Three tips to prepare for tax time!
When it comes to preparing for tax time, the more organised you are, the less stressful the process and the more likely you are to maximise your deductions.
1. Organise your paperwork
Start gathering together all of your records and receipts, along with:
• Records of any sales or purchases of shares, business or property.
• Private health insurance details.
• Your spouse’s details (if applicable).
• A list of all your income, including payment summaries, rental income, interest and dividends and any foreign income.
• A list of all your expenses, including work-related expenses, donations, self-education expenses and accountant fees.
If you’ve been working from home for any part of this financial year, ensure you have everything you need to claim a deduction for your home office expenses. In response to COVID-19, the ATO has introduced a shortcut method which can be used when claiming deductions for the 2020-2021 financial year.
The shortcut method allows you to claim 80 cents for every hour worked from home over the year, but you must have kept a record of the hours you’ve worked from home in either timesheets, a roster or a diary. Find out more here.
2. Prepay expenses in this financial year
If you expect your income to be lower in the next financial year, you could boost your tax refund for this financial year by paying for any expenses before June 30. That way these expenses are included in this year’s tax deduction.
To claim work-related expenses, you must have spent the money and not have been reimbursed, and the expense must directly relate to you earning your income. If your claim for work-related expenses is more than $300, you’ll need to show proof of these expenses so ensure you have all receipts on hand ahead of tax time.
3. Prove it all with records
Maintaining accurate records is crucial. The standard rule is that if you can’t verify it, you can’t claim it.
For any travel/car expenses claims, keep a log book as proof of your usage.
You must hold your records for 5 years from the date you lodge your tax return.
Get ahead at tax time
It’s been an unusual year, and for many of us, that’s meant a change to how we work. Along with any disruptions to income, there may also have been extra expenses relating to a home office. To ensure you’re prepared for tax time, it’s a good idea to start getting organised now.
Applying these financial tips and keeping records at the start of the financial year will streamline the tax time process and save you both time and money.
Our team at Gerard Wilkes & Associates are also here to help. If you have any questions or would like to discuss this article further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.