Au Individual Return

---
name: au-individual-return
description: "Use this skill whenever asked about Australian individual income tax for sole traders. Trigger on phrases like \"how much tax do I pay in Australia\", \"Australian tax return\", \"sole trader tax\", \"ABN tax\", \"Medicare levy\", \"LITO\", \"PAYG\", \"tax brackets Australia\", \"BAS\", \"instant asset write-off\", \"home office deduction\", \"HELP repayment\", \"HECS debt\", \"small business income tax offset\", \"motor vehicle deduction\", or any question about filing or computing income tax for an Australian sole trader. Covers 2025–26 Stage 3 tax rates, Medicare levy and surcharge, LITO, business income computation, allowable deductions, depreciation, instant asset write-off, small business income tax offset, HELP/HECS repayments, and final tax computation. ALWAYS read this skill before touching any Australian income tax work."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/au-individual-return"
  jurisdiction: "AU"
  tax_year: "2025"
  last_updated: "2026-10-12"
  reviewed_by: "Ryan Duguid"
---

# AU Individual Return

## AU Individual Return

## AU Individual Return

## Asset-threshold currency

- **Asset-threshold currency** — For 2025–26, eligible small business entities using simplified depreciation can deduct assets costing less than $20,000 when first used or installed ready for taxable use. The permanent threshold was enacted on 26 August 2026; schedule 2 commences on 1 October 2026 and applies to specified first use or installation from 1 July 2026. The acquisition date alone does not establish the first-use year or a second deduction. Check prior claims and business use.  _([Tax Reform No. 2 Act 2026, schedules 1–2](https://www.legislation.gov.au/C2026A00071/asmade/text))_

## Section 1 -- Quick Reference

**Section 1 -- Quick Reference**

| Field | Value |
| --- | --- |
| Country | Australia |
| Tax | Income tax + Medicare levy + HELP repayments (if applicable) |
| Currency | AUD only |
| Tax year | 1 July 2025 -- 30 June 2026 |
| Primary legislation | Income Tax Assessment Act 1997 (ITAA 1997); Income Tax Assessment Act 1936 (ITAA 1936) |
| Supporting legislation | Tax Administration Act 1953; Medicare Levy Act 1986; Higher Education Support Act 2003 |
| Tax authority | Australian Taxation Office (ATO) |
| Filing portal | myTax (via myGov) or registered tax agent |
| Filing deadline | 2 November 2026 for standard self-lodgement (31 October is Saturday); tax-agent dates depend on the applicable programme |
| Contributor | Open Accountants Community |
| Skill version | 2.2 |

### Tax Rates -- Resident Individual (2025-26, Stage 3) [T1]

**Tax Rates -- Resident Individual (2025-26, Stage 3) [T1]**

| Taxable Income (AUD) | Rate | Tax on This Band |
| --- | --- | --- |
| 0 -- 18,200 | 0% | Tax-free threshold |
| 18,201 -- 45,000 | 16% | Max $4,288 |
| 45,001 -- 135,000 | 30% | Max $27,000 |
| 135,001 -- 190,000 | 37% | Max $20,350 |
| 190,001+ | 45% |  |

### Medicare Levy [T1]

**Medicare Levy [T1]**

| Item | Value |
| --- | --- |
| Rate | 2% of taxable income |
| Low-income threshold (single) | $28,011 (no levy below; phase-in to $35,013) |
| Low-income threshold (family) | $47,238 + $4,338 per dependent child |
| Surcharge (no private hospital cover) | Additional 1%-1.5% if income over $101,000 (single, 2025-26) |

### Low Income Tax Offset (LITO) [T1]

**Low Income Tax Offset (LITO) [T1]**

| Taxable Income (AUD) | LITO |
| --- | --- |
| Up to $37,500 | $700 |
| $37,501 -- $45,000 | $700 less 5c per $1 over $37,500 |
| $45,001 -- $66,667 | $325 less 1.5c per $1 over $45,000 |
| $66,668+ | $0 |

### Small Business Income Tax Offset (SBITO) [T1]

**Small Business Income Tax Offset (SBITO) [T1]**

| Item | Value |
| --- | --- |
| Rate | 16% of income tax on business income |
| Cap | $1,000 |
| Eligibility | Aggregated turnover under $5 million (individuals and trusts only) |

