What you need to know
As a Tax Help volunteer you don't need to know everything about tax or be able to interpret tax law. However, you do need basic knowledge about the topics you will assist clients with.
Volunteers can only help clients with simple tax affairs. The topics you can help with are presented as you would see them in myTax. Follow the links to our website for additional information to help the client answer the question.
The tax return in myTax uses pre-fill information to complete some sections. The information comes from the client's selections on the 'Personalise return' section and data provided to the ATO by third parties. Third parties include employers, banks, superannuation funds, health funds, and share registries. You can return to the 'Personalise return' section at any time and add or remove selections.
Use the online tools and calculators on our website to help clients answer questions. Links to the tools are found on the myTax topic help page. The myTax help file will give the steps and information needed to complete the section.
When using myTax, the 'Help' function is on the right-hand side of the page. Only items to be completed in the client's return are listed in the 'Help' section.
Remember you can't help clients with any topics that are not listed below.
Before you begin
Under self-assessment, the client takes responsibility for declaring all their income and for being able to support all their claims for deductions and tax offsets. This includes checking the pre-fill information their employers or other organisations provide is correct before they sign their tax return or lodge it online.
This section in myTax shows as Before you begin.
Contact details
The first screen you see in myTax is the client’s contact details.
Check the details with the client. You can make changes by selecting ‘Edit’ and updating the details. After making changes, click ‘Save’. Do this for each section that needs updating.
Open each section and review the parts of each section. When you finish, select ‘Cancel’ to leave the edit screen, then select ‘Next’ to move to ‘Financial institution details’.
Financial institution details
Any client refund will be paid to the financial institution details shown on screen. Confirm with the client the details are correct. Use ‘Edit’ to make changes.
Select next to move to ‘Personalise return’.
Personalise your return
Use the Personalise return screen to help the client choose items that apply to them.
Before going further, watch the tutorial How to personalise your myTax returnExternal Link
In the client's tax return, they must complete the following sections:
- Residency
- Did you use the ATO app's myDeductions tool during the year?
- Income from
- Deductions
- Tax offsets.
You can use the ‘Personalise return’ section of myTax as a checklist. Go through each section with the client, selecting where the client has income, deductions or an offset.
If you or the client need further information, click 'Help' on the right of screen to access the myTax helpfiles.
Some selections will have automatically been made based on information we’ve received through pre-fill. Tax Help clients will commonly see selections at salary and wages, superannuation and annuities, and interest. Selections we make for you can't be removed, even if you think the circumstances don't apply to you.
Pre-fill saves time by adding information to the tax return from third parties. You should ask the client if they have other information besides what has been pre-filled. Where there is no pre-fill, confirm with the client, or make selections where the client has received income that has not pre-filled, or will claim a deduction or offset.
You can check pre-fill availability for:
- Government agencies
- Private health funds
- Financial institutions (interest income)
- Companies (dividend income)
You can move between screens at any time by selecting the buttons at the top of the screens.
Residency
The client must answer the question:
- Were you an Australian resident for tax purposes?
Use the Work out your residency status for tax purposes calculator if the client is unsure.
If your client can only claim a part-year tax-free threshold, answer 'No' to this question. You can then enter their period of residency.
myDeductions tool
If the client uses the myDeductions tool, they will need to upload their data from the app as follows:
- Open myDeductions in the ATO app.
- Go to Settings.
- Select Upload to tax return and complete the process.
- Select the Get myDeductions button below.
Income
Before starting a tax return, you need to determine if the client's income is assessable income.
Income is generally defined as the regular receipt of money – for example, the receipt of salary, wages, allowances and pensions. It can also be for the receipt of money for the use of property or on investments – for example interest, dividends and rent.
Windfall gains such as wins from a lottery, bingo or competitions aren't considered income. They are usually once only payments received because of good fortune.
Tax is paid on taxable income. Taxable income is assessable income minus any allowable deductions. If a client's taxable income is below the tax-free threshold, they won't pay any tax.
Remember you can't help clients who have any of the following types of income:
- business income or losses, including as a sole trader
- capital gains or losses (except as a distribution from a managed fund)
- rental income
- foreign employment income
- employee share scheme income.
