Tax tips you should read before this EOFY
#1 GATHER UP THAT PAPERWORK
Ok so, yes, some of the paperwork required will only be sent to you after the EOFY (eg. Payment summaries and private health insurance policy statement etc) but why not get ahead of the ball and gather together all the other receipts and statements that you will need into one place:
DOCUMENTS YOU MAY NEED FOR – INCOME
- Payment summaries
- Bank statements
- Shares, unit trusts or managed funds statements
- Buy and sell investment statements
- Records from your rental property
- Foreign income details
DOCUMENTS YOU MAY NEED FOR – EXPENSES
- Private Health insurance policy statement
- Donation receipts
- Educational records and receipts
- Investment property receipts
- Your spouse’s income and expenses (If you have a spouse, you will also need details of their income and expenses to make sure your entitlements are correctly calculated.)
- Union membership
- Work related expenses receipts
As a general rule you need to keep your tax records for at least 5 years from the date you lodge your tax return, so make your life easy and file away those receipts – lots of receipts these days are digital so it might be as easy as searching and filing your emails.
Read more about these documents on the ATO website here.
#2 GET TO KNOW YOUR DEDUCTIONS
A tax deduction is an expense you are entitled to claim back, most of which are directly related to earning your income. There are some of the more obvious deductions like vehicle and travel expenses, work uniforms etc. but there are also some that you may not be aware of.
Not sure what you can count as a deduction? A good place to start is to read about the top 5 forgotten tax deductions here.
Struggle to keep track of your deductions? The ATO has created the ‘myDeductions’ tool that allows you to record work-related expenses, gifts and donations, store photos of receipts and record car trips so you can get super organised and keep track of it all.
#3 TAX AGENT OR LODGE YOURSELF?
As an individual you have the option of completing and lodging your own tax return or using a tax agent to do it for you, so which one should you choose? The answer to this depends on your circumstances, the complexity of your return and how comfortable you feel with the process.
DIY-ing – if you choose to lodge your tax return yourself you can use the ATO’s myTax online system for free. You will need to create a myGov account and link it to the ATO to be able to be able to lodge online. For anyone comfortable with technology this is a fairly straightforward, secure easy-to-use and free system.
Using a Tax Agent – if you want to use a professional to do your tax return then you can seek out a variety of tax agents (the MoneySmart website has a useful guide to help you choose a registered tax agent here). An agent will charge you a fee to prepare and lodge your return however it’s also worth noting that ‘costs of managing tax affairs’ is a claimable deduction so you may be able to recoup some of the expense the following tax year.
#4 GET IN BEFORE THE DEADLINE!
31 October – write that down.
If you are lodging your own tax return online you have until 31 October to lodge it. If you decide to use a tax agent, you can lodge later, but you will need to contact the tax agent before 31 October to qualify.
As tedious as tax returns can be, no good comes from ignoring them! So why not get organised now so you can stress less when the EOFY arrives?