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Tax Time: How To Tackle It

Don't get too overwhelmed with it all - we are here to help!

Posted on: July 17, 2017

Don't get too overwhelmed with it all - we are here to help!

Once again, tax time is just around the corner and seems to be fast approaching. If you’re only having to account for your own personal income and not a business, you should be fine tackling your tax return solo, but there are always exceptions to the rule. Should the tax man come knocking, you want to make sure that you have done everything right and stuck to the rules and regulations set out. So, make sure you have your priorities in line and get thinking about your tax and how much you can save! We are here to give you a brief low down on what you should have on hand and a basic list of claims that might save you (or better yet gain you) money come the new financial year!

Get your paperwork in order

As annoying as it is at the time, you’ll be ever-so grateful when the end of financial year comes around if you kept your receipts on hand and all in the same place. I swear there is probably nothing worse than scampering around in your wallet/glovebox/bottom of your bag or even various cupboard drawers for the important receipts you were keeping for your tax return. Make sure your ‘safe place’ or filing system isn’t too out of whack or you’ll be kicking yourself for not learning each year from your mistakes. Keep anything that may be claimed as a deduction/any big-ticket item receipts in the one place (maybe an old shoe box?) and label it so that you’ll only need to look for the one filing system.

Also, make sure you take note that documentary evidence of receipts should be kept for five years from the date of lodgement of your tax return in the event of a tax audit.

Income vs expenses

Gather all your information on income, and that will be your first step towards finishing your tax return. These can include:

  • Payment summaries – the income you have received from your employer, super funds, or government agency payments like Centrelink, Department of Veterans Affairs etc.
  • Bank statements – this will show any interest you may have earnt during the financial year.
  • Shares, unit trusts or managed funds statements – includes any dividends or distributions made to you.
  • Buy and sell investment statements – provided by your investment adviser or stockbroker if you bought or sold any shares.
  • Records from your rental property – including any capital gain or loss from property sale/s.
  • Foreign income details – foreign pensions or other foreign income.

Once all incomes have been compiled, you’ll now need to gather your expenses which may be used in claiming deductions on your income tax paid throughout the year. Expenses can consist of:

  • Private health insurance policy statement – for completing the private health insurance section of your tax return.
  • Donation receipts – from any approved charities you contribute to.
  • Educational records and receipts – some of these may not be claimable. See the ATO’s self-education expenses for more information.
  • Investment property receipts – costs of repairs and maintenance on your investment property could be claimed.
  • Your spouse’s income and expenses – include your spouse’s income and expenses to ensure your entitlements are correctly calculated.
  • Union membership – cost of union membership can be deducted from your taxable income.
  • Work-related expenses – certain work-related expenses are claimable. They must be real, relevant, and recorded. See the ATO’s guide on claiming work-related expenses.

Leave your deductions

Now, you may spend your money on a lot of different things throughout the year, but how much of this actually can come under a deduction with your tax return? Well the Australian Taxation Office introduced a way to make it a little easier to sift through the paperwork. The myDeductions app can help keep your tax deductions and income records all in one place. It can be used by individuals claiming general or work-related expenses and sole traders to help keep track of business income and expenses.

In addition to this, the ATO also lists deductions that you can claim on from throughout the financial year. These, however, can come with limits or limitations. They can include vehicle and travel expenses; clothing, laundry & dry-cleaning; gifts & donations; home office expenses; interest, dividend and other investment income; self-education; tools & equipment among many others. For an extensive list, visit the ATO deductions website.

Don’t forget you are also able to offset your tax with certain approved rebates!

If in doubt, see your accountant

As expensive and daunting it may seem, if you are having too much trouble assessing your tax on your own, enlist the advice of an accountant or financial adviser. You never know, you could end up saving more than you initially expected – plus hiring a registered tax agent for tax purposes is deductible!

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