Income Tax

Declaring your income, making suitable claims and lodging your tax returns on time. This guide and the ADF member specific information on the ATO website can support you in completing your tax returns each year.

In Australia, individuals pay tax on a Pay As You Go system, which means you pay income tax on your money as you earn it. Defence deducts an appropriate amount of tax from your pay each fortnight.

The Australian taxation system uses a sliding tax scale, so the more you earn, the higher the percentage of tax you pay. The highest rate of tax you pay is known as your marginal tax rate.

For the most up to date information about income tax rates, visit the ATO website.

Income and deductions

Do you know what income ADF members must declare or what expenses are allowed as deductions? This short video tells you what you need to know to get your tax right.

Making claims

The Australian Tax Office (ATO) has guides for ADF members that explain what income must be declared and what is allowable as deductions. Work-related deductions could include car or travel expenses, uniform expenses, mess fees, self-education expenses you have paid for, and fitness expenses for certain ADF members. If you’ve worked from home, you may be able to claim phone, internet and other home office expenses. The ATO has information available on their website on what you can claim.

Generally you will need to declare all of your income, other than tax-exempt deployment or reservist income. If you have been on deployment, you will have been notified before you deployed if your deployment income fell into a tax-exempt category.

For deductions to be allowed:

you must have spent the money yourself and not been reimbursed
it must directly relate to earning your income
you must have a record to prove it, or be able to demonstrate how you calculated the claim.

Don’t be tempted to make ‘dodgy’ claims, chances are you’ll be caught and issued with fines and other penalties. The last thing you need is a tax audit.
You can lodge your tax return for free through myGov.

Lodging your tax return

If you are completing your own tax return, using the myGov website, it needs to be lodged by 31 October. If you are using a registered tax agent or accountant, you’ll have until 31 March the following year.

Going on deployment?

Depending on where you are deploying to, and for how long, you may not pay tax on some of your earnings. While paying no tax for a period is generally a positive for you, there may be other factors to consider. Take a look at Preparing for Deployment section for more information.

Accounting & tax advice

For help with a simple tax return, a registered tax agent may be all you need. You can find a registered tax agent in your area by using the search function on the Tax Practitioners Board website.

If your financial affairs are more complex, you may be better off speaking to a qualified accountant that has completed additional professional training. You can find a list of appropriately qualified accountants on the websites of industry associations such as Chartered Accountants of Australia and New Zealand or CPA Australia.

Knowledge Quiz

Understanding the Australian system of income tax is not an easy topic. This quiz on Income Tax is designed to be challenging. We provide introductory links and resources you can use for further research to learn more.

TAKE QUIZ

Frequently Asked Questions

1How do I reduce my tax?

Besides earning less money (which is a self defeating strategy) there are limited means by which you can legitimately reduce the tax you pay. You can reduce your taxable income by claiming allowable deductions, which will reduce the amount of tax you have to pay. Only claim genuine deductions for expenses you can document. The ATO has a deductions guide specifically for ADF members. You may also find our tax time video useful.

2Will I pay tax on my super pension?

If you have a defined benefit super fund like MSBS, you will pay tax on some of your pension income. You can find more details in the factsheets for your fund, available on the CSC website. If you are an accumulation fund member, for example ADF Super, under current rules which may change your super pension should be tax free from age 60. However, we strongly recommend that before making a decision to receive your superannuation benefits, you should seek financial advice from either the Commonwealth Superannuation Corporation or from a licensed financial adviser of your choice.

1What tax deductions can I claim as an ADF member?

A deductions guide specifically for ADF members is available on the ATO website. Make sure you have documentary evidence of your claims.

2How do I find an accountant?

If your tax and financial affairs are relatively simple, consider preparing your own tax return (by 31 October) or consider using a registered tax agent, rather than an accountant. Accountants are generally more suitable for taxpayers in business or who have more complex tax and financial affairs. To find a qualified accountant to prepare your annual tax return you could ask for a recommendation from friends or family or you could use the search functions available on the websites of the peak professional bodies, CPA Australia and Chartered Accountants Australia New Zealand. If you want them to complete your tax return for you, make sure they are also a registered tax agent. Whoever you appoint, understand the fees that you will be paying. Fee arrangements should be put to you in writing before the work starts.