### Key Deduction Rate Lookups

**Key Deduction Rate Lookups**

| Item | Rate/threshold | Claim handling |
| --- | --- | --- |
| Home office -- fixed rate method | 70 cents per hour (2024-25 and 2025-26) | T2 -- method choice, hours, and records/substantiation required |
| Motor vehicle -- cents per km method | 88 cents per km (max 5,000 km) | T2 -- method choice and business-km support required |
| Instant asset write-off (small business) | $20,000 threshold (assets under $20,000 immediately deductible) | T1 if small-business eligibility and asset cost are clear; otherwise escalate |
| Superannuation (deductible personal contribution) | Up to concessional cap ($30,000 in 2025-26; $32,500 in 2026-27) | T1 rate-cap lookup; notice of intent must be lodged before claiming |

### Conservative Defaults [T1]

**Conservative Defaults [T1]**

| Ambiguity | Default |
| --- | --- |
| Unknown residency status | Australian resident (but STOP if genuinely unclear) |
| Unknown business-use % (vehicle, phone, home) | 0% deduction |
| Unknown expense category | Not deductible |
| Unknown depreciation effective life | Use ATO's Table of Depreciation |
| Unknown private health insurance status | No cover (Medicare levy surcharge may apply) |
| Unknown aggregated turnover | Over $10 million (no small business concessions) |

## Section 2 -- Required Inputs and Refusal Catalogue

### Required Inputs

**Minimum viable** -- bank statement for the full financial year (1 July to 30 June), confirmation of ABN/TFN, and whether the taxpayer is an Australian resident.

**Recommended** -- all tax invoices issued, purchase receipts, PAYG payment summaries or income statements (via myGov), prior year tax return, BAS lodgments.

**Receipts and substantiation (critical)** -- for deduction claims, keep written evidence (receipt or tax invoice) showing supplier name, cost, date, and nature of expense, plus records of business-use apportionment. A bank or credit-card statement alone is generally not sufficient evidence. Keep records for at least 5 years from lodgment.

**Ideal** -- complete bookkeeping records, depreciation schedule, motor vehicle logbook, home office hours log, private health insurance statement, HELP debt balance.

### Refusal Catalogue

- **R-AU-1 -- Companies and trusts** — Companies lodge company tax returns. Trusts lodge trust returns. This skill covers individual sole traders only.  _(R-AU-1)_
- **R-AU-2 -- Non-residents** — Non-resident tax rates and rules differ significantly. Out of scope.  _(R-AU-2)_
- **R-AU-3 -- Capital gains tax events** — CGT events require specialised computation (cost base, discounts, exemptions). Out of scope.  _(R-AU-3)_
- **R-AU-4 -- Complex depreciation (effective life disputes)** — Where the ATO effective life is contested or the asset has no published rate, escalate.  _(R-AU-4)_
- **R-AU-5 -- Partnership or PSI (Personal Services Income)** — PSI rules and partnership allocations require separate analysis. Escalate.  _(R-AU-5)_

## Section 3 -- Transaction Pattern Library

### 3.1 Income Patterns (Credits on Bank Statement)

**3.1 Income Patterns (Credits on Bank Statement)**

| Pattern | Tax Label | Treatment | Notes |
| --- | --- | --- | --- |
| ABN INCOME, CLIENT PAYMENT, [client name] | Business income (Item P8) | Gross business income | Core sole trader income |
| STRIPE PAYOUT, STRIPE TRANSFER | Business income | Revenue | Match to underlying invoices |
| PAYPAL TRANSFER | Business income | Revenue | Report gross before fees |
| DIRECT CREDIT [client name] | Business income | Revenue | Bank transfer from client |
| INTEREST, SAVINGS INTEREST | Interest income (Item 10) | NOT business income | Report separately as interest |
| DIVIDEND, DISTRIBUTION | Dividend income (Item 11) | NOT business income | Report separately. Include franking credits. |
| FRANKING CREDIT | Gross-up dividend | Add to assessable income | Franking credit is both income and tax offset |
| ATO REFUND, TAX REFUND | EXCLUDE | Not income | Prior year tax refund |
| CENTRELINK, JOBSEEKER, YOUTH ALLOWANCE | Government payment (Item 6) | May be taxable | Check specific payment type |
| SUPERANNUATION (lump sum or pension) | Item 7 or 8 | Check | Depends on age and components |
| OWN TRANSFER, SAVINGS | EXCLUDE | Internal | Between own accounts |
| RENTAL INCOME | Rental income (Item 21) | NOT business income | Separate rental schedule |

