tax problems
If you have tax burden then you need to increase your net income rate so that you can avoid dealing with future problems. A good idea is to have two jobs that will support the increased income tax rate because being jobless could mean additional income tax problems.
2. Avoid tax evasion in the future
As a responsible taxpayer, and to be able to effectively fix your income tax problems, you should avoid dealing with illegal businesses or attempting to conceal your income. Planning to evade taxes can get you into serious trouble if and when the government audits your accounts.
3. Trust your income tax to someone who is knowledgeable to properly file your income taxes.
Trust in someone who knows the ins and outs of tax business. There are many tax firms that will help you fix the income tax problems you are dealing with by evaluating and assessing your case to develop appropriate solutions for your income tax problems. Remember, everyone’s situation is different, so a tax specialist can help you determine exactly what to do with your specific problem.
4. You can file an “offer in compromise” to deal with income tax problems that are usually brought up by the Australian Taxation Office.
If you don’t have the right amount of money to pay for your taxes, then you must seek for the option of filing an offer in compromise. An offer in compromise allows a taxpayer to pay less than they owe on their income taxes. But not everyone can have the offer in compromise. To qualify for this advantage, you must have filed your tax return on time for at least the last five years, and you must have been unable to earn enough money to pay the taxes you owe.
Income tax problems and seeking solutions
An income tax, as aforementioned, is one of the most significant taxes known in Australia. As a taxpayer, it is crucial for you to learn and deal with the proper guidelines in paying taxes to avoid simple cases that can become income tax problems. You can’t simply get away from your tax problems, but you always have options to solve them.