As you read about each type of income, open the ATO online services simulatorExternal Link and practise adding information to familiarise yourself with each section of the tax return.
Assessable income
Assessable income is income that can be taxed and must be declared in a client's tax return.
Examples of assessable income Tax Help clients may have to include:
- salary and wages
- interest from bank accounts
- superannuation lump sums and pensions
- annuities
- government pensions
- government payments and allowances
- dividends
- income from managed funds
- foreign pensions and annuities.
Money from a lottery win, an inheritance, a gift or other similar sources aren't considered income. However, if the money is invested and earns interest, the interest is assessable income.
Income statements
Employers report a client's pay, tax and super information directly to us each payday, so all the information is in one place.
An income statement will be available in the client's ATO online services account. This information will also pre-fill in the myTax return.
Income statements will be ready to use in a tax return when the employer marks it as 'Tax ready'. It's important not to use any information before it is marked 'Tax ready'.
Australian superannuation or annuity funds
If the client receives income or payments from one of the following sources, they will need to select 'You had income from Australian superannuation or annuity funds' and then select the items that are relevant to them.
If the client is over 60 years old and received a capped defined benefit income stream or streams, they may have additional tax liabilities. This also applies if the client is a death benefit dependent and the deceased died aged 60 or over.
Use the defined benefit income cap tool to work out the amount to include in the tax return. You can access this tool directly from myTax.
When using the defined benefit income cap tool, click ‘Save to myTax’ to transfer the calculated amount to the tax return and check that it appears in the ‘Calculated amounts’ section.
Australian interest or other Australian income from investments or property
If the client has income from Australian investments, they will need to select 'You had Australian interest, or other Australian income or losses from investments or property' and then select the items that are relevant to them.
This section includes capital gains and rental income. You can help the client with capital gains only when shown on a statement from a managed fund.
Foreign income
If the client has foreign income, the only item you can help them with as a volunteer is Foreign pensions or annuities.
All foreign income, deductions and foreign tax paid must be converted to Australian dollars before including it in the tax return. From 1 July 2003, there are specific rules that tell you which exchange rate to use to convert these amounts. Generally, these require amounts to be converted at the exchange rate prevailing at the time of a transaction, or at an average rate.
You can convert foreign currency amounts into Australian currency using the Foreign income conversion calculator. The calculator lets you choose:
- actual exchange rate at the time of payment
- an annual average rate of exchange.
Other income not listed above
If the client receives any other income or payments not listed elsewhere, you will need to select:
- You had other income not listed above (including employee share schemes).
At this question you can help only with these items:
- jury attendance fees
- taxable scholarships, bursaries, grants or other educational awards
- ATO interest remitted
- payments made under an income protection, sickness or accident insurance policy where the premiums were deductible and the payments replaced income.
Income of a minor
If a client is under 18, some of their income may be taxed at higher rates. However, they pay the same income tax rates as an ordinary adult for:
- all income they receive if they are an 'excepted person' – this may apply if they have finished full time study and are working full time, if they have disabilities or if they are entitled to a double orphan pension
- the income we refer to as 'excepted income' – including employment or business income, Centrelink payments and income from a deceased person's estate.
If the client is not an excepted person, they pay a different rate of tax for income that is not excepted income. This was introduced to discourage adults from diverting income to their children.
Amounts not included as income
Clients may have received amounts that aren't subject to tax and aren't included as part of their assessable income. These amounts may be used in other calculations in their tax return.
The tax treatment of these amounts depends on whether they are classified as:
Exempt income
Exempt income is income on which you don't need to pay tax.
Non-assessable, non-exempt income
Non-assessable, non-exempt income is income you don't need to pay tax on. It doesn't affect your tax losses but may be considered when calculating your liability for the Medicare levy surcharge and the adjustable taxable income of your dependants.
Other amounts that are not taxable
Some amounts are not included as income in the tax return. Generally, you don't have to declare:
- rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts, or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)
- prizes won in ordinary lotteries, such as lotto draws and raffles
- prizes won in game shows, unless you regularly receive appearance fees or game-show winnings
- child support and spouse maintenance payments you receive.
