Preparing your tax return? Here are some tax return tips to help make the process smoother.
1. Don’t lodge your tax return late
The accounting year runs from July 1 to June 30, and most returns must be lodged by October 31. If you are on the books of a registered tax agent, you may have access to a later lodgement date. If you get a tax bill, make sure you pay it in full and on time. Even if you earn less than the current tax-free threshold of $18,200, you’ll still have to let the tax office know by submitting a non-lodgement advice.
2. Don’t lodge too early
If you or your agent submit your return via the Australian Tax Office’s (ATO) myTax online service, it can be pre-filled with all sorts of information, such as from an employer, health fund, super fund and share registries, but allow a little time for the information to become available. Most pre-filled information should be in place by July 31.
3. Don’t rely on autofill forms
These can be really helpful and save you a lot of time, but you should still always double-check that all your income and expenses are accounted for to avoid potential penalties down the line.
4. Read your tax return
Even if it has been compiled by a tax professional, check your return carefully before you sign it. Mistakes can happen, and the responsibility generally lies with you.
5. Include all relevant income
Side hustles, cash payments, gratuities, payments for your service, share dividends, interest on savings accounts – basically, most of what hits the revenue/income side of your wallet – must be declared, although not everything may be taxed. Some government allowance payments, like the childcare subsidy, are tax-exempt, while things like lotto winnings may not have to be declared at all. Check with a tax professional.
6. Claim everything you’re entitled to
While you might be across obvious potential deductions – work tools, some workwear, safety items like goggles – there may be things you have overlooked, such as the cost of spare parts for an essential tool or the fee for a required permit. Check the ATO website for what tradies can claim.
A good rule of thumb is asking yourself if the expense is genuinely necessary for your work and is not being reimbursed in some other way, for example, by your employer or client. Business apps like the Bunnings Trade PowerPass app can help by keeping your receipts in one place for easy access later.
7. Keep records
If your work expenses for the year total more than $300, you’ll need to show evidence of those expenses, whether on paper or online. You can keep a record of business income and expenses, including a log of vehicle use (see below), through the ATO’s myDeductions tool in the ATO app. Technically you don’t need a receipt for small amounts under $10, as long as your total claim for such small items is $200 or less. Better to be safe than sorry and hang on to it anyway.
8. Log your vehicle use
You can only claim deductions for work-related travel, so while a logbook (or the myDeductions tool in the ATO app) is not always an ATO requirement (depending on the method you use), keeping one will make it easier to show how you’ve worked out any deductions, whether you’re using the cents per kilometre or logbook methods (for a car), or actual cost method for a larger vehicle (like a van).
9. Don’t include private use as a business expense
You can only claim deductions for expenses directly related to your business or your job as an employee, so if you use a home computer for work and Yellowstone re-runs, determine the proportion of time you use the machine for work, and keep a record.
Tip: have a separate mobile for work – it makes life easier when it comes to allocating phone expenses to your tax return.
10. Retain your tax records
You must keep everything related to your tax return for a minimum of five years from the date you lodge your tax return.
Keep in mind…
The information in this article is general in nature. It doesn’t take into account your specific financial position, needs or circumstances. You should look at your own financial position, objectives and requirements and seek professional advice before making any financial decisions.
Are you looking for more tax tips?
Check out Best online tax tools to help run your business and What can tradies claim on tax.
