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Saving money is as important as earning money for your financial wellbeing.
What you can save in tax can contribute to your overall financial position so filling out your tax return should be taken seriously.
The key to making tax time easier is by being organised. Have all relevant information ready and, if you’re doing it yourself, make sure you submit it on time.
Financial planner Nigel Baker CFP®, Arch Capital, says it’s easy to keep organised online now as many companies provide emails electronically and simple files can be shared securely with accountants and advisers.
Most people use a Microsoft folder or similar online share drive such as Google, and cyber security is safer when information is not shared on email.
“Receipts should be immediately emailed into your drive; let your accountant work it out,” Baker says.
As an adviser, Baker says he is happy to work with his client’s accountants and if they don’t have one, to recommend someone.
If you are lodging your own return the due date is 31 October. Payment when you lodge your own tax return is due on 21 November. Interest will apply to any amount you owe after 21 November.
If you are using an accountant, you must have engaged them before 31 October and they will then be able to let you know when they need to lodge your return. There is a cost for using an accountant but it’s tax deductible and, if your matters are anything other than very basic, cost-effective in terms of your own time and peace of mind.
What to watch for
The tax office is currently looking at three areas:
- Working from home claims. With many people returning to working from the corporate office, the tax office is looking at people who have used data from previous returns, and which may not be up to date.
- Claiming too much for investment properties.
- Making sure capital gains tax is being paid on trades in crypto and other regularly traded investments.
- Travel claims. Be aware of what you can claim as a deduction for work travel. It doesn’t include your petrol, tolls, or public transport fares to get yourself to the office.
Tax time for business
For business owners, there are more regular dates and requirements that you need to be on top of, including BAS, payroll tax, PAYG and superannuation payments.
Having a good plan or system in place is important as payments can easily get out of hand if you miss a notice, or if one goes missing. Paying two notices in close succession might become a cash flow issue. If you inform the tax office as soon as you realise, they can often be quite flexible in you paying it back in Instalments.
With all business owners, including sole traders, consultants and freelancers, it’s good practice to keep between 10-30% of income aside for tax. This should be put into a separate account and kept for tax purposes only.
Tax deductions you might claim in certain professions include clothes and items you wear to work, work-related memberships and accreditations, fees and commissions, meals, entertainment and functions, personal grooming, health and fitness, education, training and seminars, tools, computers and other items you use for work, transport, and travel.
What you can claim will depend on your personal circumstances. Check with your accountant or on the ATO site first.
Working with a financial planner and accountant
Seeking expert help and guidance from both an accountant and a financial planner can help you make the most of what you can.
Adding extra amounts into your super is not only building up your super balance but up until the concessional super threshold ($27,500 for FY23/24 and increasing to $30k from 1 July 2024) it is also a tax deduction which puts more money into your pocket.
To claim a deduction in the current year, the payment must have been deposited into the fund by June 30 of that year. If you are making that payment in after-tax dollars you will need to file a notice of intent that you will be making a tax deduction. Your super fund can help with this.
The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information accessible via any links provided in the article. Please consider seeking advice from a qualified professional to ascertain how the information in this article and the links provided may relate to you.