Deductions
Deductions are costs you can claim to reduce your assessable income. Clients may be able to claim deductions for expenses that directly relate to work as an employee or investment income.
The basic rules when claiming a deduction are:
- claim the deduction in the income year the client was liable for or paid the expense
- don't claim an expense that the client has been, or will be reimbursed for
- claim for expenses incurred in earning their assessable income – but not private, domestic or capital expenses
- keep records to prove your expenses, such as receipts.
The myTax help files may refer to decline in value, depreciation, and capital allowances. Tax Help volunteers are unable to help with these topics.
If you can't see the deductions section, return to the ‘Personalise return’ screen. Then select ‘You had deductions you want to claim’. Make selections from the ‘Deductions’ sub-sections where the client is making a claim.
Based on the selections on the ‘Personalise return’ screen, myTax will automatically display some deductions.
You can help clients with the following types of deductions:
- Work-related expenses
- Gifts, donations, interest, dividends, and the cost of managing your tax affairs
- Other deductions
As you read about each deduction, open the ATO online services simulatorExternal Link and practise adding information to familiarise yourself with each section of the tax return.
Work-related expenses
To claim work related expenses, the client must have salary and wage income, or foreign employment income shown on an income statement or payment summary. Work-related expenses include:
- Work-related car expenses – Tax Help volunteers can only help clients use the cents per kilometre method
- Work-related travel expenses
- Work-related clothing, laundry and dry-cleaning expenses
- Work-related self-education expenses
- Other work-related expenses
- Working from home expenses – Tax Help volunteers can only help client's use the Fixed rate method.
Gifts, donations, interest, dividends, and the cost of managing your tax affairs
Non-work-related deductions that you can help a client with include:
- Interest deductions
- Dividend deductions
- Gifts or donations – donations must be made to a deductible gift recipient
- Cost of managing tax affairs – fees paid to a registered tax agent or accountant are deductible.
If you're unable to see these sections in the 'Prepare return' screen, return to the 'Personalise return' screen and select 'Gifts, donations, interest, dividends, and the cost of managing your tax affairs'.
If the client has a foreign pension or annuity, the following deduction category will display – Undeducted purchase price (UPP) of a foreign pension or annuity.
Other deductions
At 'Other deductions', Tax Help volunteers can only help clients claim for Income protection, sickness and accident insurance premiums.
Spouse details
If the client had a spouse during the year, complete the ‘Spouse details’ section. The information is used to work out the client's entitlement to rebates, offsets, and levies.
A spouse includes another person who:
- is in a relationship with the client that was registered under a prescribed state or territory law, or
- although not legally married, lived with the client on a genuine domestic basis in a relationship as a couple.
Spouse details will pre-fill from the last lodged tax return. Check the details and update if needed.
Tax offsets
Tax offsets reduce the amount of tax payable on your taxable income.
In general, offsets can reduce tax payable to zero, but on their own they can't get you a refund.
As you read about each tax offset, open the ATO online services simulatorExternal Link and practise adding information to familiarise yourself with each section of the tax return.
Tax offsets give:
- tax relief for personal circumstances (for example, tax offsets for seniors and pensioners and people living in remote areas)
- an incentive (for example, the private health insurance tax offset).
Some tax offsets don’t need any action from the client. We will work out the client's entitlement to these offsets and apply them automatically when their tax return is lodged. For Tax Help clients these include:
- Low income tax offset – Low income earners may be eligible for a tax offset if they are an Australian resident for income tax purposes. The offset can only reduce the amount of tax to zero and does not reduce the Medicare levy.
- Beneficiary tax offset – Taxpayers who receive certain Australian Government payments or allowances, may be entitled to the beneficiary tax offset.
You can help clients to complete the following tax offsets. Some tax offsets will automatically display in myTax based on the information available in the client's tax return.
- Zone or overseas forces (the page has a link to the Australian zone list). Use the Zone or overseas forces tax offset calculator to calculate the amount of offset
- Australian super income stream
- Seniors and pensioners (includes self-funded retirees) – clients may have a unused portion of this offset.