### 3.2 Expense Patterns (Debits on Bank Statement)

**3.2 Expense Patterns (Debits on Bank Statement)**

| Pattern | Deduction Category | Tier | Treatment |
| --- | --- | --- | --- |
| RENT, OFFICE RENT, SERVICED OFFICE | Business expense -- occupancy | T1 | Fully deductible if dedicated business premises |
| HOME OFFICE, WORK FROM HOME | Home office deduction (D5) | T2 | Fixed rate 70c/hr (2024-25 and 2025-26) OR actual cost method. See Tier 2. |
| PETROL, FUEL, CALTEX, BP, SHELL, AMPOL | Motor vehicle (D1) | T2 | Cents/km (88c, max 5,000 km) OR logbook method |
| CAR INSURANCE, REGO, SERVICE | Motor vehicle | T2 | Only under logbook method (not cents/km) |
| TOLL, CITYLINK, LINKT | Motor vehicle or travel | T1 | Business travel tolls: deductible under either method |
| FLIGHT, QANTAS, VIRGIN, JETSTAR | Travel (D2) | T1 | Fully deductible if business travel |
| ACCOMMODATION, HOTEL | Travel | T1 | Deductible if business travel with overnight stay |
| MEALS (business travel, overnight) | Travel | T1 | Reasonable amount while travelling overnight |
| MEALS (client entertainment) | NOT deductible | T1 | Entertainment: NOT deductible for sole traders |
| INSURANCE, PROFESSIONAL INDEMNITY | Business expense -- insurance | T1 | Fully deductible |
| INCOME PROTECTION INSURANCE | Deduction (D15) | T1 | Fully deductible (personal deduction, not business) |
| ACCOUNTING, TAX AGENT, BAS AGENT | Cost of managing tax affairs (D10) | T1 | Fully deductible |
| OFFICE SUPPLIES, OFFICEWORKS | Business expense | T1 | Fully deductible |
| SOFTWARE, SUBSCRIPTION, XERO, MYOB | Business expense -- IT | T1 | Fully deductible |
| GOOGLE ADS, META ADS, FACEBOOK ADS | Business expense -- advertising | T1 | Fully deductible |
| PHONE, TELSTRA, OPTUS, VODAFONE | Business expense -- telecom | T2 | Business portion only |
| INTERNET, NBN | Business expense -- telecom | T2 | Business portion only (or included in home office fixed-rate method) |
| TRAINING, COURSE, SELF-EDUCATION | Self-education (D4) | T1 | Deductible if directly related to current income-producing activity. NOT deductible if for new career. |
| COMPUTER, LAPTOP, EQUIPMENT (under $20,000) | Instant asset write-off | T1 | Immediately deductible if small business entity and cost < $20,000 |
| COMPUTER, LAPTOP, EQUIPMENT (over $20,000) | Depreciation (D2 business) | T1 | Depreciate over effective life per ATO table |
| SUPER CONTRIBUTION, SUNSUPER, AUSTRALIAN SUPER | Deduction (Item D12) | T1 | Personal deductible super contribution up to the concessional cap ($30,000 in 2025-26; $32,500 in 2026-27). Must lodge notice of intent. |
| ATO TAX, INCOME TAX, PAYG INSTALMENT | EXCLUDE | Not deductible | Tax payments are not deductions |
| GST PAYMENT, BAS PAYMENT | EXCLUDE from income tax | T1 | GST is separate. Report net of GST if registered. |
| PRIVATE HEALTH, MEDIBANK, BUPA, NIB, HCF | NOT a deduction (but affects MLS) | T1 | Private health insurance is NOT tax deductible. But having it avoids Medicare Levy Surcharge. PHI rebate claimed separately. |
| PERSONAL, GROCERY, ENTERTAINMENT | EXCLUDE | Not deductible | Personal expenses |
| DONATION, CHARITY, DGR | Deduction (Item D9) | T1 | Deductible if to a deductible gift recipient (DGR). Must be $2+ and genuinely a gift. |

