In 2022 Tax Tips

Tips to Make Tax Time Easier

The time of year when taxes need to be filed may be very stressful, particularly if this is your first time doing so in Australia. We are fortunate to have access to a wealth of resources and information that can simplify and streamline the process. This article on the blog will provide an overview of the tax system in Australia as well as some advice to assist you in effectively filing your taxes. If you are a student who is just getting started in the workforce or if you have been living in Australia for years, continue reading for some useful information that will make the process of filing your taxes much simpler.

Many people in Australia are beginning to prepare themselves for the upcoming tax season as the end of the financial year approaches closer. Do not worry if you are one of them; we have some suggestions that will assist make the process a little bit simpler for you. Continue reading if you want to learn how to get started, what deductions you might be able to claim, and other relevant information. We really hope that this information will make tax time a little less stressful for you and that it will assist you in getting your affairs in order before the deadline!

The time of year when taxes need to be filed can be stressful for many people, particularly if they are unsure of how to complete their returns. Therefore, in order to make filing taxes easier in Australia, here are some ideas. If you follow these guidelines, filing your taxes won’t be as stressful for you, and you’ll be able to finish the process more quickly and easily. In addition to this, you will have the peace of mind of knowing that you are conducting all of your business activities in the appropriate manner and will not be subject to any penalties from the ATO.

Helpful Hints to Ease the Stress of Tax Season

When it comes to matters pertaining to taxes, far too many of us desire to hide our heads in the sand. The majority of the time, this is the case because we consider it to be too difficult, the regulations are constantly being updated, we already have an adequate number of life administration issues, and dealing with taxes does not exactly excite or delight us.

The issue is that filing your annual tax return is something that cannot be avoided. It is easier to take some basic measures now to make your life easier by the deadline of June 30 rather than having to pay a premium or wind up in difficulty because you have overclaimed or haven’t submitted. The deadline is June 30.

This three-day weekend is the perfect opportunity to take care of yourself and get your life in order.

Utilize the Power of the Cloud

Since the advancement of technology has made our lives simpler, there is no reason not to take advantage of it when filing taxes.

If you are an employee, you may want to consider downloading the free app offered by the Australian Tax Office. With this app, you will be able to keep track of your deductions and upload receipts.

You may also take pictures of your receipts and upload them to the cloud or Dropbox if you don’t want to deal with installing yet another software. This way, all of your receipts will be stored in a single, secure location.

If you are the owner of a company, you should make sure that you are utilizing cloud-based solutions such as Xero, Quicken, or MYOB, along with some of the numerous add-ons available, such as Shoe-boxed or Receiptbank, in order to keep everything in the same location.

The benefit of using them is that they are not only useful for tax preparation, but they will also provide you with insights into the operation of your business, allowing you to make sound choices regarding issues pertaining to growth, cash flow, and performance.

Use Your Card

If you make a purchase with cash and then misplace the receipt for that purchase, you may no longer be eligible to claim a tax deduction for that purchase. Because of this, using a card to pay is quite vital.

It’s possible that the bank statement won’t cut it as evidence of your ownership of the property, especially if the only description says “David Jones.”

On the other hand, the majority of stores that use an EFTPOS system now have the ability to offer a copy of your receipt if you can provide the date and the total amount spent.

It is recommended that you either take a picture of the receipt or upload it into an app. However, if you pay with a credit card, you will have a backup option in that you will be able to present the retailer with your bank statement as proof of purchase and ask for a copy of your original receipt should you ever need it.

Keep Log Books

tax return financial form concept

In the event that you drive for your job or conduct business from the comfort of your own home, it is imperative that you maintain the accuracy of any logbooks that are required of you.

In order to be eligible to deduct a portion of the costs associated with operating a vehicle for business purposes, the logbook that documents such use must be no more than five years old.

In order to be able to claim an hourly rate for a home office, the Internal Revenue Service recommends that individuals who work from home maintain a diary for a period of one month.

Examine the entries in your journal

It is easy to forget about these incidental purchases when it comes time to file taxes because so many of us are in the habit of jumping into a car for the occasional work trip, using our public transport cards to visit a client, attending conferences, or purchasing a meal for an overnight work trip.

Because of this, it is necessary that you flip through your calendar in order to serve as a reminder to check for periods that you may have spent on a deduction for work.

Put Some Extra in Your Super

You may have been intending to talk to your human resources department about salary sacrificing to superannuation, or you may be one of the many business owners who are forgetting to pay any superannuation for themselves. In either case, you should do it as soon as possible.

You are permitted by the ATO to make personal contributions to super and claim a deduction for such contributions on your tax return.

You must be careful not to exceed the $25,000 barrier every year, your super fund must have received the cash before the 30th of June, and you must inform them before you lodge a return that you intend to claim a tax benefit for the contribution.

