Do you find yourself drowning in random receipts when EOFY comes around? Learn to lodge your tax return the easy way with these last-minute and longer-term tax hacks.
Tax paperwork is something few of us take in our stride. In fact, the majority of people hand over much of this responsibility to someone more qualified. In the 2019/20 financial year, 64.8% of Australians lodged their return via their tax agent [1] but even your accountant can’t do it all for you. Gathering receipts and records you need to pass along can become a headache when you leave it all to the last minute.
If you’re reading this and the EOFY is almost upon us, there’s no need to panic. For individuals, the deadline for lodging your return is 31 October in the next financial year but before putting tax to the back of your mind for a few more months, it’s worth glancing through these tips for taking the pain out of the whole process. Not only will it help you streamline your paperwork, it will also remind you to make the most of deductions or offsets you may be eligible for before 1 July.
1. Maximise deductions
Depending on your situation – married or single, salaried employee or sole trader for example – you can claim all sorts of legitimate expenses against your income to lighten your tax burden. A good accountant can certainly advise on which types of deductions you could potentially include in your return. Whether you’re lodging through an agent or doing your tax return DIY style, knowing what expenses to record can help you keep receipts organised throughout the financial year.
A visit to the ATO website can inform you about eligible deductions in the current financial year. They also provide a handy myDeductions tool in the ATO app for tracking these deductible expenses as they happen. There are also a host of other apps available for keeping track of your spending and not just the tax-deductible kind. Expensify has been popular for a few years now. Not only does it scan and store receipts, it actually pulls information, including date, time, amount and merchant, into a CSV file ready for your accountant at tax time. There’s also a more concierge-style solution called Squirrel Street (formerly Shoeboxed) available here in Australia. For a monthly subscription, you can mail your receipts to be scanned, uploaded and categorised on your behalf.
If you’re eligible to claim some of your car expenses as a deduction, there’s also a nifty app to make this easier too. Providing you’re following the logbook method for calculating vehicle usage, Vehicle Logbook is an ATO-compliant app that gives you an easy way to capture and collate all that essential journey info.
2. Be super savvy
Depending on your working arrangements, you may have already contributed to your superannuation in this financial year, either through the Super Guarantee or voluntary personal contributions. By making extra contributions into super, you’re saving more for retirement and may be eligible for tax concessions too. This will depend on your marginal tax rate and how much you’ve already paid into super.
3. Know your offsets
Making extra super contributions for yourself and on behalf of your spouse could also see you qualify for tax offsets. Under current Federal Government legislation, tax offsets are available to lower-income earners and for contributions made on behalf of your spouse if they’re on a low income.
4. Investment costs
Just like money, you earn from working, income from investments is liable for tax. Whether that’s rent from a property or dividends from shares, there may be deductions you can claim against these investment earnings. While an accountant can certainly offer guidance on these deductions, a Certified Financial Planner® professional can advise you on your investments’ overall costs and benefits. Tax is just one of the costs you need to consider when exploring investment options and developing an investment strategy to meet your financial goals.
5. Tidy up for next time
By knowing what deductions and offsets you can legitimately claim and keeping on top of record keeping, you could be boosting your chances of getting a tax windfall after lodging your return. But if your overall finances are in a bit of a muddle, there may be just as much value in doing a spot of financial housekeeping and decluttering your finances to get all your money matters in the best of shape for the future.
Reach out to our specialist tax and accounting team here to discuss your situation.
[1] Australian Taxation Office, Individual Taxation Statistics 2019-20, https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2019-20/?anchor=IndividualsStatistics
Source: Money and Life