### 3.3 SaaS Subscriptions

**3.3 SaaS Subscriptions**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| GOOGLE WORKSPACE, MICROSOFT 365, ADOBE | Fully deductible business expense | Operating expense |
| SLACK, ZOOM, NOTION, FIGMA, GITHUB | Fully deductible | Same |
| AWS, HEROKU, DIGITAL OCEAN | Fully deductible | Hosting costs |
| CANVA (AU entity) | Fully deductible | Australian company |
| XERO, MYOB | Fully deductible (cost of managing tax affairs or business expense) | Accounting software |
| SPOTIFY, NETFLIX | NOT deductible | Personal entertainment |

### 3.4 Internal Transfers and Exclusions

**3.4 Internal Transfers and Exclusions**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| TRANSFER, SAVINGS, TERM DEPOSIT | EXCLUDE | Internal movement |
| MORTGAGE, HOME LOAN | EXCLUDE (or home office %) | Personal. Home office actual costs method only. |
| ATM, CASH | T2 -- ask | Default exclude |
| HECS REPAYMENT, HELP | NOT a deduction | Compulsory repayment is not a tax deduction |

## Section 4 -- Worked Examples

### Example 1 -- Standard Sole Trader (Graphic Designer)

**Input:** ABN income AUD 92,000. Business expenses: software AUD 3,600, advertising AUD 1,200, accounting AUD 1,100, office supplies AUD 800. Home office 1,200 hours at 70c/hr. Car 4,000 business km at 88c/km. No other income. No HELP debt. Has PHI.

**Computation:**
- Business income: AUD 92,000
- Expenses: 3,600 + 1,200 + 1,100 + 800 = AUD 6,700
- Home office: 1,200 x 0.70 = AUD 840
- Motor vehicle: 4,000 x 0.88 = AUD 3,520
- Total deductions: 6,700 + 840 + 3,520 = AUD 11,060
- Taxable income: 92,000 - 11,060 = AUD 80,940
- Tax: 0 + 4,288 + (80,940 - 45,000) x 30% = 4,288 + 10,782 = AUD 15,070
- Medicare: 80,940 x 2% = AUD 1,619
- LITO: $0 (income > $66,667)
- SBITO: 16% x (tax attributable to business income) -- business is 100% of income, so 16% x 15,070 = 2,411, capped at AUD 1,000
- Final tax: 15,070 + 1,619 - 1,000 = AUD 15,689

### Example 2 -- Instant Asset Write-Off

**Input:** Small business entity (turnover < $10M). Purchases laptop AUD 2,800 and monitor AUD 950. Both under $20,000.

**Classification:** Both items are immediately deductible under the instant asset write-off. Assuming both assets were first used for business in 2025–26, are wholly business-use, qualify for simplified depreciation and were not previously deducted, the total deduction is AUD 3,750. Record the first-use date and prior-claim check in the asset register.

### Example 3 -- Motor Vehicle (Logbook vs Cents/Km)

**Input:** Total km: 20,000. Business km: 12,000 (60%). Car costs: fuel AUD 4,800, insurance AUD 1,600, rego AUD 800, service AUD 1,200, depreciation AUD 4,000. Total AUD 12,400.

**Computation:**
- Cents/km: min(12,000, 5,000) x $0.88 = AUD 4,400 (capped at 5,000 km)
- Logbook: 12,400 x 60% = AUD 7,440
- Logbook method is significantly more beneficial. But requires a valid logbook kept for a continuous 12-week period.
- [T2] Flag: confirm logbook exists and is valid.

### Example 4 -- Home Office (Fixed Rate vs Actual)

**Input:** Works from home 1,600 hours/year. Dedicated office in 3-bedroom house (1/4 area). Electricity AUD 2,400, internet AUD 1,200, phone AUD 960 (80% business), depreciation on furniture AUD 400.

**Computation:**
- Fixed rate: 1,600 x $0.70 = AUD 1,120 (covers electricity, gas, phone, internet, stationery, computer consumables)
- Actual cost: electricity 1/4 x AUD 2,400 = AUD 600. Internet 80% x AUD 1,200 = AUD 960. Phone 80% x AUD 960 = AUD 768. Depreciation AUD 400. Total = AUD 2,728.
- Actual method is significantly better here.
- Under fixed rate: only computer/printer depreciation and occupancy expenses (rent, mortgage interest, rates, insurance) can be claimed additionally. Under actual: each item claimed individually.
- [T2] Flag: confirm method choice and occupancy costs if actual.