Donate To Charity

You are not able to deduct the cash that you place in the bucket on your way out of the bar; however, you are able to deduct donations made to recipients who are eligible to obtain tax deductions for gifts if you receive a tax-deductible receipt.

It’s a tax deduction that makes you feel good, which is not something you can usually say about taxes.

Consider Your Structure

When it comes to taxes, wealth building, or the protection of assets, choosing to own assets or manage a business in your own name is frequently the easiest option. However, doing so is not always the most advantageous alternative.

Rather than always falling back on what you already know, you should consider exploring other possibilities, such as a family or unit trust, corporation, or self-managed super fund.

Given the amount of change that is being discussed in relation to taxes, it is necessary to revert to the fundamentals and make certain that you are performing all of the requirements in an adequate manner.

Check-in Monthly

Checking in on a regular basis is the most effective strategy to organize your receipts and expenses. That means you won’t have to worry about sitting down to complete your taxes during tax season only to realize that you need to look for evidence that is several months old. Rather than doing this, you should invest in folders that are color-coded so that you can readily find the receipts and paperwork you need in the future. These files could be found in those folders:

  • Expenses associated with both the home and the workplace include receipts; the cost of utilities such as electricity, gas, and water; home repairs, maintenance, and renovations; internet and phone bills.
  • Expenses related to vehicles and mileage include the following: the cost of gas and other fuels; vehicle repairs and maintenance; receipts for vehicle registration and licensing; tires; statements for rentals or leases; and both personal and commercial miles driven.
  • The cost of education includes things like enrollment fees, textbooks, and any other necessary tools or supplies.
  • Expenses related to child care, such as pay stubs indicating payments made for child care through a reimbursement account at work or invoices for child care while you were volunteering for a nonprofit organization.
  • Expenses related to medical care include health insurance premiums for you and your family as well as any out-of-pocket costs incurred.
  • Other costs include the cost of moving, gifts to charitable organizations, the cost of tax planning and investment services, the cost of work uniforms, the cost of laundering or dry cleaning work apparel, and the cost of company supplies (pens, paper). Moving expenses, unreimbursed employee costs, and fees associated with tax and investment planning can all be deducted as itemized deductions on your federal tax return for the 2017 tax year. However, the total amount that can be deducted is limited to 2% of your adjusted gross income. These 2 percent deductions will no longer be allowed beginning with the 2018 tax year unless the expense was incurred in the course of running a business. There are still some states, such as California, that allow residents to deduct these kinds of expenses from their taxes.

Make sure that all of your deductions are properly accounted for by placing any new receipts from the previous month into the appropriate folder. This includes making sure that you haven’t “lost” any receipts by looking through your wallet or baggage.

Because your workload is kept under control by this method, you will not feel overburdened when it comes time to organize and save the necessary documentation for your taxes. It also provides you with the opportunity to add pertinent notes on your receipts while the specifics are still fresh in your mind. For example, you may record which customer you met at a power lunch that will shortly be deductible.

Maintain both electronic and paper backups of your data

In spite of the fact that you should keep paper receipts in order to track your costs, it is possible for a receipt to be misplaced, damaged, or even become illegible over time. Keeping an electronic duplicate of your expenditures allows you to safeguard paper receipts and other documentation. This can be accomplished with as little as:

  • Scanning your receipts to save as photos or PDFs, or requesting that they be emailed to you if you have the option to have them sent to your email address;
  • storing rent receipts in an electronic format;
  • The PDFs of the utility invoices are being saved.

Before you place any of your receipts into long-term preservation, you should perform a checkup on the electronic documentation you have as part of your routine checkup. This will ensure that you have a digital backup of all of your purchases.

On-the-Go Documentation of Expenses

Consider keeping track of your day-to-day expenses while you’re out and about if the prospect of spending an evening sifting through receipts isn’t exactly your idea of a good time. Take pictures of your receipts to establish a digital backup at the point of sale, and then at your monthly tax check-in, all you need to do is import them and organize them in the appropriate order.

Some financial planning applications, such as Mint, feature functionality to organize and store digital images of receipts. If you use applications or software to manage your finances, make sure you take advantage of this function to keep track of the expenses that are tax-deductible.

Maintain a backup copy of your information

It is possible for even the most well-designed and meticulously organized storage systems to fail for reasons that are beyond your control. For example, you could lose your phone, have your laptop crash, have your hard drive break, or even a fire or flood could destroy any physical or digital documentation. Therefore, it is imperative that you periodically back up your digital receipts to the cloud or an external thumb drive, so that you are protected in the event that either your hardware or software fails.

Determine which tax bracket you fall under.