The Total net medical expenses for disability aids, attendant care or aged care was abolished from 1 July 2019. You can help clients who are lodging tax returns for the 2018–19 income year and earlier with this offset.
Follow these instructions where the client is claiming:
Unused portion of seniors and pensioners tax offset
If both the client and their spouse are eligible for the seniors and pensioners tax offset and one doesn't use all of it, the unused portion may be available for transfer to the other person. We will work this out automatically and transfer any entitlement.
Records you need to keep
Clients need to keep records for 5 years (in most cases) from the date their tax return is lodged. Records can either be paper or electronic, and may include income statements, payment summaries and receipts.
Income tests
The ‘Income test’ section of the tax return is completed by all taxpayers. Make sure you read the information at each question. If these questions are not completed correctly the client may receive an incorrect tax assessment.
When completed the income test summary should show either a zero (0) or a dollar amount next to all the items. You will also be asked the number of dependent children the client has.
As you read about the income tests, open the ATO online services simulatorExternal Link and practise adding information to familiarise yourself with each section of the tax return.
Income tests work out whether the client:
- can claim certain tax offsets and the amount they are entitled to receive
- can receive some government benefits or concessions
- are entitled to a rebate for their private health insurance
- must pay Medicare levy surcharge
- have a HELP or SFSS repayment liability
- must pay tax.
Medicare and private health insurance
The ‘Medicare and private health insurance’ section of the tax return is completed by all taxpayers. Make sure you read the information at each question.
As you read about Medicare and private health insurance, open the ATO online services simulatorExternal Link and practise adding information to familiarise yourself with each section of the tax return.
Medicare gives Australian residents access to health care. It is partly funded by taxpayers who pay a Medicare levy of 2% of their taxable income. A Medicare levy reduction is based on your taxable income. A Medicare levy exemption is based on specific categories. You need to consider the client's eligibility for a reduction or an exemption separately. The Medicare levy may be reduced for low income earners.
Help the client to complete each of the following sections:
If the client was covered by a private health insurance policy or paid for a dependent-child-only policy, they may be entitled to a private health insurance rebate. Check the pre-fill matches the client’s statement.
How did you complete this tax return?
It's important that Tax Help volunteer assisted lodgments are identified so we can measure the effectiveness of the program. It also tells us the type of returns Tax Help volunteers are helping to lodge.
In myTax, Tax Help volunteers need to select the ‘Tax Help volunteer’ box and enter your Tax Help volunteer ID and the Tax Help centre ID. If you don't know your volunteer ID or Tax Help centre ID contact the Tax Help team.
Do you need to lodge a tax return in the future?
This may be the last tax return a Tax Help client needs to lodge. If so, you will need to select 'I do not need to lodge future income tax returns'. Clients will not need to lodge in future years if they:
- have an annual taxable income in the future below the tax-free threshold ($18,200)
- only have income from an Australian Government pension
- will become eligible for the seniors and pensioners tax offset, and their rebate income is below the threshold for lodging a tax return this year (for threshold levels and eligibility see Do you need to lodge a tax return?)
- they are moving overseas permanently
- they are 60 years old or older and their only source of income is from superannuation benefits (both lump sum and income streams) that have already been subject to tax in the superannuation fund.
Tax estimate
After entering all the client’s information in the tax return, myTax will provide a Tax estimate using this information. Inform the client that the calculation is an estimate and the final balance of their assessment may differ once the tax return is processed. This happens when:
- it involves complex calculations
- we receive information that affects the balance of the assessment.
When you click ‘Calculate’ any uncompleted sections will be highlighted. You will need to return to the highlighted sections and follow the prompts to complete the section.
Declaration
The declaration appears after the ‘Tax estimate’ has been calculated and any errors corrected.
The client ticks the following boxes, to declare that:
- All information in the tax return is true and accurate.
- All income has been declared.
- They have records to support their claims for deductions and offsets.
Logging on with myGov or the AAP creates a digital signature associated with the client.
Return to: Tax Help program training.