Are you ready for tax time come June 30th?
As the end of the financial year approaches and our TV screens are inundated with advertisements for EOFY savings, it’s time to think about getting yourself ready for tax time. While technically, individual tax returns have until 31 October each year to be lodged (later if lodged by an accountant), it’s a good idea to be ready well in advance. Not only will your accountant love you, but being on top of your end of financial year preparation could make a big difference to your long-term financial goals as well.
Proof of Income
Your income may be more than you think, and it’s up to you to advise the ATO of all your income sources.
For example, you may have earned income from:
- Dividends received or reinvested, employee share schemes
- Interest: banks and building societies
- Government benefits
- Lump sum and termination payments
- Income from rental properties, business
- Foreign income
- Capital gains
Record of Deductions
Your accountant/tax agent is best able to advise you on eligible deductions for your personal circumstances. You can make the end of the financial year easier by maintaining a running spreadsheet or record of work-related expenses. Not only will you save time and hassle leading in to 30 June, but being organised could save you money as well by ensuring you’re able to claim all eligible deductions.
A few examples include:
- Motor vehicle and travel expenses
- Education and professional development
- Home office
- Donation to charities
- Property deductions and depreciation
- Income protection insurance
Documentation for Offsets and Rebates
Offsets and rebates differ from deductions when it comes to calculating your tax liability. Unlike deductions, that are subtracted from your assessable income, offsets and rebates are subtracted directly from your tax payable. You will need to provide documentation for some, such as the rebate for private health insurance, while others are applied automatically by the ATO.
Examples include:
- Private health insurance
- Low/middle income tax offset (LMITO)
- PAYG instalments
Superannuation Contributions
Getting ready for tax time can mean more than keeping track of your income and expenses. Depending on your personal circumstances, you may want to discuss your superannuation contributions with your financial adviser.
Your financial adviser can assist you in making the most of your superannuation through various strategies such as:
- Concessional contributions
- Non-concessional contributions,
- The government co-contribution scheme
- Spouse contributions
- Salary sacrifice
- Super splitting
Organisation is Key
Few people enjoy preparing to lodge their tax return. The key to reduce stress, maximise a possible tax return and stay friendly with your accountant/tax agent is to be organised all year round. The easiest way to be ready for tax time is to regularly update a spreadsheet or folder with your income and expenses and keep an organised filing system for receipts, statements and insurance policies. Being organised can go a long way to making the 30 June deadline less of a headache.
Taxation is a specialist area and it can be hard to know who to talk to. We work closely with trusted accountants/tax agents and financial advisers and are always happy to put you in touch with the right people.
Call Fox Mortgage Services to start building your team of experts today.
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