Your first step in maximizing your tax return is to ensure that you have correctly determined which tax band you fall into. You won’t have a complete understanding of the scope of your tax responsibilities until you determine which tax bracket you fall into.

From one year to the next, the tax brackets do not always remain the same. To gain a better idea of where you stand, you should consult the individual and married income tax rates provided by the Australian Taxation Office. This should only take a few minutes of your time. Once you have determined which tax bracket you fall into, you will be in a better position to examine the deductions you are eligible for.

Create a Receipt System

You are not the only one who shoves their receipts into a secret drawer or a large envelope in order to stay organized. Having said that, there is a more effective approach. Because receipts are something that is very simple to lose, you will need to create a method for keeping track of them. In addition to this, the ink on the paper may become less visible with time, leaving you with a sheet of blank paper.

business chart showing financial success

During tax season, one of the best methods to save money is to carefully keep track of and save all of your receipts. You might be astonished to learn exactly how many things you are eligible to claim, some of which you might not have even been aware of.

Going forward, you should make it a priority to organize and store all of the receipts that are applicable to your situation, and you should consult with an accountant to determine the specific deductions that are open to you. If you’d rather use an up-to-date method to store your receipts safely, there are now apps that can help you digitize them so you can access them whenever you need them.

Get Paid to Read Newspapers, Magazines, and Other Publications

Do you regularly read online versions of trade magazines or journals? It’s possible that you qualify for a tax break. If you pay for a subscription to an online or offline publication that assists you in remaining current in your line of work and you can demonstrate a direct link between the subscription and your taxable income, then it is highly likely that you will be able to deduct the cost of the subscription from your taxable income.

For instance, if a chef or maitre d’ subscribed to a food magazine, they would be considered qualified, as would a writer or journalist who subscribed to internet news sites. Both of these examples meet the criteria. The good news is that if the total cost of the membership was under $300, you are eligible for an instant tax benefit.

Invest It in a Pension or Retirement Account

It’s possible that making contributions to your retirement account could be one of the most effective strategies to get the most out of your tax refund. This is especially relevant for workers making an annual salary of less than $52,000. The government will contribute fifty cents to your retirement account for every dollar that you put into it.

Additionally, if you are married and one of you makes less than $40,000 per year, the higher-earning partner can contribute up to $3,000 to the lower-earning partner’s super fund. This applies only if both partners are Australian residents. This results in a tax offset equal to 18% of the original amount. This is the kind of investment that ends up being quite profitable in the long run!

Additional Suggestions to Help Make the Tax Process Easier

  • Make sure that you report all of the interest and any income you received from investments. It is irrelevant to the Internal Revenue Service (IRS) how little an individual’s interest, managed fund, or dividend payments are because they have a data matching system.
  • The member of the family who has the lowest overall tax burden should be the one to hold investments in their name. Utilizing a family trust to achieve true asset protection and equitable distribution of income is an even better option.
  • If you have achieved a capital gain and have an investment that is producing a loss and the 30th of June is approaching, you should consider selling the investment in order to help decrease any gain and tax burden you might have.
  • You need to make sure that all of the information regarding your rental property is in order. This includes things like rental statements, records of repairs and maintenance, rates, insurance, travel logs for inspections and the collection of rent (either a logbook or invoices of travel), capital improvements, interest on loans, and all details regarding any refinanced loans (loan contracts and statements). Because of this, you will be able to successfully have the appropriate charges of borrowing claimed against the property.
  • Do you have a report created by the quantity surveyors? With the use of these reports, you will be able to deduct, over the course of the property’s lifetime, the expenses incurred during its construction as well as the cost of any fixtures it contains.
  • You can immediately start taking the deduction if you prepay the interest on the loan for the investment property you have. Make sure this feature is available through your loan by checking with your bank first.
  • Do you have audit protection insurance? Because the ATO is continuously expanding the number of audits it conducts, it is just a matter of time before you are subject to one. This insurance allows you to deduct the charges from your taxes and covers the fees that your accountant or lawyer would charge you to finish the audit.
  • A significant amount of money can be saved through superannuation. In addition, if your spouse has a low income, sacrificing some of your earnings and contributing to their fund might provide significant tax savings.
  • Life insurance is not eligible for a tax deduction, but insurance that protects against loss of income is. On the other hand, if you have your superannuation fund pay for the policy, then the fund will include that payment as a deduction. If you are self-employed, you are eligible to make contributions to a retirement plan and receive a tax deduction at the same time that you pay for your life insurance. You may also qualify for the co-contribution option, which enables you to have the government de facto pay for the insurance coverage on your behalf.
  • Being well-prepared will save you not only time but also, and maybe more significantly, money.
  • Do not attempt to create your own tax return; if you do, you WILL fail to take advantage of certain deductions.
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