## Section 5 -- Tier 1 Rules (When Data Is Clear)

### 5.1 Business Income [T1]

- **Business income treatment** — All amounts derived from carrying on a business. If GST-registered, report net of GST. If not registered, report gross.  _(ITAA 1997 Div 6)_

### 5.2 General Deduction [T1]

- **General deduction** — A deduction for any loss or outgoing to the extent it is incurred in gaining or producing assessable income, or necessarily incurred in carrying on a business. Must not be private, domestic, or capital in nature.  _(ITAA 1997 s8-1)_

### 5.3 Depreciation [T1]

- **Diminishing value** — Base value x (days held / 365) x (200% / effective life)  _(ITAA 1997 Div 40)_
- **Prime cost (straight line)** — Cost x (days held / 365) x (100% / effective life)  _(ITAA 1997 Div 40)_
- **Small business entity simplified depreciation** — Small business entity (turnover < $10M): can use simplified depreciation -- pool all assets over $20,000 at 15% first year, 30% thereafter.  _(ITAA 1997 Div 40)_
- **Instant asset write-off** — Assets costing less than $20,000 (assets first used or installed ready for use 1 July 2023 to 30 June 2026; extension made law by the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025) can be immediately deducted by small business entities. For later first use, apply the enacted permanent threshold and commencement details in Asset-threshold currency above.  _(ITAA 1997 s 328-180)_

### 5.4 Superannuation [T1]

- **Personal deductible super contributions** — Personal deductible contributions up to the concessional cap (combined with employer contributions if also employed): $30,000 in 2025-26, **$32,500 in 2026-27**. Must lodge a valid "Notice of intent to claim" with the super fund AND receive acknowledgment BEFORE lodging the tax return or rolling over.  _(ATO contributions caps QC 18123; au-rates-2026-27)_

### 5.5 HELP/HECS Repayment [T1]

Use the 2025–26 thresholds below for this return workflow. Use the separately labelled 2026–27 bands only for that requested year. Both years are marginal: nil at or below the minimum threshold; 15c then 17c on the excess; the top band is 10% of **total** repayment income. Do not use the old 1%--10% of whole-of-income rates.

### 5.5 HELP/HECS Repayment [T1]

**5.5 HELP/HECS Repayment [T1]**  _(ATO QC 16176)_

| Repayment income (2026-27) | Repayment |
| --- | --- |
| $0 -- $69,528 | Nil |
| $69,529 -- $129,717 | 15c for each $1 over $69,528 |
| $129,718 -- $186,050 | $9,028 + 17c for each $1 over $129,717 |
| $186,051+ | 10% of total repayment income |

- **2025-26 HELP repayment bands** — 2025-26: nil to $67,000; 15c over $67,000 to $125,000; $8,700 + 17c over $125,000 to $179,285; 10% of total repayment income from $179,286.  _(ATO QC 16176)_
- **Marginal basis (from 2025-26)** — From 2025-26 compulsory repayments are calculated on a marginal basis (only the income above the minimum repayment threshold), substituted by the Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025.  _(Universities Accord (Cutting Student Debt by 20 Per Cent) Act 2025)_
- **Repayment income** — Repayment income = taxable income + reportable fringe benefits + net investment losses + reportable super. HELP repayments are NOT deductible.  _(Higher Education Support Act 2003)_

### 5.6 Filing and Penalties [T1]

**5.6 Filing and Penalties [T1]**

| Item | Value |
| --- | --- |
| Self-lodge deadline | 2 November 2026 (31 October is Saturday; check extensions) |
| Tax agent deadline | Varies (typically March-May 2027) |
| Failure to lodge on time | $364 per 28-day period or part, up to five base units ($1,820) for the applicable period from 1 July 2026; apply relevant multipliers and remission rules. [Crimes (Amount of a Penalty Unit) Instrument 2026](https://www.legislation.gov.au/F2026N00424/asmade/text) |
| Shortfall penalty (reasonable care not taken) | 25% of shortfall |
| Shortfall penalty (recklessness) | 50% of shortfall |
| General Interest Charge (GIC) | Rate set quarterly and published on the ATO website; calculated daily and compounded |

## Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required)

### 6.1 Home Office [T2]

**6.1 Home Office [T2] methods table**

| Method | What It Covers | Additional Claims |
| --- | --- | --- |
| Fixed rate (70c/hr, 2024-25 and 2025-26) | Electricity, gas, phone, internet, stationery, computer consumables | Separately claim: technology depreciation (computer, monitor), occupancy costs (if dedicated room), cleaning |
| Actual cost | Each expense claimed individually at actual business % | No fixed rate component |

- **Home office record keeping and occupancy expenses** — Under either method: must have records of hours worked from home. Fixed rate: can use any reasonable record. Actual: need receipts and usage records. Occupancy expenses (rent, mortgage interest, rates, home insurance, land tax) are ONLY deductible if you have a dedicated area set aside exclusively as a place of business. These are separate from running expenses. Confirm method, hours, and whether occupancy expenses apply.

