Filing income tax returns (ITR) is an annual activity that is viewed as the moral and social duty of every responsible resident of the country. ITR is the basis for the government to determine the amount and means of expenditure of individuals as well as business enterprises. It acts as a platform for the assessee/individual to meet tax obligations and maximize claims or deductions.
Though the government mandates ITR filing for individuals/ businesses that earn a specified amount of income annually, many non-liable individuals (who don’t fall under the tax bracket) also file IT returns voluntarily.
No doubt income tax covers a significant portion of your income, but it is important to file ITR for the following reasons:
• Quicker Refund Process: After filing the income tax returns, an individual or legal entity can potentially claim the refund of the excess tax paid during the particular financial year. The situation of ‘Excess Input credit’ arises when the advance tax, self-assessment tax, or deducted TDS is higher than the total tax liability of a taxpayer. As per the latest norms of ATO, the ITR filing should be done before 30th June in order to claim quick refunds and eligible credit.
Note: The applications for tax refunds are processed on a “first come first serve” basis. So, it’s better to hire a professional income tax return consultant who serves individuals and small businesses by staying current on new tax laws and thereby positioning them for short and long term tax optimization.
• Carry Forward The Losses: Any losses incurred by an individual or enterprise on investments that fall under the category of short term or long term, speculative or non-speculative, capital or recurring are eligible for tax exemption. While filing income tax returns, such ‘incurred losses’ can be carried forward against the capital gains made in the subsequent years. However, if you do not file your ITR at all, then you won’t be eligible for this exemption against the tax liability. In this regard, tax return services Melbourne are known for catering to all sorts of tax preparations, tax planning, and filing services at an affordable fee.
• Avoid Legal Repercussions: A belated return (filing tax returns after due date) or avoidance of tax payment can attract legal implications, penalties, interests, and other economic woes. As per the latest norms, the value of a penalty unit can range around $210 to $1050 for untimely payment. On the other hand, the ATO can release official notices and prosecute an individual or business owner for failing to lodge tax returns. In such cases, the maximum penalty which can be applied on prosecution is $8,500 or imprisonment for up to 12 months or both. However, to avoid such legal repercussions, it’s always better to seek professional help and minimize the risk of litigation.
• Hassle-free Loan Approval: While applying for personal or commercial loans, the eligibility and quantum of loan would depend on an individual’s aggregate income (including all the income from other sources). Indicating the personal and professional earnings in a particular financial year, ITR acts as an important proof or evidence during the loan application process. In fact, the ‘National Australian Bank’ (NAB) and other financial institutions actively ask for ITR while making a request for a particular loan amount. Usually, the lending institution will seek ITR submission of at least three years along with salary-slip and Bank Statement/Form W-2.
• VISA Processing: While processing your Visa application, the embassies and consulates of developed countries like the United States, United Kingdom, Canada, and Australia ask for ITR receipts of the past years. The income tax return file demonstrates a detailed picture of your total income earned and taxes paid during the financial year. This helps the VISA authorities to assess your income and ensure that you will be able to take care of your expenses on the trip.
• Development of Economy: Taxes is one of the primary sources of revenue for the government. The money collected through taxes in the ex-chequer account is further used for purposes such as defense, healthcare, education, infrastructure, and other development activities. Additionally, the government launches various schemes for the masses that are beneficial for individuals, SMEs, businesses, and society at large. This means that the ‘Paid Taxes’ will benefit the taxpayer in the form of schemes, relief plans, and infrastructural development. Not to mention, filing ITR is a great way to reflect your responsibility towards the nation and thereby stay in the good books of government.
Conclusion: Income Tax return filing help the individuals to plan taxes, make better investments, and eventually empower them to make smarter decisions. So meet all your tax-related obligations today and experience the above benefits of tax return services Melbourne. For more information on this, a Registered Tax Agent can guide you on know how the Australian Tax System works and what deductions are eligible in relation to your occupation. They will also help you to claim maximum dedications, stay abreast with income declarations, and thereby receive full refund entitlement.