The focus for this month is common tax questions. Here at Nexis, managing taxation affairs is a large part of what we do, so we spoke to the whole team to uncover the ten most common questions we get throughout the year.
Here’s the team’s top 10 tax questions for 2025:
Do I need to lodge a tax return?
Not everyone has to lodge a tax return. Most people earning above the tax-free threshold ($18,200) will need to lodge a tax return. Even if you didn’t earn this much, you may still need to lodge a tax return if you had tax withheld or received certain government payments. Still not sure whether you should or shouldn’t lodge a tax return this year? The Australian Taxation Office (ATO) has made it easier for individuals with their Do I need to lodge online tool.
What are pay as you go (PAYG) instalments?
PAYG instalments is a system where you prepay your tax in instalments throughout the year based on your business or investment income, helping you manage your tax obligations. The ATO will request you prepay your tax in instalments throughout the year based on the other income you have received other than your salary and wages during the previous year to help you manage your tax obligations and not get a larger than expected tax bill at tax time. The ATO calculates your instalments based on your last lodged tax return, or you can calculate them yourself using a provided rate. The Nexis Team can show you how to adjust or vary your instalments if your income changes. You may even opt out of this system if your circumstances no longer meet the criteria and you predict that you will not have a tax bill in the current year – for example, if your business is no longer operating or revenue has greatly reduced from the previous year.
My employer withheld tax for me, so why did I get a tax bill?
A tax bill may arise if insufficient tax was withheld from your income, you had other taxable income or you missed declaring certain tax offsets. For some, this can be the result of a capital gain from an investment, but most commonly this happens when people have more than one income stream e.g. two casual or part-time jobs, or when a change of job during the financial year pushes someone into a higher tax bracket. Your employer can only calculate the tax based on the income they can see, i.e. incurred through their organisation. If you think that a change in salary or having more than one income stream may affect your tax, you can ask your employer to withhold more tax to avoid a tax bill. Talk to the Nexis Team today to discuss what strategies you can put in place.
How do I start a payment plan?
So, you have a tax bill, but you are struggling to pay it off straight away? Don’t avoid it, the ATO allows you to set up a payment plan via the ATO’s online services through myGov. This is the best way to manage unexpected tax debts and avoid penalties in the future.
When will I get my tax refund?
Looking forward to spending your tax refund on a night out for yourself? The good news is most refunds are processed within two weeks for online lodgements. If it’s delayed, the ATO may take additional time to process and check your tax returns if they suspect that your deductions are higher than the prior year, or if they suspect that you may require further substantiation for your expenses. Make sure you check your MyGov for correspondence from the ATO or contact us for an update.
Why do I pay the Medicare levy and Medicare levy surcharge?
The Medicare Levy (2% of taxable income) funds Australia’s public healthcare system. The Medicare Levy Surcharge (MLS) is a separate levy that is only payable if you do not have private health insurance and your family income exceeds the income for Medicare Levy Surcharge (MLS) purposes, which includes your family’s total taxable income, reportable fringe benefits, and any amount on which family trust distribution tax has been paid. In 2024-25 the MLS rate varies between 1% to 1.5% but can be avoided if your family income is below the MLS threshold or you and all your dependents have an appropriate level of private patient hospital cover. An easy way to work out your MLS is to visit the ATO income tax estimator tool.
What are the tax implications of buying and selling cryptocurrency?
Bitcoin, Ethereum and other cryptocurrency gains or losses must be reported as part of your tax return. This includes trading, mining, or using cryptocurrency as payment. And if you are thinking that the ATO won’t know about these transactions if you don’t declare them, you will get caught. The ATO Crypto assets data-matching program has been established to address the genuine lack of awareness of the tax obligations associated with crypto transactions, and to target those people who consciously use false information to avoid their tax obligations when trading in crypto.
Do I need to declare my side hustle?
Platforms like Uber, Airbnb, Etsy, Carsales, or food delivery operators are just a small group of organisations that share their data with the ATO. Any income from your side hustle, like money earned from restoring cars, driving Ubers, or renting out your spare room, may need to be declared. The good news is you may also be able to offset this income by claiming related expenses, so make sure you keep your receipts for these expenses throughout the year.
This is my first year as a sole trader, how do I lodge my tax return?
Sole traders don’t need to lodge a separate tax return for their business. If you are a sole trader, you simply report your business income and expenses in your individual tax return using a separate business schedule. At Nexis, we have helped thousands of new businesses and sole traders keep their financial records well managed, so please contact us if you are just starting up and need tax, bookkeeping or accounting advice for your new business venture.
Do I need to declare income I earned overseas?
If you’re an Australian resident for tax purposes, you must declare any foreign income you earn on your tax return. Foreign income is more than wages and salaries from jobs overseas – it also includes pensions and annuities, income earned from foreign business activities, assets, or investments, and capital gains on overseas assets. For more detailed information on what the ATO considers as foreign income, please visit the ATO’s Australian resident foreign and worldwide income. Note: Non-residents only have to declare Australian-sourced income.
If you have more questions on your tax, and to find out how we can assist you in getting the most out of your tax return, contact Nexis today.