### 6.2 Motor Vehicle [T2]

**6.2 Motor Vehicle [T2] methods table**

| Method | How It Works | Records |
| --- | --- | --- |
| Cents per km (88c) | Max 5,000 business km. No receipts needed. | Reasonable estimate of business km |
| Logbook | Business % of actual costs including depreciation | 12-week continuous logbook, valid for 5 years |

- **Cannot claim both methods** — Cannot claim both. Eligible business parking and tolls can be separate deductions. Roadside assistance is a car operating expense covered by the cents-per-kilometre rate; do not claim it again under that method. Confirm method and km/logbook records.

### 6.3 Private Health Insurance (Medicare Levy Surcharge) [T2]

- **MLS applicability** — If income over $101,000 (single, 2025-26) and no appropriate private hospital cover, Medicare levy surcharge applies:

**MLS Rate table**

| Income | MLS Rate |
| --- | --- |
| $101,001 -- $118,000 | 1% |
| $118,001 -- $158,000 | 1.25% |
| $158,001+ | 1.5% |

- **PHI rebate** — PHI rebate: income-tested offset that reduces PHI premiums. Claimed via reduced premiums or tax offset. Confirm PHI status and income level.

### 6.4 Personal Services Income (PSI) [T2]

- **PSI rules** — If income is mainly a reward for personal efforts/skills and not from conducting a personal services business, PSI rules limit deductions. Cannot claim rent, mortgage interest, certain home office costs against PSI. Confirm whether PSI rules apply (results test, unrelated clients test, employment test, business premises test).

## Section 7 -- Excel Working Paper Template

```
AUSTRALIAN INDIVIDUAL TAX RETURN -- Working Paper
Tax Year: 2025-26

A. INCOME
  A1. Business income (ABN income)                 ___________
  A2. Employment income (per income statement)     ___________
  A3. Interest income                              ___________
  A4. Dividend income (grossed up with franking)   ___________
  A5. Rental income (net)                          ___________
  A6. Other income                                 ___________
  A7. TOTAL ASSESSABLE INCOME                      ___________

B. DEDUCTIONS
  B1. Business expenses (direct)                   ___________
  B2. Home office (70c/hr or actual)               ___________
  B3. Motor vehicle (88c/km or logbook)            ___________
  B4. Travel (flights, accommodation)              ___________
  B5. Self-education                               ___________
  B6. Depreciation / instant asset write-off       ___________
  B7. Personal super contributions                 ___________
  B8. Income protection insurance                  ___________
  B9. Cost of managing tax affairs                 ___________
  B10. Donations (DGR)                             ___________
  B11. Other deductions                            ___________
  B12. TOTAL DEDUCTIONS                            ___________

C. TAXABLE INCOME (A7 - B12)                       ___________

D. TAX COMPUTATION
  D1. Tax on taxable income (Stage 3 rates)        ___________
  D2. Medicare levy (2%)                           ___________
  D3. Medicare levy surcharge (if applicable)      ___________
  D4. HELP/HECS repayment (if applicable)          ___________
  D5. Gross tax                                    ___________
  D6. Less: LITO                                   ___________
  D7. Less: SBITO (16%, max $1,000)                ___________
  D8. Less: Franking credits offset                ___________
  D9. Less: PHI rebate offset                      ___________
  D10. Less: PAYG instalments paid                 ___________
  D11. Less: PAYG withholding (employment)         ___________
  D12. TAX DUE / (REFUND)                          ___________

REVIEWER FLAGS:
  [ ] Residency status confirmed?
  [ ] Home office method and hours verified?
  [ ] Motor vehicle method confirmed?
  [ ] Instant asset write-off eligibility (SBE < $10M)?
  [ ] Super contribution notice of intent lodged?
  [ ] PHI status confirmed (MLS)?
  [ ] HELP debt status confirmed?
  [ ] All T2 items flagged?
```

