Russell Ward Finance Writer
As the end of the financial year approaches, it’s time to gather up your expense receipts and income statements, crunch the numbers and get your tax return in on time. Here are our five essential tips to help you prepare for tax time.
1. Keep everything and be prepared
Whether you use a shoebox to store tax-related paperwork or your smartphone to capture photos of receipts, keep copies of everything you’ll need for your tax return and bring it all together in good time. Records of charitable donations, educational expenses, investment property receipts and outgoings related to work should all be kept, along with income and expense records such as payment summaries and bank statements showing interest earned over the financial year.
2. Know your deductions
You’re entitled to claim deductions for a range of expenses when completing your tax return, many related to earning your income. For example, you can claim deductions for home office expenses if you regularly work from home. The ATO website has a comprehensive list of the items you can, and cannot, claim as a tax deduction. It also has a handy tool called myDeductions, which allows you to keep track of your claimable costs throughout the tax year.
3. Make voluntary contributions
One way to reduce your taxable income is to make voluntary contributions. Try to make extra payments to your superannuation or to a HECS debt. Pay additional expenses and fees for next year that might attract a tax deduction this year – think work-related expenses, subscriptions, insurances and rent prepayments. If your income looks like it might exceed the Medicare levy surcharge threshold, consider private health insurance to avoid the additional charges.
4. Understand the rules and the deadlines
The ATO has a stack of online information to guide you when it comes to lodging your tax return, including specific information for investors and those with certain occupations. While your return covers the financial year from 1 July to 30 June, you can lodge up to 31 October of that year by paper or lodge online using a system called myTax. If you are finding it hard to complete your return or you simply don’t have the money to pay on time, get in touch with the ATO who can design a tailored payment plan to suit your circumstances.
5. Get professional advice
A registered tax agent or accountant can be invaluable for understanding expenses that you’re legally entitled to claim on your tax return and the overall process for filing your return. While many of us are capable of lodging our own return, it doesn’t hurt to get some sound professional advice. Costs related to the help you receive are tax deductible and a professional will help you prepare well in advance of the deadline date, advising on the actions you can take to reduce your taxable income when the time comes.
About the author
Russell Ward is a professional business writer who has been published in The Huffington Post, The Telegraph, CEO Magazine, Global Living, Mamamia and Thought Catalog.
Please note that this article is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs.