ATO income tax estimator
One of the other ATO tools to consider is the income tax estimator. This tool is a bit more thorough, making up for the deficiencies seen in the simple tax calculator.
Although this income tax calculator only works for the past four years, as opposed to the six years of the simple tax calculator, it helps you determine your tax refund and any debt owed. The calculator also accounts for the aforementioned bulleted items, such as the Medicare levy, the Higher Education Loan Program, and any other applicable tax offsets.
Because the income tax calculator is so much more extensive, you’ll need to provide more information than you would with the simple tax calculator. The income tax estimator asks you to provide:
- Total gross income payments
- Your total amount of claimed deductions
- The total amount of tax withheld
- Residency status
- Details regarding the tax credits and offsets you’re permitted to claim
Note that there is a tax offset designated explicitly for low-income earners. This offset, which was newly introduced for the 2018-2019 tax year, could be useful for sole traders and small business owners who are just getting started and have not yet made a lot of profit. The offset could potentially reduce the income tax you’re required to pay down to zero.
Remember that you are required to declare your assessable income when you lodge taxes each year. Determining your assessable income can be a lot more challenging than you think, which is one of the reasons why tools like the income tax calculator can help.
For example, assessable income includes things such as investment income, which accounts for earnings you make from dividends or on savings account investments. Assessable income also includes things like super pensions and annuities. You’ll want to make sure that you account for all possible earnings sources when calculating how much you’ll need to pay in taxes at the end of the year.