## Section 8 -- Bank Statement Reading Guide

### Australian Bank Statement Formats

**Australian Bank Statement Formats**

| Bank | Format | Key Fields |
| --- | --- | --- |
| CBA, ANZ, Westpac, NAB | CSV, PDF | Date, Description, Debit, Credit, Balance |
| Macquarie, Suncorp, Bendigo | CSV | Date, Narrative, Amount |
| Up, ING, Ubank | CSV | Date, Description, Amount |
| Wise, Revolut | CSV | Date, Description, Amount, Currency |

### Key Australian Banking Terms

**Key Australian Banking Terms**

| Term | Classification Hint |
| --- | --- |
| Direct Credit | Incoming payment -- could be income |
| Direct Debit | Regular outgoing -- likely expense |
| EFTPOS | Point-of-sale purchase |
| BPAY | Bill payment |
| Osko / PayID | Fast payment -- check direction |
| ATM | Cash withdrawal -- ask purpose |
| Interest Paid | Income -- report separately |
| Dividend | Income -- check franking |

## Section 9 -- Onboarding Fallback

```
ONBOARDING QUESTIONS -- AUSTRALIA INDIVIDUAL RETURN
1. Are you an Australian resident for tax purposes?
2. Do you have an active ABN and TFN?
3. Are you registered for GST?
4. What is your aggregated turnover? (for small business concessions)
5. Do you work from home? How many hours per year? Method preference (70c or actual)?
6. Do you use a vehicle for business? Method preference (cents/km or logbook)?
7. Any assets purchased this year? Cost?
8. Do you have private health insurance? Full year?
9. Do you have a HELP/HECS debt?
10. Are you also employed (PAYG income)?
11. Any personal super contributions made?
12. Prior year tax return / depreciation schedule available?
```

## Section 10 -- Reference Material

### Key Legislation

**Key Legislation**  _(ITAA 1997; Medicare Levy Act 1986; Higher Education Support Act 2003)_

| Topic | Reference |
| --- | --- |
| Assessable income | ITAA 1997 s6-1, s6-5 |
| General deduction | ITAA 1997 s8-1 |
| Capital vs revenue | ITAA 1997 s8-1(2)(a) |
| Depreciation | ITAA 1997 Div 40 |
| Small business entity | ITAA 1997 Div 328 |
| Instant asset write-off | ITAA 1997 s328-180 |
| Home office | ATO Practical Compliance Guideline PCG 2023/1 |
| Motor vehicle | ITAA 1997 s28-13, s28-15; cents-per-km rate set by Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 (F2024L00697): 88c for 2024-25 and 2025-26 |
| Superannuation deduction | ITAA 1997 Div 290 |
| Medicare levy | Medicare Levy Act 1986 |
| HELP repayments | Higher Education Support Act 2003 |
| LITO | ITAA 1997 s61-1 |
| SBITO | ITAA 1997 s328-375 |

### Interaction with GST [T1]

**Interaction with GST [T1]**

| Scenario | Income Tax Treatment |
| --- | --- |
| GST collected on sales (registered) | NOT income. Report net of GST. |
| GST credits (ITC) recovered | NOT an expense. Report net of GST. |
| Not registered for GST | GST paid on purchases IS part of the cost. Report gross. |
| GST on private portion | Non-claimable GST is part of cost. |

## PROHIBITIONS

- NEVER allow private or domestic expenses as business deductions
- NEVER allow entertainment expenses for sole traders (not deductible)
- NEVER claim more than 5,000 km under the cents-per-km method
- NEVER claim occupancy expenses (rent, mortgage interest) for home office unless dedicated area exclusively for business
- NEVER forget to lodge notice of intent for personal super contributions
- NEVER claim HELP repayments as a deduction
- NEVER claim private health insurance premiums as a deduction
- NEVER apply the instant asset write-off without confirming small business entity status
- NEVER include income tax or GST payments as business deductions
- NEVER report GST-inclusive amounts if GST-registered
- NEVER present tax calculations as definitive -- always label as estimated

## Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, CA, or registered tax agent in your jurisdiction) before filing or acting upon.

> Contributed by Ryan Duguid.

> Contributed by Ryan Duguid.

> Contributed by Ryan Duguid.

> Contributed by Ryan Duguid.

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-12. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `au-individual-return` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/au-individual-return. If neither is available, confirm every figure against the official source pages cited above before relying on it.